Constellation Software and Topicus are being wrongly lumped in with AI software fears, setting them up to rerate back toward a 3% free cash flow yield once things clear. They adapt, execute and take advantage of deals, with record capital deployments, and moats in vertical market software are shifting rather than disappearing; much of software can adapt with the right culture. A post the author replies to counters that new competitors have beaten Harris and Tyler in govtech. x.com  x.com  x.com 

Constellation Software has no way to benefit from AI and little organic growth, so 21x GAAP EBIT looks fair, with perhaps a downside skew if churn rises across its portfolio in the next five years. The market's negative reaction is rational. Its small vertical software businesses were run financially rather than for product, many still on-prem, with no central AI strategy as software gets cheaper to build. Organic growth was 2% in constant currency; inorganic growth is fundamentally different. … Show more

Constellation Software is finally at a fair valuation, making it a good time to accumulate. It has three big opportunities: new types of investments such as small stakes in public companies, adding AI to its thousands of software products at little extra cost, and buying small software companies in Asia and other less competitive regions. x.com 

Constellation Software's post-earnings selloff is myopic, reflecting a market unwilling to look beyond one quarter. Results are driven by lumpy capital deployed into acquisitions, which analysts can't forecast, so performance must be judged over years rather than against quarterly estimates. This quarter's organic growth deceleration feeds the bear case, but it was not a normal quarter, and management explained it well on the call; the market may stay in show-me mode until Q3. x.com  x.com  x.com  … Show more

Constellation Software is one of the few names where AI disruption likely widens the opportunity set. @cap_zay points to its culture, lack of stock-based compensation, diversification and an acquisition hunting ground that has just become more fertile. x.com  x.com 

Software stocks such as monday.com are the cheapest entry in a decade, and the best approach is to buy the cheapest on sales multiples, even those most exposed to AI disruption. At about 1.2x-1.5x EV/sales, if AI cuts seats 50% and revenue halves, monday.com could slash sales and marketing costs to reach 50%+ operating margins and trade at about 5x earnings; even a 75% seat loss leaves about 10x. Software will re-rate when AI lifts margins, not when growth re-accelerates. x.com  x.com  x.com  x.com  … Show more

Constellation Software's Sabre deal is one of the dumbest capital allocation decisions in years, enough to reverse a fresh view on the stock in under a month. Constellation should be buying smaller, solvent companies. x.com  x.com