u/ksing_king

I just virtually attended the CSU.TO annual meeting, which lasted about 5 hours. This stock is deeply undervalued and a great software business, my largest #1 holding. Per my assessment, likely intrinsic value is around $4,000, current stock price is $2,600 CAD/share. I believe this is the best software company to buy right now in the market, CAD or US. I took notes throughout the whole meeting. And here they are:

Software went to eating the world, to being afraid AI will eat software
Being close to customers to solve problems directly is how to utilize AI
Even within Harris group, subdivisions, same as other groups
Volaris was running at 12% per annum, now at 23%
Want to double by 2029
Growth is driven not by going faster, but asking a different question
What does going 50x faster look like for our customers?
Some products extreme have been rebuilt from scratch
Click dimensions - Andrew, horizontal, faster innovation and more threats
Use AI to help tier 1 support tickets, chatbot 24/7, any language
AI to read own database to get information for simpler questions
AI at click helped 80% of support tickets
Creating more agents since
Agentic AI, a front line beneficiary like Jensen Huang said
Agents can help, but can't replace a person
Agents given names, not numbers. So someone can manage them
Transparency on where the agents are and what they are doing
Deep domain and customer expertise, specialized vertical niche
Take complex processes, with many meetings and reports;
automate this process and validate at end what this looks like
AI sabbatical; go to companies doing better than they are
AI accelerators going on everywhere with CSI direct with customers
Took 4 days to create a prototype to user conference
Positive feedback from customers, wanting to use it
CSU verticals only invited in because of relationships and reputation over decades
Business unit leaders
AI cannot replace these relationships, high switching costs
AI will take away and do all the boring stuff
Horizontal software has more competition, and at more risk from AI
If you know stuff, you will become better. If you don't, you'll be found out quickly
But AI becoming more effective is not going to let people work less hours
Your job won't be replaced by AI, but you may be replaced by someone
Who can use AI in their job better than you
Mark Miller - product developer, programmer by background. Have to continue to try and provide value to customer
Mark Miller in 2025, new CEO, ended up taking zero compensation in 2025 to follow the footsteps of Mark Leonard
Won't change name of CSU, you are what you do not what you say you are
Peer Learning at scale via conferences, collaborative sharing
Confronting AI - decentralized model turns AI disruption into structural advantage
Being close to customers, know in tune the issues of customers and upgrade them
Some customers have been with CSU for decades
PEMS - permanent engaged minority shareholder
Shareholder questions - panel of C suite and operating groups, 11 total people. Decentralized style, input from everyone
A lot of the questions are from equity analysts at the large funds, online questions based on AI primarily
Candid but not revealing everything in the answers. Specific number questions not being answered, same as Buffett
Haven't yet seen direct attrition due to companies or revenues from AI specifically, attrition not due to AI. WOW
But believe it is coming and will have an impact
Verticals are protected, highly regulated, and integrated is part of the reason
Attrition rates are very low with laggard customers especially
Use AI to expand presence in customer by introducing more functionality
98% renewal rate, very low attrition constantly at CSU
Customers don't want to change user interface, workflows. Resistant to change
Most of the customers not lost on pricing, more likely on functionality
Functionality could be AI or not AI, it’s something that matters to the customer
Robin Van Poelje, CEO of Topicus also present and answered questions
Topicus tries to win with excellent businesses, and weaker ones try to disrupt themselves with innovation
Procurement cycles B2B with government is getting longer, not shorter
Government likes to shift liability and risk onto vendors, so appealing to that is good
David Nyland-telecoms are conservative, bruised and fatigued, resistant to change. Pace of change subject to regulation
Lumines vertical uses more math functions to process stuff faster, machine learning. Agentic AI being used
Closer to the network directly, more conservative. Want costs to be cheaper for anything
Capturing new logos at Lumine is hard; they can't get a slot in a large telecom. So Lumine looks at complex carve out deals
Costs for AI? Tokens cost. CSU is using AI tools and experimenting actively
Trying to actively measure impact of AI, if you can't measure AI can't figure out the impact
Costs slightly outpacing revenue for AI, but it's not a material item to begin with
Topicus bought a company in Indonesia; rare but they are open to it, if it fits the mold. Cultural differences. I like his relaxed demeanour
Customers are not using AI right now to save money or innovate. They sometimes try and come back for support
Strong businesses will continue to be strong, weak businesses will continue to be weak, measured at the BU level
Weak businesses Mark hopes better leadership goes in and makes them better; meaning leadership at the helm is what matters for the business
A lot of verticals don't want to price on seats, even though AI may displace seats. Pricing model may look at seats, but prefer enterprise level pricing
Inherited pricing from customers, sometimes 3-4 year contracts. Possible cannibalization from redcued seat count
Lumine: generally on prem, but will go to cloud if overload expected, e.g. if England goes deep in FIFA, more coverage needed from England
Lumine: On-prem to go to cloud native is a big architecture shift
Lumine: Agentic AI wil take longer to get there. 6-8% are going to it first. Moving next 5-10 years slowly, cautiously
Compensation based on ROIC, which is good. Plus organic growth
Changes made in 2025 for compensation to encourage more organic growth, as a trial
It's a kicker for organic growth on top, as an experimental basis.
Topicus companies already had good innovation and organic growth, and incorporated CSU style incentives
There's nothing like personal wealth destruction to drive incentive and focus
Could incentives discourage shifts to AI? Possibly, they will see. Increased net revenue per user would be a nice metric
