4 Things This Billionaire Investor Wants You to Know About ADP

There's a juicy melodrama playing out at Automatic Data Processing (NASDAQ: ADP). While the company has actually performed quite well over the past few years, activist investor Bill Ackman thinks it can do much better, and recently purchased an 8% stake in the company. He backed his thesis up with a 168-slide, three-hour presentation. I read it (you're welcome!) to distill the relevant points.

Ackman's main point is that Automatic Data Processing, the leader in payroll processing, has not invested correctly in software and technology, which has allowed upstart competitors such as Workday (NYSE: WDAY) and Ultimate Software (NASDAQ: ULTI) to release better products and take market share.

Ackman believes that ADP, started by accountants, has brought innovation through acquisitions, which have never been fully integrated. Many of these systems rely on legacy COBOL code from the '90s, which not only makes them difficult to use but also makes it difficult to attract top software engineering talent.

Source: Fool.com