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Actua: Buybacks, Balance Sheet And Growing SaaS Business All Point To Upside

Jun. 15, 2017 11:59 AM ETActua Corporation (ACTA)3 Comments


  • Sum of the Parts equate to $22 on this $14 stock.
  • Massive repurchasing program at the current price suggests management sees the stock as underpriced.
  • Actua has over 20% revenue growth, 70% margins and 98% customer retention.


Actua Corporation (NASDAQ:NASDAQ:ACTA) is a sum of the parts SaaS story. ACTA has sold one of its four primary divisions for $133 million and in this article we outline what we see as the value of the remaining three divisions. We also look at the company's actions, which we see as supporting our thesis that Actua is significantly undervalued. We believe ACTA has over 50% upside from today's price of $14.10. The company has bought back over $140 million in stock in the last year, and has announced it has another $40 million remaining under its repurchase program. For the last five months ACTA has repurchased shares at ab average of $14.00 (see below).

Why are Saas Companies so Valuable?

Sticky Clients

As a SaaS company, Actua sales are subscription based. Wikipedia defines Saas as follows: Software as a service (SaaS; pronounced /sæs/) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. Saas companies are valuable because SaaS customers rarely leave. Instead, clients pay the fees every year and incorporate the SaaS services into their businesses. Once the customer is on board it is hard for them to leave and adopt a new platform. In addition, once scaled, the margins, which are over 70% for ACTA, can be turned into cash flow (think of the power of Amazon (AMZN), and how the critics didn't understand that Amazon wasn't to be valued on a P/E basis).

Actua has 98% customer retention and 70% gross margins. These facts have impressed some of the best known institutional investors, who combined own 82% of the outstanding stock.

Sticky Investor Base

The top five institutional holders include:

Fidelity 5.921M (17%), Vanguard 2.698M (8%), BlackRock 2.661M (7.9% which bought heavy during Q1 '17), Dimensional Fund 2.510M (7.5%) and Capital World 2.234M (6.6%).

This article was written by

Kenneth Orr CEO, CIO and CRO – Series 65 Kenneth “Kenny” Orr is a graduate of Tufts University (’88 - Bachelor of Science) and completed case studies by Harvard Business School Executive Education Program - Concentration in Valuation and Strategic Acquisitions. Kenneth Orr joined a family-owned commodities trading firm called North American Agriculture Inc., and its sister company, Jake’s Products in 1988. Kenny’s roles included sourcing, buying and selling of physical commodities both domestically and internationally. In addition, Kenny led the acquisition of Jackson and Johnson, a leading ICC carrier in the northeastern United States, and sale of significant assets to cooperative Minnesota Corn Processors. During his tenure, which lasted five years, the company’s sales increased by 600 percent and the staff grew to 320 employees. Kenny became a shareholder in both companies. In 1993, Mr. Orr sold his interest in the companies and established his own investment banking firm. Kenny acquired Herold Securities in 1994. Herold was a Connecticut based broker dealer that focused on research. Kenny renamed the firm, First Cambridge Securities, and established offices in New York and Los Angeles, California. As chief executive Officer, Kenny built the firm to over 400 employees and more than 15,000 clients. Clearing through Bear Stearns, FCS quickly became one of Bear Stearns largest correspondents. FCS was an underwriter, syndicate member and or placement agent in billions of dollars’ worth of IPOs, secondary offerings and/or private placements. In addition to brokerage services, FCS maintained a proprietary trading desk, fixed income department and a research department. Co-underwriters and or syndicate members of FCS included Starr Securities, Fagenson & Co., Merrill Lynch, Bear Stearns, Montgomery, and Rausher Pierce. Notable under-writings and or initiated investment focus included, RentWay, which later sold to Rent-A-Center in 2003, and Ivax Corporation, which sold to Teva in 2005, creating the largest generic drug manufacturer in the world. After selling FCS, in 1997, Kenny invested through a venture firm he founded called Triumph. from 1997 through 2015, Triumph invested in micro to small public and private companies that showed promise in the fields of technology, oil and gas, biotech, and health care. Kenny became CEO of KORR Acquisitions Group, Inc. in 2015. KORR is an investment advisory and consulting company. Kenny passed The Uniform Investment Advisor Law Examination, Series 65, in 2015.

Analyst’s Disclosure: I am/we are long ACTA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: KORR Value and/or its affiliates are long ACTA. KORR reserves the right to buy or sell without updating this blog. Readers are encouraged to talk to an investment professional before making an investment.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (3)

Alta500 profile picture
Any thoughts on the Parchment/Credentials merger? www.prnewswire.com/...
beach_trader profile picture
Doesn't look like much downside, but with 3 disparate businesses, minority holdings, and adding in $46 MM NPVs of NOLs that may never get used, it is not screamingly cheap. If fair value is around $22, that is 37% discount to today's value - can't image this wouldn't trade with at least 25% discount.
One of the best researched, detailed & well written article about ACTA !. Couple of minor details that you might have overlooked.

1. $ in Escrow from Gov Delivery sale
2. Shares of Symbio thru sale of Freeborders in 2013.
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