AI hasn't changed KPI metrics, even on the business unit level
CSU goes to conferences and interact with engineers at the huge mega caps
M&A conversations have realized targets can't do this by themselves and see the value of CSU to help
Mark Miller says you can develop good products, but the more difficult part is selling them, so long to penetrate and sell
Large scale layoffs are not planned at CSU. There is so much more to do with AI with existing customers, 1500+
If they were forced to not lose or buy another customer, they would take it. Because so many already with opportunity with AI
Tech modernization is easier with AI. But selling it to customer is hard and convincing them of value
Morale has gone from trough to peak for AI excitement in 2026
Rewrites of solutions ROI before was not worth it, now with AI if efficient now may be worth it
AI leads to more efficiency with code but there is a human at the end to manage and oversee this
CSU is not scraping peoples data without their permission. With permissions, aggregate data anonymously and come up with high level insights
Cybersecurity: Crowdstrike is used across all the businesses.
Lumine when acquired wideorbit used a lower EBITDA at wideorbit compared to the EBITDA at Lumine
Competitors: chapters Group raises capital at the top
Lumine in the future might consider equity raises when the price is above the intrinsic value of the stock, especially when it was at $54
If CSU could invest in those companies again in the portfolio, they would not invest in the poor ones, regardless of whether AI is present or not
Horizontal solutions that aren't dominant moats aren't good to buy regardless; too much competition and attrition
1.5 hours from 8:30-10am MST centered around AI mainly, now shift towards M&A
How has AI affected considering M&A? The market is taking a haircut on all software companies
But it seems on the business level, for strong horizontals or restricted verticals, more and more product is still coming and going strong right now
CSU doesn't see the terminal value of these businesses going down, so see the markets reaction as incorrect. No change
CSU is not looking for AI first businesses, they need real case value. A lot of those AI 1st companies lose money and have no money, and can't get the distribution
Distribution is the key, ability to sell and provide value, not the underlying code, or AI creation of products
After 10 minutes, now move toward PEMS, spearheaded by Mark Leonard remaining as an advisor
What edge does CSI bring to PEMS? CSU has capital, and understands VMS well. They also will invest in companies that need help if the price is right
Buy businesses and takes 1-3 years to get them up to speed with best practises of CSU
PEMS requires getting businesses at a lower price than a straight small acquisition to hit internal IRRs. PEMS cashflow doesn't come back to CSU unlike VMS
PEMS not looking to sell public stakes, even if price is above intrinsic value. Doesn't make sense tax wise either.
How to generate cash from PEMS? It can't generate cash to reinvest. Influence those public companies to try and return cash to shareholders if it can't be invested properly
Public companies when sell go to roadshow, and pay a premium for those. IPOs, overvalued
CSU doesn't want that, look for undervalued companies to buy and influence. Good management, good incentives, and good capital allocation is what they want, more important than current profits
3 billion of cash, hard to re-invest it, despite amount of VMS companies out there. Thus PEMS; want businesses that are receptive to influence
What other evolutions for next 5 years for capital allocation? Experimenting, tech enabled services, style drift. Mostly software though.
So it seems once free cash flow gets above 1 billion per year it gets hard to expand as rapidly as before. Something to keep an eye on for other serial acquirers, VMS or not
VMS remains a great industry to be in. How does CSU assess mission criticality criteria? If the VMS goes down, can the customer operate? If no, mission critical
Marketing is less mission critical where they could use pen on paper and still run the business. Those businessesneed to pay less to justify, based on attrition rates
Some businesses in the Harris group have 0% attrition rates. They use a business quality checklist
Middle of the road is the department software critical to that department, not the overall business itself
Topicus: investment in Asseco impact. CEO believes Asseco is a great business. Discussions with management team at Assesco to influence operations
3 people from Topicus on the board of Asseco. Asseco has its own M&A, if conflicts of interest Topicus can talk to them but they use their own strategy
Private credit dislocation affect on CSU investments? There is some distressed debt out there, and also in the software world. CSU looks at it, thinks its scary, but isn't involved in it yet
Debt investment is a short-term type of investment, doesn't follow CSU model of long-term investing. Not considering it right now
Bernie: the run way is still huge. Database is still building, with increased acquisition targets now from AI created products
VMS ventures, 2 acquired AI products, deploying AI agents.
Lumine: carve out situations, are there any with support of seller, but deferred due to inability of buyer? No. At least 1 year in advance cycle
Barriers to entry are very complex on carve outs, especially with dysfunctional sellers.
How is CSU going to deploy capital at a 100% rate? Need to develop more people properly to be able to allocate capital. Special dividends in the past, may happen in the future
Mark Miller was running Volaris prior to becoming CEO at CSU
A good operator helps in becoming a good M&A investor, but it is a different skillset to do both. Some people can be good at both.
Importance of autonomy in a decentralized model. A regular CEO to walk into CSU would be difficult to adapt into CSU's model
Need to develop good decision makers in the company over time, based on a track record to see what the decisions and results are
Successors: Number one job of a CEO at CSI is capital allocation. Low ego leaders, like good to great
Every manager at CSU is cheap, operators are all big shareholders, no one flys private jets. Not like the US companies, with tons of buybacks to reduce SBC effect, renegotiate compensation every year.
Not interested to buyback shares
Since 2015 more copycats showing up, but some of them have been leaving the M&A industry. CSU would prefer the other rollups to exist, and CSU may look to acquire them
More copycats will pop up in M&A

