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Advent Software (ADVS) is a $1.7 billion leading provider of enterprise solutions for the investment management industry. Their 5,000 clients in 60 countries include all types of asset managers, broker-dealers, fund administrators, and independent advisors. Founded in 1983, Advent was built out of a need to automate the then highly manual portfolio accounting function in the investment management business. And they were among the first to innovate cloud-based solutions for the industry.

The stock has been a Zacks Rank No. 1 (Strong Buy) or No. 2 (Buy) since mid-February when it was trading at $26. And here's a three-year monthly chart that shows the momentum breakout above 2011 highs at $31:

The Portfolio Manager's Faithful Servant

You can think of Advent as the essential technology platform for the global investment management industry, which has unique and complicated accounting, regulatory, and information reporting demands where errors with data are unacceptable in firms that must operate with perfect accountability to their clients at all levels in financial markets. And when you think of the thousands of changing securities prices and positions a firm might have to deal with every day, you can imagine how robust and redundant the software has to be to maintain flawless reporting in real-time. One of Advent's biggest clients is the giant TIAA-CREF pension system.

Steady Growth

In 2005, Advent introduced their next-generation portfolio management solution, Advent Portfolio Exchange. Known to clients as APX, it was the first solution to integrate portfolio accounting, reporting, performance analytics, and client relationship management -- effectively linking portfolio managers, operations, and client service staff on a single database platform. The company's revenue is split 39%, 33%, and 28% between the traditional asset management, alternative asset management, and wealth management end markets, respectively.

The fall of 2008 saw their revenue trough in the Great Recession at $58 million and the recent first-quarter haul of $92.5 million marked a 6.4% year-over-year growth rate. Peak revenue growth, since the recession, hit 17.5% in the fourth quarter of 2011. So while top-line growth has slowed, EPS growth continues as gross profit margins have expanded in the past year from the 63% to the 69% in the most recent quarter.

Here's a look at the earnings estimate story in the past five years, which is on pace for 64% growth this year and projecting 15% growth into 2014:

Premier Hedge Fund Solution

On Monday, Advent was named "Best Technology Fund Accounting and Reporting Software" at the 2013 European Hedge Fund Services Awards, hosted by HFMWeek in London. This is the fifth year in a row Advent has received this award, recognition of its status as a premier hedge fund solution.

"With pressure on the frequency and accuracy of fund reporting increasing all the time, we felt the quality of Advent's fund accounting software made it a compelling winner in this category," said the panel of judges from HFMWeek. "An exceptional solution from an impressive firm."

Big Money on the Prowl

Who would know better than a large money manager how good Advent software is? TPG Advisors, a $55 billion private investment fund, revealed in early May their 7.5 million share, 14.5% stake, in ADVS. This prompted me to buy it for the Zacks Follow The Money (FTM) portfolio.

Based in Fort Worth, Texas, and founded in 1992, TPG prides itself on a unique "contrarian value" philosophy. They clearly want to help Advent grow and I'll be watching to see if they keep buying shares to assume a 20% "significant" interest. While the forward valuation multiple at 31x is rich compared to financial software peers, Advent's achievements and growth have caught the eye of many institutional investors.

With its premier solutions and sub-$2 billion market cap, it could become an acquisition target in an ocean of technology behemoths with huge cash war-chests.

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Source: Bull Of The Day: Advent Software