Rebecca Teltscher Constellation Software Inc. CSU-T DON'T BUY May 15, 2025

She really likes it . It has done a good job of acquiring and managing niche companies in the vertical market business. Also organic growth has increased. Has strong free cash flow. Return on Capital is one of the best in the market. Scores 9 out of 10 on fundamentals.

Phenomenal compounder. Unique business model. Via its capital allocation infrastructure, king of doing the small deals that private equity can't do. Grows at an exceptionally high rate, rarely goes on sale. Look at its price to cashflow, with 3% being his threshold free cashflow yield. Right now, it's around 2.3-2.5%, which is above his buy price.

Definitely buy on a pullback, and hold for a very long time.

He'd pick CLS, as it's in a nice upward trend with more potential upside a year from now. CSU is at a record high, which might be hard to get above.

The chart shows a definite uptrend, but the most recent high has stalled at the early-2025 high. That's okay. It's consolidating. Normal. If we break the current level, we're likely in for another run upwards. Hold if you already own. If not, keep an eye on the last low of $4,500.

Can't argue with the chart. Now hitting its old high. Sort of levelling off, might be in one of those consolidation periods. It did this back in 2022. Net-net the stock's been in an uptrend for a long time, no reason to be concerned. 

It is a really good name to own and is a champion in Canadian equities. He is not concerned about a dwindling number of software companies for it to buy and feels there are still plenty.

12-month price target of $5290. Definitely can buy it here, but also around $4200. Don't go all in today. Fantastic report on Monday. The slide is probably due to people taking some profits plus options trading.

Really big move, a leader to the upside. Now showing signs of stalling and breaking down. Reaffirms his view that we're in a corrective phase. Moved below the 200-day MA, not a great sign. Doesn't mind nibbling here, but expects a better opportunity in the next 1-2 months as we get through September and even into October.

He'd definitely be looking to add around $4250, the support level of the tariff tantrum back in April. 

Very aggressive M&A strategy. Some of the best capital allocators in the business. Optimizes costs in acquisitions to increase margins, but doesn't necessarily invest in growth. So organic revenue has struggled, and we need to analyze how long this will last. Vertical synergy strategy works well.

Key metric to look for is reacceleration of organic revenue, rather than just M&A revenue.

Utmost confidence in management. Massive compounding shareholder value over time. Recent results were good. Behind the pace on M&A goal for the year. Could be getting lost amidst AI-driven stories. Vertical markets mean its organic growth rate is low.

Continues to be long and strong. Not concerned by recent pullback.