Why a 63% Vertex Selloff Didn’t Scare Off a New $13 Million Investor | The Motley Fool

On November 13, New York City-based Hyperion Capital Advisors disclosed a new position in Vertex ( VERX +0.30%), acquiring 540,000 shares valued at approximately $13.39 million. What Happened According to a filing with the Securities and Exchange Commission dated November 13, Hyperion Capital Advisors established a new position in Vertex ( VERX +0.30%). The fund acquired 540,000 shares, with the stake valued at $13.39 million as of September 30. The move brought the number of reportable positions in the portfolio to 62. What Else to Know This new position represents 7.16% of Hyperion Capital Advisors’ reported U.S. equity assets as of September 30. Top holdings after the filing: NASDAQ: GOOGL: $35.93 million (19.2% of AUM) NYSE: ELV: $16.69 million (8.9% of AUM) NASDAQ: VERX: $13.39 million (7.2% of AUM) NYSE: ICE: $12.85 million (6.9% of AUM) NYSE: UNH: $12.44 million (6.7% of AUM) As of Wednesday, shares of Vertex were priced at $20.03, down a staggering 63% over the past year and well underperforming the S&P 500, which is up about 15% in the same period. Company Overview Metric Value Price (as of Tuesday) $20.03 Market capitalization $3.2 billion Revenue (TTM) $732.19 million Net income (TTM) ($53.58 million) Company Snapshot Vertex provides tax technology solutions, including tax determination, compliance and reporting, tax data management, document management, pre-built integration, and industry-specific software. The company generates revenue through software licenses, software as a service (SaaS) subscriptions, implementation and training services, and tax-related outsourcing services. It serves corporations across retail, communications, leasing, and manufacturing sectors in the United States and internationally. Vertex is a leading provider of tax technology solutions, with a focus on automating complex tax compliance and reporting processes for large enterprises. The company leverages a mix of on-premise and cloud-based offerings to address diverse client needs and regulatory environments. Its strong presence across multiple industries and long-standing expertise position it as a trusted partner for corporate tax management. Foolish Take Vertex’s stock has been crushed since its late January peak, yet the underlying business is still growing at a double-digit clip and throwing off real cash. In the most recent quarter , revenue rose 12.7% year over year to $192.1 million, with cloud revenue up nearly 30%. Annual recurring revenue climbed to $648.2 million, and adjusted EBITDA expanded to $43.5 million, a 22.6% margin. That disconnect might be why Hyperion has stepped in here.net The selloff appears perhaps driven more by decelerating net revenue retention and investor fatigue with midcap software generally than by a collapse in demand. Meanwhile, management had its own response: Vertex authorized its first-ever $150 million share repurchase program and ended the quarter with more than $313 million in cash, giving it flexibility many beaten-down software names lack. This position now sits alongside Alphabet, Elevance, ICE, and UnitedHealth in the portfolio, signaling a preference for durable cash-generating businesses rather than speculative growth. Ultimately, for long-term investors, today’s Vertex valuation does seemingly signal that there’s room for patience to be rewarded. Glossary Assets under management (AUM): The...

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