Constellation Software Inc. (CSU.TO)

One of the best run tech companies. Growth by acquisition. Not cheap at 35x earnings. Beautiful chart. Top-drawer management. If you’re not worried about the valuation, it’s fine to own it.

They've bought a lot of little companies that specialize in "vertical applications" which fulfill a single purpose and do it well. They then divided them into six divisions they manage. They could aquire far more, so they have a big possibility of growth. The street didn't like their last quarter, but investors should look at the long-term: can they use their capital wisely to make these acqusitions? Yes. Based on the past, they are smart acquirers with 31% ROE on these purchases. Smart managers. (0.5% dividend, Analysts' price target: $1,073.58)

As long as its longer-term uptrend remains intact, he'll continue to like it, and consider the near-term pullback as a buying opportunity. (0.6% dividend, Analysts' price target $1,083.64)

This is a good time to buy, he thinks. Growth has been exponential and there is a pristine balance sheet. There is no problems with this company and is a very attractive buy. He thinks the lack of quarterly updates is reasonable as he thinks people should not focus on the last 90 days performance.

They reported earnings recently and the stock is down as a result. They are moving away from quarterly management calls and thinks this is strange. They are trying to make acquisitions and may have felt they were giving away too much information. A great stock to own, continue to hold it for the long term. It is cheaper than similar quality tech companies in the US.

It is a really well run software company. They buy up companies and cut costs. The market has awarded them a very high valuation multiple and they may have trouble continuing to grow as quickly.

He held this for close to seven years, but sold it back around $700. He thought their niche was based on smaller acquisitions, which no longer works at this scale of business – it is hard to move the needle now.

Despite the rapid share price rise, he still thinks they are undervalued. They have been acquiring companies very profitability. As long as they compound shareholder wealth at 30%, their cash ROE is almost 100%. Don’t be put off by the high 60 P/E ratio. Yield 0.5%. (Analysts’ price target is $964.42)

First Canadian company trading over $1000. The chart looks really good from the early-April rally point. It is looking a little over-extended and could be subject to a pause. A 50 day moving average would be a good reduce point to lock in gains and the 100 day as a stop.

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.