Constellation Software被评为A级；尽管有机增长疲弱，但对AI风险具有韧性，且交易价格接近内在价值。

Constellation ended up in our watch list um the last three times, whether it be, you know, SAS companies or anything else. One thing that's pretty interesting is that we see they invest a lot more money now in MMA, right? Um or in M&A.

Um that was one of the things where people felt like look if the narrative that AI is not actually going to kill software is actually true they should be able to spend even more money or invest even more money in businesses right that's what we see

free cash flow available to shareholders is the metric that you usually use with consolation in this case it's not yet fully adjusted um so usually I would always go with the adjusted numbers and they do adjust it for a stake that they have in topic um which is one of their um subsidiaries and and main platforms um through which they do acquisitions um primarily in Europe.

We also have episodes on both Topicus and some of these smaller spin-offs I explain the the structure there a bit better but you sort of get the idea um that almost all the money that they make um they are currently reinvesting um which obviously is is always good to see because that's how this company's growing.

There's one thing in the last earnings report I don't know Sean um whether you you listen to the earnings call or just looked at the numbers um but we had a call in our mastermind community um where we have someone who not only worked for CSI um or CSU however you want to call it um but who also runs a business in the industry for quite a while now um and he talked about organic growth and how that is not totally unimportant even though this company is primarily growing through M&A um especially for the terminal value where a lot of the value comes from for consolation

Um it is quite important that these companies are growing still. Um and in the last earnings report you saw that um they're not growing fast organically. I have two numbers here. So um you would see both if you open up the um the earnings report. Um the most important number to look at is maintenance because this is by far the biggest part of the business and it's also the recurring part of the business. Um and this is growing last quarter at what looks to be 4%. Um but this is not yet corrected for forex. Otherwise, it's only going one to two%. And that's not very strong.

Um, I think if you want to at least entertain the narrative that that AI is feeling or software is feeling AI coming, it's probably in the organic growth numbers. Um, on the earnings score, they said that they want to focus more on that. And then to see this result is um not the most inspiring.

Um but generally and I always kind of thought the same I think VMS vertical market software is um difficult to attack for AI. Um I think consolation is in a good position.

Mark Leonard is uh an incredible inspir inspiration. He's built uh an incredibly robust business. Um you know, you're getting consolation right now at a bit of a rebound, right? I'm looking at the uh the chart. U obviously April 26, you know, below 2500 sort of in hindsight feels like a no-brainer to have wanted to to bought to buy the stock. We did.

And I think we were held up on the fact that we just didn't have good visibility into what the underlying they have so many underlying portfolio businesses. We just don't have good visibility into um how exposed they are to to AI disruption risks.

like uh there's quite there's a whole spectrum for AI companies of of uh of risk exposure to AI I would say. Um and so we just we don't have a great feel uh we kind of have their guiding principles and ethos uh but we don't have specific insights into a lot of the businesses they own. Um, and and that gave me hesitancy.

But, uh, the more I get the more convinced I get that, uh, the the AI SAS apocalypse narrative has gone too far, um, the more I probably become inclined to to want to own Constellation Software. Um, so I'm not there today, but I would I would happily put it as like a as an A.

>> yeah, I think for me consolation always just um yeah, this is actually a good one. Um I prefer the small. I mean we just talked about the anchoring bias in the beginning of the episode. I very much liked it at 2500. Um I think we also like I think I didn't want to add it back then because I thought okay well you weren't too excited and we did say okay well let's look at some of the the smaller companies.

um which again I see in the comments you know you have topicus you have chapters which is kind of different but you also have signity um a seco poland all of those companies are in the um in the ecosystem of constellation um I personally bought signity and a sec poland for my personal account and I think to me constellation is sort of competing with those um where if I just look at constellation um I would say it's it's probably a tier um so I would also put it here

um we don't have them here now on the list if you would ask me signity Seeko Poland those sorts of companies um I think they also moved up about I think Sydney was something like 25% Poland something like 50%. So they also not as cheap anymore as they used to be. Um but I think they are um a bit more attractive than constellation generally.

All that said if you just look at consolation compared to the companies here plus in our portfolio um I think a tier is is pretty fair.

Um I I think also to some extent I mean it's one thing to just look at the price and say 2500 would have been great but we shouldn't or we should at least acknowledge the fact that back then there were a lot more questions about how will this business the entire industry look like in a year now.

I feel by now um you know all of SAS as you said is recovering um is looking a bit better. Um you get a whole lot of results there's not much impact on um on earnings. I think it's easier now to underrite the fact that you would buy one of those companies. Um and that's also reflected in the market price. Um and I think that's um that's sort of what you're seeing there. So I think at is kind of fair.

Um I I agree here with the comment that I think CSU is pretty close to intrinsic value. Um and then it just sort of depends on the assumptions that you make in your model. Um whether you think it's slightly undervalued, slightly overvalued, which I think that's probably difficult.

um let's see kind of to the same extent we talked about with uh with Nike it it's difficult to imagine getting this stock back to like multiples of 50 and a lot of what we saw especially in you know when the the stock price was the highest is that these quality compounders traded at multiples um that you are less likely at least to see in the future and that just means part of your return um is going to be low if you just look at the stock chart and you see okay well this company used to trade at like 4,000 and now it's at two and a half thousand you could think that as long as or as soon as the narrative is gone, the price will sort of revert to that point. But again, a lot of that was also the multiple and I think that's a lot less likely um to get back to that point in in the future.