Open Text (OTEX.TO)

Not a high-quality business. Struggles for organic growth. 10+% free cashflow yield. They should stop worrying about organic growth and just buy back shares, and they could buy back the whole company in less than 10 years. He might even send a note to that effect once a permanent CEO is appointed :) 

It's business as usual in the meantime, under a temporary CEO who's been with the company for 25 years. Yield is 3.09%.

Pretty evenly priced, as the average price target is $49.25. If you own it, look to write some calls of 1-2 weeks with a strike price of $55-60. Keep your eye on it, as you probably don't want to get called away.

"Garbage in, garbage out" is a saying that demonstrates how you really need to have your data house in order to optimize decision-making processes. Earnings YOY still shrinking, and so it trades at a low multiple. Organic revenue decline is concerning. They can't M&A their way out of this. 

The caller asked about his opinion on both of these companies. Open Text is much larger and is very leveraged, Open Text did a large deal which is not at their comfort level. He has never owned it. Enghouse has no debt along with lots of cash. The CEO of Enghouse is on the board of Open Text. He owned Enghouse but sold last year. It is cheap so it's time to move on. It is a much much smaller version of CSU

Really active with M&A through pandemic. Recent sale of a business. About 30% upside to target from here. Very involved in EIM software, leader in Canada. Buy 1/3 here around $36, another ~$33, final ~$31.

Stock's struggled. Earnings flattened out. Likes it, in some good niches. Very cheap. Lots of upside and earnings power if you're patient. Decided to stop the acquisitions and streamline what they have.

That's a question every company should be asking. It takes a long time for technology to disrupt an industry. OTEX has to keep investing to stay relevant, and AI might be an opportunity. Not particularly high growth, but they chalk up free cashflow. Buys back 10% of shares every year.

Pulled back from earlier this year. Broke downward trend line (a really good sign), now seeing a base and a breakout. Technicals look good, could break higher.

Promised a lot, and if they can deliver it will be a great investment. That proof is still in the pudding. Doesn't have a strong opinion on whether management is capable of delivering. He agrees that market's lost confidence in its M&A ability. Expectations are quite low, so it would be easy to do well. A solid hold.

It made an acquisition which the market didn't like and the stock has fallen significantly. It is a growth by acquisition company and tends to have bumpy revenue post acquisition. He thinks it is under-priced here and there is more upside, but it is a show-me story.

About 10% left on the upside runway. Better opportunities elsewhere.

Familiar with business. Good at M&A, but has used a lot of debt in business model. Better options like Constellation Software available for investors. Doesn't own shares. 

It now has a different strategy and is not acquisition driven any more. Other companies are more attractive for returning capital to shareholders.