FICO - Fair Isaac Corporation

Host is extremely bullish, citing the aggressive $2B buyback program (largest in company history) as a strong signal from management that the stock is deeply undervalued. He draws direct parallels to 2021 when a similar buyback pattern preceded a 5x rally from $400 to $2,000. FICO doubled its prices driving massive revenue/EPS growth, guidance was raised to 23% revenue and 35% EPS growth, and the forward P/E of ~20-23x is historically cheap for FICO. The host has been actively buying the dip and plans to continue below $900.

Chuck Akre bought Fair Isaac, the company behind FICO credit scores, described as a software and data business with deep competitive advantages.

Host is personally a shareholder and bullish. Stock is down due to three concerns (VantageScore competition, price gouging regulation, previous overvaluation) none of which have materially impacted the business. FICO still has 98% market share. Revenue, net income, and free cash flow are reaccelerating. Forward P/E of 25 is cheap relative to history (was 100). Company is doing its largest buyback ever. Akre has been buying the dip consistently from $1,700 down to $1,100.

Very bullish after 50% drawdown. Stock is extremely cheap with PE of ~20. Revenue reaccelerated, biggest buyback ever, margins at all-time highs. Regulatory investigation and Vantage Score competition are concerns, but believes FICO will maintain monopoly. Would buy more below $900.

Cited as an example of an expensive stock with extremely high valuation multiples. Used to illustrate that a 50% drop from overvalued levels brings it back to fair value, not cheap.

Host is actively buying the dip, seeing a repeat of his successful 2021 strategy. He believes FICO's forward P/E of ~28 is reasonable for a near-monopoly compounder with double-digit growth, expanding margins (58% operating margin), and strong free cash flow. The new success fee pricing model could improve margins further. Management's aggressive buybacks below $1,200 signal confidence.

FICO beat EPS by 14% with 60% YoY growth. Revenue beat by 10% with 38% YoY growth. Stock was up 5% after hours despite being in a significant drawdown. Described as a solid quarter.

FICO's forward P/E has collapsed from 80 to 20 due to regulatory fears and VantageScore competition, but Nour believes the moat remains strong. VantageScore has only 2 years of data vs. FICO's 12+ years, making it inferior for risk-averse lenders. FICO launched a counterattack pricing model (free browsing, $65 success fee). The business has 82% gross margins, 50% operating margins, and does massive buybacks. DCF base case shows 40% undervaluation with $1,370 fair value and 17-18% expected CAGR. Nour is actively buying dips with 5% portfolio allocation.

Nour is a shareholder (5% of portfolio) and is actively buying the dip. Believes the data moat (12 years of data vs 2 years for Vantage Score) remains intact despite new competition. Expects guidance to be raised from 26% to 36% EPS growth. Sees parallels to his successful 2021 investment. Will buy more if stock drops below $900-850.

Latest purchase, buying the dip as stock declines. Believes moat is intact, regulatory pressures will fade, and business fundamentals won't change significantly. Sold Lam Research to buy FICO.