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Constellation Software Inc. (CSU)
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Topicus.com Inc. (TOI)
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Brookfield Corporation Class A Limited Voting Shares (BN)
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Lumine Group Inc. (LMN)
Q: Good morning. Would it be fair to say that CSU is basically the tech version of BN? BN has, what six or seven children and CSU now has a set of twins. Do you see CSU continuing to give birth to more children?
And if so, at what point would you rather just own the kids and let the parent go, if ever?
And if so, at what point would you rather just own the kids and let the parent go, if ever?
5i Research Answer:
CSU is applying the same approach of BN now. CSU’s management indicates that going forward CSU will continue to spin out smaller entities not only to maintain entrepreneurship and decentralization at the smaller level but also to provide the spin-co with its own currency, therefore, more flexibility for acquisitions and helping the public market value these companies properly. It depends on the track record of growth through acquisitions, the organic growth profile of the spin-co as well as valuation relative to CSU, that we would decide which companies to own. For now, we think CSU is still an attractive long-term investment, we are okay to hold it along with TOI and LMN.