A Cloud-Based Fintech Champion Trading at a 40% Discount: What Totem Point Management Sees in BILL Holdings

The Setup: Business Thriving While Stock Languishes

BILL Holdings (NYSE:BILL) has become a case study in market mispricings. While shares have plummeted 38% over the past 12 months—far underperforming the S&P 500’s 15% gain—the underlying business continues executing with quiet consistency. This disconnect between deteriorating stock performance and resilient operational results has apparently caught the attention of value-oriented investors.

New York City-based Totem Point Management recently wagered capital on this divergence, establishing an initial position of 71,225 shares during the third quarter. According to SEC filings released November 14, the position carried a market value of approximately $3.77 million as of September 30, representing 3.36% of the firm’s total 13F assets under management.

Why This Matters: The Numbers Tell a Different Story

At Friday’s closing price of $55.23, BILL’s stock chart screams distress. Yet operational metrics paint a starkly different picture. In its most recent quarter, the company posted $395.7 million in total revenue—a 10% year-over-year increase. Core revenue growth accelerated further at 14%, driven by expanding transaction volumes and growing subscription adoption.

The payment processing business processed $89 billion in volume during the quarter alone, serving just under 500,000 businesses globally. These aren’t vanity metrics; they reflect genuine platform traction and customer stickiness even as equity investors have grown bearish.

The Business Model: Recurring Revenue With Transaction Upside

BILL operates a dual-revenue architecture that insulates it from cyclical headwinds:

• SaaS Subscriptions: Cloud-based automation software for accounts payable, accounts receivable, spend management, and payment workflows for small and midsize businesses
• Transaction Fees: Monetization of the payment network itself, which now processes nearly $90 billion quarterly

This subscription-plus-transaction structure generates predictable recurring revenue while capturing upside from transaction volume growth. The company serves accounting firms, financial institutions, software vendors, and an increasingly broad ecosystem of small and midsize business clients.

Totem Point’s Portfolio Context: Selective but Deliberate

Placing BILL outside its top five holdings doesn’t diminish the conviction signal. Totem Point’s concentrated portfolio reveals a thesis around high-quality compounders trading at reasonable valuations:

• NVIDIA (NASDAQ: NVDA): $14.28M | 12.7% of AUM
• Taiwan Semiconductor (NYSE: TSM): $12.10M | 10.8% of AUM
• Take-Two Interactive (NASDAQ: TTWO): $11.10M | 9.9% of AUM
• Spotify Technology (NYSE: SPOT): $10.17M | 9.1% of AUM
• Micron Technology (NASDAQ: MU): $9.79M | 8.7% of AUM

The BILL allocation—though smaller in absolute terms—sits alongside genuine secular growth franchises, suggesting management views the fintech operator as offering comparable durability at compressed valuation multiples.

The Paradox: Margin Pressure Masking Expansion

BILL’s financial snapshot reveals why the market has cooled:

Near-term profitability remains modest relative to revenue, likely reflecting investments in platform scale and geographic expansion. Investors accustomed to SaaS growth stories commanding premium valuations have punished BILL accordingly. Yet this same margin compression may signal aggressive reinvestment into a rapidly expanding addressable market.

The Underlying Thesis: Growth Compressed Into Recovery

What separates structural decline from cyclical disappointment often reveals itself in quarterly results. BILL’s continued revenue acceleration, paired with steady adoption metrics, suggests the market is pricing in worse outcomes than fundamentals warrant.

The $55.23 stock price caps expectations aggressively. Should the company eventually demonstrate improving unit economics and operating leverage—neither unlikely given the subscription plus transaction model—the current valuation offers asymmetric upside for patient capital.

Totem Point Management’s entry appears less speculative rebound trade and more calculated bet on a fintech infrastructure play whose competitive moat (embedded payment processing, accounting software integration) remains intact despite near-term sentiment erosion.