Constellation Software Inc.

CSU-T

He really likes it. One of the best management teams. It is pretty steady up and to the right so it looks pretty nice. They acquire 'old' tech companies and share best practices. Then they take the cash flows that those companies spin out and then go and invest that cash. You can sit back and trust management.

Growth by acquisition. Appreciation slows down as acquisitions slow down. Need organic growth to keep the story going. Valuation high. The law of large numbers eventually catches up with you. Other opportunities at better valuations.

An amazing chart. It's still in its uptrend which is consistent while the market has been volatile. CSU is entering seasonality, too. This can go higher. It's "blue sky" and he can't tell when it will stop rising.

Biggest winner in technology in the last 10 years. He shorted this stock in the last week. Harder time finding acquisitions at the right valuation. Getting squeezed. No organic growth.

(A Top Pick Aug 29/18, Up 34%) Very difficult to analyze. They serially acquire companies that have only one family of software that addresses particular vertical need in the market. CSU says there are thousands like this and now own bunches of them. CSU knows how to buy them. Their return on invested capital is terrific. It's still an attractive stock at current prices.

Doesn't need to rely on bigger deals to keep growth up. Flexible, nimble. Can do many, many small deals. Governance and corporate strategy risk is a lot lower.

Possible split? He doesn't think they will split the stock. This company has done an excellent job, but the valuation is just too rich. The yield is just a little too small too. There is a risk for a sizable retracement in this stock. Be careful.

He wishes he owned it. They have a roll-up strategy in software: buy companies and integrated them well. This way, they have created tons of value, but he prefers software companies are hands-on in creating product. CSU has been a great performer though.

They consolidate various software companies. They have no debt so a pretty good balance sheet. He finds it is too rich at 20 times cash flow. Also there is no centralization of services among companies acquired.

They buy other software companies, around 200 now and could acquire many more. Managers own a lot of stock, and that's a great sign. They know what they're doing. (Analysts’ price target is $1223.33)

It has been a darling stock for a long time. The just keep consolidating. They don't squeeze out much synergies. This was not the business model he was looking for over the years. They will have to make bigger and bigger acquisitions.

They are serial acquirers with heavy cash flow. This can continue without limit. However, they have heavy competition now. So, CSU is now increasing its balance sheet. This has done incredibly well, a no-brainer.

(A Top Pick Apr 09/19, Up 1%) He still likes it. A strong chart and a great performer. The longer-term trend is up. It's consolidating these days. Expect choppiness then a breakout to new highs.

It has been a core holding of his for a long time. They are extremely well run. They are run by a competent intelligent operator. They acquire software companies. When they are put on the world stage they shine. They are a bit expensive right now but one you should own. (Analysts’ price target is $1176.30)