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A

Review of Constellation Software Inc

APR 03, 2025 - The company has been really innovative in the capital allocation playbook by switching to spinning out “mini Constellations”, which encourage not only entrepreneurship but also autonomy and operational efficiency at the managerial level. Software businesses have limited exposure to tariffs and geopolitical uncertainty. Despite a challenging operating environment of a potential recession, CSU’s portfolio of businesses is expected to continue to do well due to the recession-proof nature of VMS businesses. CSU is a high-quality name to own amid a volatile market that balances both upside potential and downside protection. We think CSU will compound capital just fine over time. However, given its current market capitalization of more than $100 billion and an all-time high in multiple valuations, the compounding effect will be decent but not as impressive as it used to be, which investors need to have a realistic expectation. We think the investment thesis in CSU as a long-term compounder remains unchanged, we are maintaining our rating at “A”.

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5i Recent Questions
Q: PNG questions:

- What was the catalyst in mid-2024 that finally created a break-out in stock price?

- Why is it such a high-conviction 5i Research stock now compared to back a few years ago ?

- Do we know anything about the quality of management?

- What is the quality of the balance sheet ?

- How out of line is the current valuation of this stock ?

- Does it have similar runway potential that a LMN and TOI might have (with reference to success of CSU) ? ......acknowledging of course that they are in different sectors.
Read Answer Asked by James on July 03, 2025
Q: BN is sitting at 7.5%, AXON - BKNG are 5% and the rest are 3% positions totaling approx. 83% of my stock assets. I have some 1-2% positions in my cash account (GSY, ATZ, PRL, CLBT, HPS.a, BNS,SU, TMDX, TVK and CNQ. I'm heavy tech, financials and industrials going into H2 2025. Would you add to, remove or change anything is this was your account (assuming you're 52 and plan to retire in 8 years). Not looking for a person allocation but rather if it was you, what might you be looking to adjust, if anything. Note I have no utilities currently. Thanks and have a great weekend.
Read Answer Asked by Don on June 24, 2025
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