Aspen Well Positioned for Oil and Gas Rebound

Dan Romanoff: We see wide-moat Aspen Technology as an interesting niche software company selling into the industrial process automation vertical market. Aspen’s software optimizes asset design, operations, and maintenance in complex industrial environments. The AspenOne software platform helps improve process-oriented plant efficiency, and thereby lowers capital intensity, increases working capital efficiency, and improves margins. This is high-end software that competes against offerings from industrial automation companies like Siemens, Emerson, and Schneider Electric.

Shares have gapped up in the months since our mid-December launch. Most of that has occurred since tensions increased with Iran. Given that Aspen software is used predominantly for the oil, gas, chemical, and energy industries, at times shares become decoupled from the underlying business fundamentals and trade based on the volatility of oil. We now see shares as overvalued.