Constellation Software is a good opportunity in a market said to have none, because it has doubled free cash flow available to shareholders while its market cap has gone nowhere. x.com 

Constellation Software's Q1 headline growth overstates the underlying business, making the AI update at the May 15 meetings the key test. Revenue rose 20% to $3.18bn, but organic growth was 6%, or 2% in constant currency. Free cash flow to shareholders jumped 44% to $733m, yet about $170m of the gain came from a non-cash revaluation swing, leaving underlying growth near mid-single digits at about 76x earnings. What matters is whether AI gains become pricing power and faster organic growth. 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 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'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 

The Constellation family, Constellation Software, Topicus.com and Lumine Group, is still due for a rerating as the market's fear about AI gives way to the opportunity. The market has already misread AI's impact on Google, Meta, ServiceNow, Salesforce, CrowdStrike and Palo Alto Networks; in each case the fear was priced in long before the opportunity was understood. x.com 

Bending Spoons' growth is bought on credit, while Constellation Software can deleverage quickly, and valuations should eventually reflect that. Both grow just 3-5% organically, and Bending Spoons' organic rate halved twice (13% to 6% to 3%). Yet Bending Spoons trades at 19x FY25 sales versus 3.8x, with net debt at 3.1x revenue versus 0.2-0.4x and interest at 11% of revenue versus 2.6%. Bending Spoons needs the next deal to pay for the previous one. x.com 

Constellation Software and its spin-offs Lumine Group and Topicus.com are among the few software companies run for shareholders' benefit, which assures a good outcome if they are bought at modest valuations. Under 20 times earnings is reasonable, but no more. x.com  x.com 

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