I'm thinking of going to one or both countries in Jan-March 2027, flying from west side of Canada. This would likely require 1 or most likely 2 layovers, total days of 14, but this includes travel days. So actual travel time is likely 12 days accounting for jet lag and time zone lost. Am thinking of going with a friend. We are debating is it worth going on two separate trips for both? I am wanting a slow travel pace, a day that is not necessarily jam packed. If malaysia only, it would be kuala lumpur, malacca for 3 days 2 nights, and george town. If malaysia and singapore, it would replace malacca with singapore. If singapore only, I was thinking 6-7 days in the city, excluding the travel days lost. So this could be like a 9-10 trip but only singapore. For those who have been to one or both places, based on what I listed, would you bundle both in one trip since singapore is so close to malaysia, or split them up?

[H] USDC 80% [W] Canada Walmart, esso, petro, home depot~$50-$200

Is it better for the stock price to stay low?

[H] USDC 80% [W] Canada Walmart, esso, petro, home depot~$50-$200

Constellation Software CSU annual meeting

Constellation Software stock annual meeting notes - May 15, 2026

[H] USDC 80% [W] Canada Walmart, esso, petro, home depot~$50-$200

[H] USDC 80% [W] tons of cards in Canada ~$50-$200

[H] USDC 80% [W] tons of cards in Canada ~$50-$200

[H] USDC 80% [W] tons of cards in Canada ~$50-$200