Constellation Software Inc. (CSU.TO)

They do a lot of healthcare/government payroll sorts of things. They make organizations work more efficiently through software. This company is a huge acquirer. The founder still works at the company and has $500 million worth of stock. They don’t issue stock, the cash flow is great, balance sheet is really, really strong, they deliver on expectations, but they trade only in Canada and their earnings are in US$. They have had 11 days in a row where their earnings have gone up. Dividend yield of 1.06%.

Had been a long-term holder of this, but recently sold it when it broke down technically. This also has a lot to do with where we are in the market. Has been a fantastic performer, but doesn’t trade at a cheap multiple, so could be susceptible to lower prices.

(Market Call Minute.) This would be a Sell at this time, on valuation and a slowdown on deals.

There are certain business industries where you have recurring revenue, where clients are very, very sticky, and getting organic growth is relatively difficult, so it is cheaper to acquire.

(Market Call Minute.) One of the best companies in Canada. They have never issued stock in 10 years and they just make money and cash flow.

At some point you get too big and the growth numbers come down. Maybe the pause in the last few months was the market seeing this coming. He is not sure on this one.

Still likes this and would have no problem recommending it. Stock seems to be performing well. An outstanding great buy and hold company.

This stock hits 2 of his biggest metrics, price momentum and value. Scores in the top 10% in momentum and in the top 20% on value. ROE is off the charts at 50%, and has historically had a strong Return on Equity for a long period of time. This doesn’t look expensive on a multiple basis.

(A Top Pick Oct 24/14. Up 84.82%.) The management team is so good at allocating capital.

This continues to see all-time highs. It is really a story of making the right acquisitions and integrating them into their suite of other companies that they have. Have executed extremely well and doesn’t see any reason why that will not continue. The risk is that you are paying such a premium because the stock price has run up so much, but it is a growth name and you could have said that a year or 2 ago and missed out on some good gains. Trading at 26X estimated earnings, which is justified because of the future momentum or the acquisitions being digested.

This has been a great story. The caution for him is that it is growth by acquisition. The growth they have been showing really comes from a number of acquisitions, and most of them have gone extremely well. He prefers to have his technology investments in the US where there is a lot more geographical diversification and a lot more size and scale. He would be very cautious on this.

(A Top Pick June 19/14. Up 100.22%.) Currently this is correcting with the rest of the market. A fabulous business model and an extremely competent/astute management team. It has had a big correction, so you are getting in at about $500. They are raising debt right now, presumably to make some acquisitions. They are really smart allocators.

Looking at the chart, obviously this has been a good stock to own. There are no reasons to Sell. A great looking chart.

This has done a phenomenal job. Probably one of the highest compound return stocks in the last 3-4 years. They can probably continue to do what they are doing, but not at the same rate. He is happy to continue holding this.

When he originally recommended this, it was on 7 or 8 times earnings, but is now on about 28 times earnings. Considers this management to be the best capital allocators in Canada. They are raising debt right now, and why would they be doing this if they were not going to be doing big acquisitions. You won’t know about these until the morning the press release comes out, and the stock will pop.