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  5. CSU: All 3 stocks have recently been down and are continuing to drop today (Tuesday). [Constellation Software Inc.]
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Q: All 3 stocks have recently been down and are continuing to drop today (Tuesday). Your blog on the CSU/Leonard call about AI recapped what was said and indicated premiums assigned to these stocks may be lowered. Looks like it's now underway. I was hoping for more thought on what might happen in the future? As many of your customers own these stocks, it would be nice if 5i could issue quick reports on them. Are they still rated high or have they gone down a notch, or two or three? Are they rated buy, hold or sell? Where does 5i see these stocks' prices in 3, 6 and 12 months from now? I realize there are many unknowns and predicting the future is tough, but 5i has done this generally quite well in the past. These 3 stocks appear to widely held and deserve more attention at this time.
Asked on September 23, 2025
5i Research Answer:

The software industry in general has declined as a result of the fears of AI, but from the conference call, one of our main takeaways is that AI is expected to expand, not replace, software budgets. We feel the current sentiment shift and pessimism around software names is likely overdone, but negative momentum can beget negative momentum for longer than warranted on a fundamental basis. 

We can overanalyze the conference call, or dig into its individual business units, but the reality is that this is not CSUs first major decline. It has seen several 20%+ declines from its peak over the past 20 years, and yet it has still compounded its share price by over 30%. 

We continue to like CSU, LMN, TOI, and for long-term investors that want exposure to high-quality software names that can navigate a changing tech landscape, we would be comfortable adding or initiating a position in these names today. Over the near-term, we cannot accurately predict what may happen, but we feel that looking out one year or more, these prices will present strong dip buying opportunities for investors.  

Below is a chart showcasing CSUs historical drawdowns, and its share price. We can see that it has had several 20%+ declines over the years, and it has bounced back each time, historically. 

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