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Constellation Software Inc. (CSU $3,324.75)
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Topicus.com Inc. (TOI $125.91)
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Lumine Group Inc. (LMN $26.16)
Q: Constellation Software and Lumine Group were the only two companies in our Portfolio, which had a negative return during 2025, being a rare event after years of spectacular growth. Software stocks, in general, have also been weak, for past several months, due to AI related fears. Some market watchers are hopeful to see a recovery in software stocks, during 2026 and Tech-Software ETF was up in Wednesday's trading by 1.23%, against a flat tape at Nasdaq.
1. Do you believe that investors may shake off the concerns with Constellation Software group and shares could recover in 2026, from last year's steep losses ?
2. With our combined holding down to 10-12% (CSU 7%, TOI 2.5% and LMN 2.5%), due to price declines, and road to recovery at least a few quarters away ( plus a need to raise some cash), would it be wise to trim, across the board, or consolidate into one/two names and eliminate the other ?
Thank You
1. Do you believe that investors may shake off the concerns with Constellation Software group and shares could recover in 2026, from last year's steep losses ?
2. With our combined holding down to 10-12% (CSU 7%, TOI 2.5% and LMN 2.5%), due to price declines, and road to recovery at least a few quarters away ( plus a need to raise some cash), would it be wise to trim, across the board, or consolidate into one/two names and eliminate the other ?
Thank You
5i Research Answer:
We do think share prices could recover nicely over time. However, this assumes acquisitions continue or (better) speed up, and there is no deterioration in general business. Any slowdown would keep investor angst about AI encroachment high. We would expect better things in 2026, though as noted it may take awhile to fully recoup 2025 losses. In terms of selling, we think an across the board trim makes more sense, though we would see 2% as the low point of weighting, just so the shares will have a portfolio impact in a recovery.