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  5. CSU: Most of my investing style is focused on Canadian high quality compounders and the US market using ETFs. [Constellation Software Inc.]
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Investment Q&A

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Q: Most of my investing style is focused on Canadian high quality compounders and the US market using ETFs. I have really tried to drill in my head that drawdowns of 20-30% happen quite frequently to quality compounders for no significant reason other than they can randomly occur. I try my best to ignore them and focus on the long term future. My biggest holdings are CSU, TOI, and LMN. Instead of focusing on the current drawdown, where do you see these companies in a 5-10 year time horizon? Will CSU be able to acquire as many companies? Will it compound as quickly as it has before. Do you feel that TOI and LMN will be that faster growers in the future compared to CSU. What is the possibility of future spin outs for CSU? So far the 2 spin outs have worked well and followed CSU’s acquisition and incentive playbook.
Asked by Todd on August 20, 2025
5i Research Answer:

Despite recent weakness and concerns on AI-threats, we are fairly confident these companies still have good long term potential. Much has been discussed about CSU's ability to keep up an M&A strategy. But (from company comments) there are still thousands of possible deals it can do. It has discussed in the past stopping its dividend in order to do a 'big' deal. AI worries may actually increase the deal pool as well. This would also apply to TOI/LMN though being smaller they already have a larger pool of potential acquisitions than CSU. CSU has discussed the possibility of more spin outs and must be pleased with its first two. There is no timing on this, however.