GBST (ASX:GBT) is an Australian based fintech company with two main businesses across securities trade clearing and Platform technology solutions. The business has faced a number of issues over the past 18 months, most recently announcing a significant cost blowout in relation to a R&D project on its Platform technology product. The market reacted severely to the announcement, and the share price fell 45% in the days following. We felt that the market had overreacted to the news and used the sell off to acquire a 6% shareholding in the company.

In our view, the market was ascribing very little value to the Platform business despite the fact the business continues to generate recurring license fees and has relatively sticky clients. Further, GBST’s net cash balance sheet provides comfort that it will be able to fund the higher R&D spend over the next two years. Importantly, feedback from existing GBST Platform clients in relation to the R&D investment has been supportive. Whilst the share price has recovered 35% in the months since we established our position we continue to see value and GBST remains a position in the Fund.