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Who is right on Sage, Terry Smith or Nick Train?

Two of the UK’s top fund managers have diverging views on the stock
Who is right on Sage, Terry Smith or Nick Train?
  • Ongoing SaaS transition looks enticing in the long term
  • But investors should brace for bumps along the road
Tip style
Growth
Risk rating
High
Timescale
Long Term
Bull points
  • Leading market position in the UK 
  • Ongoing transition to a more attractive subscription model 
  • Highly cash-generative and strong balance sheet
Bear points
  • Tough competition, especially from industry giant Intuit (US:INT)
  • Transition is risky and weighing on profitability

For UK tech investors, Sage (SGE) has been a reliable bet for decades. The accounting software company, which was founded in 1981 and listed in London eight years later, has been a stalwart of the UK’s diminutive listed tech sector. But compared with the new generation of tech businesses flocking to the market, it is starting to look rather sluggish. Views on the stock are starting to diverge, most strikingly among two of the UK’s most revered investors. 

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