Fasten your seatbelts, Bill Foley is buying stuff again. That would be William P. Foley, the title insurance entrepreneur and longtime chairman of Fidelity National Financial Inc. (FNF), Jacksonville, Florida. And spoiler alert: It's a sports team. [paragraph] Foley has a whole career of corporate spinoffs, initial public offerings (IPOs) and all manner of capital market moves under his belt. Actually, that's putting it mildly. [paragraph] Just last year, in May, he spun off Black Knight Financial Services Inc. (BKFS) in an IPO. The basic components of BKFS had most recently spent time under FNF's corporate umbrella. But the essential thing to know here is that Black Knight Financial Services is made up of businesses that have a long history in the Fidelity stable of companies. [paragraph] To go back over that history might be helpful, or possibly just confusing, but here's the gist of it: Foley reacquired Lender Processing Services (LPS) and merged it with FNF's ServiceLink division in 2014, and renamed the combined group Black Knight Financial Services. That lasted until May 2015, when it was time to reshuffle again and the decision was made to spin off the technology, data and analytics components of the companies that had been put together into a publicly traded company--named Black Knight Financial Services. The mortgage services that ServiceLink provides stayed under the FNF umbrella.
Today, the spun-off Black Knight Financial Services, Jacksonville, Florida, is going gangbusters. Traded on the New York Stock Exchange under BKFS, the stock price was up roughly 19.24 percent year-to-date as of late August. That is more than triple the roughly 6.35 percent gain for the S&P 500 index for the same period.
The spin price of the BKFS stock when it debuted in May 2015 was $24.50. As of midday trading on Aug. 26, the price per share had risen to $39.42.
But more recently Foley's checkbook has wandered even farther afield. He's done mortgage technology, title insurance and a family wine business--not to mention restaurants. But now he's onto something really different: a professional hockey franchise. That's right. A new startup NHL hockey team was awarded to Foley and it will be based in Las Vegas. The media hoopla has been pretty much nonstop.
As of mid-August, the name game was well underway. Speculation swirled in the Vegas media around a variation on the Black Knights theme.
Foley is a West Point grad and the Army's sports teams are named the Black Knights. But for a variety of reasons, that name seemed unavailable for the new hockey team. (London Knights in the Ontario Hockey League already has dibs on that name in Canada.)
At press time, the team's name had not been announced. All we know is that the Vegas team, with Knights as part of the name, will hit the ice at T-Mobile Arena.
And while Foley has been caught up with the countless details involved with launching a new professional hockey franchise, Tom Sanzone has been at the helm of Black Knight Financial Services acquiring his own set of companies to fill gaps in BKFS' extensive mortgage technology offerings.
With an impressive Wall Street resume, Sanzone is a careful student of earnings, growth opportunities and management strategies. But he came to Black Knight with little or no knowledge of the mortgage business. Yet that hasn't seemed to hold him back one bit.
As chief executive officer and president of Black Knight, analysts are saying a lot of good things about Sanzone and his team's accomplishments since the spin. The stock price kind of speaks for itself.
And while Foley clearly serves as owner (FNF retains a 55 percent ownership stake in BKFS), Sanzone is a much more hands-on coach. (Although I'm pretty sure he owns a few shares himself.)
And his coaching tenure comes at a time of heavy regulatory demands, intense profit pressures and dramatic technology innovation.
Even so, Sanzone has found a way to navigate the mortgage industry's current challenges and deliver solutions that seem to be resonating. The company's second-quarter financial results were strong and on Oct. 25 when the company reports again, more good numbers are expected.
That's partly why Piper Jaffray & Co., Minneapolis, rates the stock an "overweight" for investors.
We talked to Piper Jaffray Senior Research Analyst Jason Deleeuw, based in Minneapolis, to get more details about what Black Knight has been doing right. And then we had a chance to sit down one-on-one with Sanzone for a deep-dive look at the progress since the spin.
It turns out it's a good time to be in the mortgage technology space, especially if you can deliver solutions that enhance lender efficiency. The other thing lenders are desperately looking for right now is reliable enterprise technology that can address regulators' serious ongoing angst about the entire mortgage business. The fewer times you need to rekey customer information between your operating silos--each with their own niche systems--the better. Because if you can sync everything up seamlessly with technology, that means fewer chances for error and less regulator trouble.
BKFS offers both those things. Plus, Black Knight has built a deep bench of loyal customers over time. Add to that very predictable revenue streams from long-term contracts, and you start...