Aspen Technology (AZPN) is a leading provider of simulation and optimization software to companies in process industries such as oil and gas, chemicals and pharmaceuticals, with a $1.1B market‐cap. Customers generally sign 5‐year subscription agreements for use of the software, resulting over $300M of recurring annual cash payments. The company trades at a 3.5x multiple of these recurring payments vs. 6x+ for its peer group.
Third Point initiated its position in Aspen after it was delisted from the NASDAQ in February 2008 as a result of being delinquent with its SEC filings. Shortly thereafter, the company’s auditor, Deloitte & Touche, did not stand for re‐election and the company appointed KPMG. KPMG completed its audits of the company’s 2008 and 2009 financial statements, and in 2009 the company filed its 10‐Ks for those years. Aspen was re‐listed on the NASDAQ in February 2010, coincident with its filing of the 10‐Q for the December 2009 quarter, setting off the period of positive performance that contributed meaningfully to our returns in Q1 2010.
Upcoming potential catalysts include a decision by private equity firm Advent regarding the exit of its 33% stake in the company (which could increase the stock’s trading volume), potential inclusion of the stock in nationally recognized stock indices, and Aspen’s continued penetration of its customer base with the new aspenONE licensing model which entitles subscribing customers to its entire suite of engineering, plant operations and supply‐chain software, including future upgrades.
Read the complete letter:
Third Point Q1 2010 Investor Letter