Constellation Software Inc. (CSU.TO)

Insiders own a fairly large chunk of the stock and there have not been many share offerings. Management must invest directly in the stock – not just through stock options. They continue to deliver and have a great balance sheet. If you own it, you probably don’t want to sell it.

Acquisitions grow this company. Problem is, to continue growing at this pace, they must accelerate acquisitions, and it's getting harder for them to buy companies at the right valuations. Constellation itself has a high valuation which scares him off. That said, management is good at delivering growth.

They have done exceedingly well at growth by acquisition. It is valued for a continuation of a very high rate of growth. It could be vulnerable to more of a setback. Organic growth has not been as high recently as expected.

This trades outside of the multiples he would normally look at. At 60X, you have to ask yourself what sort of growth rate do you need to justify that kind of multiple. This company has basically existed on the acquisition strategy, and it trades outside of the multiple norms that he would normally look at.

He thinks the growth from acquisition is going to continue. Doesn’t look like they overpaid too much on their acquisitions. Still generating descent return. Not ridiculously overpriced. Balance sheet is quite good for a company that has done so many acquisitions. Think it’s in pretty good shape.

(A Top Pick Oct 20/16, Up 26%) one of his largest holdings. The best capital allocator in Canada. They upped their acquisition game, typically smaller companies. As they get bigger they either need to be acquiring larger or more companies to keep up with their growth rate. A tremendously run company. He still likes them.

They started buying some Canadian stocks because of companies like this. Great looking chart, maybe a little bit off the trend line. There could be a little pullback, and this could be an excellent buying opportunity if it does in fact have pull back. The Canadian tech sector is a little bit overlooked, and Canadian tech companies are a little less appreciated than their US counterparts.

A great company and very well-managed. A consolidator of software companies, and their strategy continues to work. (See Top Picks.)

CSU-T vs. FIH.U-T vs. GOOGL-Q. You have several different options here. He likes FIH.U-T’s exposure to India. He thinks India is one of the great overlooked growth stories. GOOGL-Q is one of the death stars. It has run to quite an extent. He thinks it has a good year to run yet. This is one that will be around in one form or another for a long time.

A very successfully run company. They’ve been very successful with their acquisitions. In term of a technology company they’ve done very well. From a value investor perspective the multiple is a little out of reach. Feels it could be very vulnerable to a significant downturn in the market and wouldn’t recommend buying at this point.

Grows by acquisition. Expected to have earnings growth of 17%. Earnings are expected to go from $27.50 to $32, which is a 17% lift, but you are paying a 22X price earnings multiple. In the top 10% of his database.

Debenture.Probably the best capital allocator in Canada. He likes this debenture, because it has a high yield of almost 7%. It is not well known and is under the radar. It also has an element of inflation protection. The yield is rather unique in that it is set at 6.5% plus the trailing CPI inflation rate. If you think inflation is going to pick up, you will get yield reset every year. Yielding 6.3%. (Note: This doesn’t qualify for the dividend tax credit, so Buy it in an RRSP, RIIF or a TFSA account.)

This has been a good name in the past, and continues to be good. They have a decent footprint in Europe which is really helpful. Continues to post good numbers and will continue going higher.

A growth rollup strategy. They have grown a lot by acquisition as well as some organic growth. Trading at close to 50X earnings. It only needs to stumble a little in order to cause a great deal of disappointment. In order to continue the growth and the appreciation that we have seen, they have to continue to surprise people on the upside and continue on the growth pattern.

Essentially a serial acquirer of companies, which they roll into their product offering. Focused on smaller size companies. He bought this at $100 a share, and sold it last year at $629. It is going to become increasingly difficult for them to move the share price higher.