Allan MeyerOpen TextOTEX.TOCOMMENTApr 01, 2016

Big selloff. At the centre of disruption by AI ecosystem. A lot of the software pricing models will change because now there's an alternative -- not necessarily "rip and replace", but contract renewals are much shorter. A lot of that churn will happen at the end of 2026.

A prove-me story. Change in leadership. These stocks look like value stocks, but at some point they become cheap for a reason.

Its long-term pattern has broken down and has broken below $55 instead of rebounding. It's now consolidating and could return to its former low, bad news for long-term investors, but good for traders.

Look elsewhere for other software that has sold off due to AI fears and that are growing faster. Open Text's growth has been through acquisition but it has not had a lot of success with it.

Not at the top of his software list. Organic growth is somewhat non-existent at 1-2%. Acquisitions stretched the balance sheet.

Instead, look to the US at ADBE, CRM. Or LSPD and SHOP in Canada. See his Top Picks.

Factors weighing on stock include AI. M&A is great, but de-leveraging has been a headwind. Slow organic growth. Management shuffle. Other companies provide better businesses, better execution track record, industry-leading solutions, and trusted management.

Room for some recovery, so you could wait for a bounce. Better opportunities to deploy capital.

He's traded this one over the years. But even down at this level, it's yet another software company. You have to let a couple of quarters pan out. Probably working hard to integrate AI agents into software. It does more information resource management than the planning, so it's a little less susceptible to the large-language models.

Price target may be enticing, but he wouldn't put money in.

Hasn't owned for a number of years -- mainly because there are lots of good tech companies, with the bulk of them outside Canada. They'd have a better path to good results. Take a look at MSFT, for example.

Suffering pain along with most software companies, which have been hit unless they report amazing earnings. He'd be careful. He'd probably repurpose that capital, and look for a higher-quality company at a better valuation.

No growth. They did well buying then spinning out Microfocus. Why isn't there a new CEO? They should buyback shares. It's on a short leash for him. Not a fan of their operations, but it's been so beaten up he would buy it now.

AI is starting to impinge on software businesses, which will hamper ability to sell as much or for as much profit. These stocks will continue to struggle over the next couple of years until they can prove that they can provide something over and above what AI may be taking away from them. 

Last summer his team exited their software companies completely.

Doesn't know it well, but the market fears that AI will replace these software companies. OTEX is trying to unload 15-20% of their business to be more AI-centric. He doesn't know if they will succeed or not. In this sector, he finds Salesforce more interesting, would avoid Oracle for its debt, and fears that Adobe's debt isn't wide enough. He prefers more senior software companies.

Wouldn't want to see it break the old support level. Already fallen a chunk. Are you going to hold on for another couple of bucks? Maybe, if you like the stock. Will probably find some support around $45-46. Definitely wouldn't step in. 

If you hold, have to decide if you want to wait to see if it can hold at next support level.

If you own it, hold on, but look for places to add at better levels -- $33 and, if you're really lucky ~$29. Embraced AI in a big way, which is expanding its own business as well as its clients. Able to maintain double-digit recurring growth rate.

His caveat is that, from the charts, price action not all that good. 

Horrible valuation versus peers. Hodge-podge of different software businesses, execution problems. Lots of debt. Management changes. Momentum is negative most of the time. Value trap.