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September 5, 2011 Analyst: Troy Oberholtzer

September 5, 2011 Analyst: Troy Oberholtzer. Introduction. International supplier of software and e-commerce solutions to the insurance industry As of Dec 30, 2010: 71% of Ebix revenues come from on-demand insurance exchanges Most Recent Merger: A.D.A.M. Inc. Feb. 7, 2011

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September 5, 2011 Analyst: Troy Oberholtzer

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  1. September 5, 2011 Analyst: Troy Oberholtzer

  2. Introduction • International supplier of software and e-commerce solutions to the insurance industry • As of Dec 30, 2010: 71% of Ebix revenues come from on-demand insurance exchanges • Most Recent Merger: A.D.A.M. Inc. Feb. 7, 2011 • Ebix’s goal is to be the leading backend powerhouse of insurance transactions in the world.(http://www.ebix.com/ebix_intro.aspx)

  3. Key Stats • Recent Price: $15.33 • Purchase Price: $24.50 • Intrinsic Value: • Shares: 125 • Loss: $1,156.24 • Port Weight: 2.9% • P/E(ttm): 8.79 • D/E: 0.1 • NPM: 46.54% • ROE: 26.41% • EPS Growth 3yr: 55.7%

  4. Industry Comparison EBIX Industry P/E: 26.5 P/B: 3.5 EPS Growth 3yr: 17.8% NPM: 12.1% ROE: 14.0% D/E: 1.7 • P/E: 8.79 • P/B: 1.7 • EPS Growth 3yr: 55.7% • NPM: 46.54% • ROE: 26.41% • D/E: 0.1 Morningstar.com

  5. Recent News • Multiple class action lawsuits filed in late July/early August claiming Ebix artificially inflated stock prices by making inaccurate claims about the company’s organic growth with growth being caused by inorganic acquisitions (which were made without proper internal controls). Ebix is also accused of achieving tax advantages by violating US GAAP. Ebix is also accused of materially and improperly inflating cash flows and gross margins. http://www.reuters.com/finance/stocks/EBIX.O/key-developments/article/2382053

  6. Recommendation • Ratio analysis indicates that Ebix is outperforming its industry and has solid financial health. • However, due to recent news, Ebix’s financial honesty has come into question. This challenges the credibility of the above ratios that the analysis is based upon. • First instinct would be to sell but I think we need to seek advice on how to handle situations in which the company’s financial reputation comes into question. • Recommendation: Moderate Sell

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