Intelligent Systems (INS) – “Small and Focused Wins”

Sector:      Technology – Internet Services and Infrastructure

Price/Market Cap:   $40.71 / $362M

Target Price/Implied Upside: $92 / 125%

Thesis

Intelligent Systems (INS) has established itself as the go-to payments-processing software provider specializing in complex credit. Previously under the radar, the company is attracting attention after being tapped by Goldman Sachs and Apple to support the new Apple Card.  The announcement was a whale for the company and, if the partnership is successful, could set Intelligent Systems on a path to multiply in size while attracting other large clients seeking highly flexible and customizable software to manage authorizations, fraud identity, interest and rewards calculations, and other merchant processing functions. Intelligent Systems’ CoreCard software was purposely built to uniquely address the rapidly evolving merchant processing market with solutions that other large software providers are not built to handle.  They have made investments in their software technology that create a barrier to entry for competitors.

Defying Gravity

Overall, 2019 was quite a year with most indexes increasing by roughly a third.  From a historical perspective, the period from 2010 through 2019 was the first contiguous decade in the history of the market without a recession[1].  During this period, we had only one (2018) negative year.

The gains of 2019 were phenomenal in light of the many headwinds facing investors heading into, and throughout, the year: