ValueACT recently started a new activist campaign over at Microsoft, but I believe there’s still inherent value to be found in the hedge fund’s other major stake in tech. In late 2011, ValueACT took a 5% stake in Adobe Systems Incorporated (NASDAQ:ADBE) and since then the stock has outperformed the broader market by 100%.
ValueACT Capital has a 31.3 million share position in the stock, which makes up 15.4% of the fund’s public equity portfolio. ValueACT owns 6% of Adobe Systems Incorporated (NASDAQ:ADBE). Currently, ValueACT’s position in Adobe Systems Incorporated (NASDAQ:ADBE) makes up a larger position than Microsoft.
ValueACT also has a few major hedge funds as fellow owners, including Viking Global with 7.1 million shares, Luxor Capital 2.8 million and billionaire Ken Griffin’s Citadel Investment Group with 2 million.
Adobe Systems Incorporated (NASDAQ:ADBE) creates software and services for creation, distribution, management and tracking of digital content. Its staple product includes Creative Suite and the company’s latest initiative has been to switch form a pay-upfront model to a subscription model.
Adobe Systems Incorporated (NASDAQ:ADBE)’s revenue is expected to be down 7% in fiscal 2013 as it shifts to a subscription model. The fall in revenue is likely to persist for several years as the timing of revenue is shifted, but the long-term benefits are a big positive. Its digital- media segment is its bread-n-butter, making up 70% of revenue. And what this segment does is it enables small businesses and enterprises to create content, deliver it, and ultimately optimize it.
Where Adobe Systems Incorporated (NASDAQ:ADBE) caters more to the graphic-design market market, Autodesk, Inc. (NASDAQ:ADSK) is another major software business, focusing on engineers and the like for creating designs in the manufacturing, architectural and civil- engineering markets. Around 85% of revenue comes from indirect channels (i.e. re-sellers).
Meanwhile, the company is also relatively diversified geographically, with 35% of revenue derived from the Americas, 40% from Europe, the Middle East and Africa, and the remaining 25% from Asia.
Revenue is expected to be up a modest 4.4% in 2012, but growth should ramp up nicely in the future as Autodesk, Inc. (NASDAQ:ADSK) moves to incorporate social- and mobile- computing offerings. One of the big tailwinds for Autodesk, Inc. (NASDAQ:ADSK) should be a rebound in the construction and infrastructure markets, including increasing urbanization of emerging markets.