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Jason Donville has owned Constellation Software (CSU.TO) for a couple years now, with 60% returns

he recommended it on BNN again as a top pick expecting another 60%

he said $250 before he was right, said $300 now (its 295), and says next year will be $400


any CMFers have any comments?
Such predictions depend partly on if the bull market continues. Most of the high p/e high fliers don't do well when the bull ends. don't be greedy. If its up trend stalls, sell and watch it consolidate. If it breaks out up again you can buy it back.
 

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I personally wouldn't buy stock with P/E 58 and yield 1.5%
There's bit more to the story than that. The three year earning growth rate is 46% and looking forward the multiple is < 20. When a company is acquiring on a regular basis, there are a lot of one time expenses which tend to obscure the true earnings in the short term.

I started watching the stock at $130 but didn't buy it until $190. Three years ago it was a $60 stock. Tough to argue with the results, nearly a 5-bagger in three years.

A nice part of having a high stock price per share is that is scares away traders and momentum investors and the stock isn't that correlated to the overall market. During the recent TSX plunge, CSU didn't budge at all really.

Anyway, did anyone notice the 3 year average return of Donville's fund? 35% per year.
 

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yeah it goes up like 1% every day... glad i finally bit the bullet... i wonder what jason donville will say next time he is on BNN... last time he was on he said he was still buying it at the $430 mark
 

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Anyone want to help me understand this
(im with questrade)

Now I only have 5 shares, it says I need 10.596

So what options do I have, and what steps do I need to take

Can I get these, or sell the rights



The Rights will be issued in satisfaction of the Rights Dividend in the amount of one Right per Common Share. For every 10.596 Rights held, the holder of such Rights will be entitled to subscribe for C$100 principal amount of Debentures. The Rights and the Debentures have been qualified for distribution in each province and territory of Canada by way of the Final Prospectus and the Debentures have been registered in the United States on Form F-7 under the United States Securities Act of 1933, as amended.

The Rights will be exercisable until 4:30 p.m. (Toronto time) (the “Expiry Time”) on September 15, 2015 (the “Expiry Date”) at a price of C$115 per C$100 principal amount of Debentures purchased. Rights not fully exercised prior to the Expiry Time on the Expiry Date will be void and of no further value.

The Rights will be listed on the Toronto Stock Exchange (the “TSX”) under the symbol “CSU.RT.A” and will be posted for trading on the TSX until 12:00 p.m. (Toronto time) on the Expiry Date, at which time they will be halted from trading. The TSX has approved the listing of the Rights and the Debentures, subject to the Company fulfilling all of the requirements of the TSX.

The Debentures are expected to be issued on September 30, 2015 and will have the same terms and conditions as the Existing Debentures.
 

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Into this one as a Canadian play that spits dividends, and along with OTC is one of a small pool of Canadian software plays.

Not sure if there is a huge upside to this stock, but if it can hold its own as a bunch of other holdings get mired in likely interest rate hikes.

So this and OTC holds about 10% of my non -registered holdings, as a sector equal weighted approach.
 

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I have a trailing PE of 59, not 100.
Its EPS stagnates in the past 4 years. The average EPS from past 4 years is ~$5/share. That gives a PE of 111. This is the method from Benjamin Graham. Looking at the earning from 1 year is not reliable. Its yield dropped from 4.3% 3 yeas ago to the current yield of 0.95%. This tells you how insanely expensive this stock is. Its earning can't grow at 100% per year for the next 5 years. The stock price of CSU will stagnate for years until earning catches up.
 

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$CSU 2015 results are quite good:
- Revenue grew 10% (negative 3% organic growth)
- Adjusted EBITA increased 28%
- Adjusted EBITA margin increased 3% from 21% in 2014 to 24% in 2015. Changes in foreign exchange rates resulted in less than a 1% reduction in Adjusted EBITA margin.
- Adjusted net income increased 35%
 

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Adjusted P/E is 29 based on trailing 12 month earnings, but non-adjusted P/E is double at 61. It also trades at an insane 25 times price to book. The company is doing well but I just can't see paying this much.
 

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I sold all my CSU initially purchased at $190 over the past few months. The issue looking forward is that the company has reached such a size that it is going to be increasingly difficult to make acquisitions that can make a substantial increase in earnings and as the earnings growth rate declines, so will the valuation multiple and the stock price. This is the natural end to all industry consolidation by acquisition stories.

The stock went on a tear in the first 6 months of 2015 but I get a sense that "the market" is backing away now and for the trend followers, it is "broken".

Let's call CSU what it is, a finance 101 experiment, a conglomerate of software businesses that act independently, levered to the hilt to produce crazy ROE. The equity base of the company doesn't grow as about 100% of earnings are paid out. I fail to see how they can keep using debt alone to fund acquisitions without getting hit with higher interest rates and lower valuations to compensate for the additional risk.

Therefore, my opinion is that the company has reached a crossroads and I'm waiting by the side of the road to see what happens.
 

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This is a really tricky stock for me. The business is doing probably the best among TSX listed stocks but seems high premium is attached to it. Would a bad news ever come out on this one? :)
 

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It's interesting looking back at this thread. CSU now at $631 and valued at $13 billion -- crazy. Something that hasn't been mentioned in this thread is that CSU correlates very strongly to the overall tech sector as shown here. CSU in green, XIT in black
http://stockcharts.com/h-sc/ui?s=CSU.TO&p=D&yr=4&mn=0&dy=0&id=p61920138304

The 2016 price movement in CSU and XIT is virtually identical.

So I think this is a sector story, not a Constellation-specific story.

If you're bullish on Constellation, you might as well buy XIT and diversify your exposure a bit. At least you eliminate single company risk. The remaining question is, how long will this tech bubble continue?

XIT has returned 17.54% annually for the last 5 years
 

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Not sure how I should track my return on investment with the Topicus spin-out. I would have to somehow link my CSU investment to my Topicus shares to recall that I never bought those shares, but got them from CSU. I don't know either how I should track my P&L on Topicus.
 
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