CSU
Capital Senior Living
stock NYSE

Since Fairfax is already on the list you are clearly fine with the TSX, so I will add Constellation Software (CSU, or CNSWF on OTC): serial acquirer of hundreds of tiny vertical market software businesses run on Berkshire-style hurdle-rate discipline, and it has not issued a single share since the 2006 IPO so every dollar of compounding accrues to the same shareholders. The moat is that each product is mission-critical, deeply embedded, and a rounding error in the customer budget compared to the multi-year nightmare of ripping it out, so churn stays in the low single digits while they push through mid-single-digit price increases year after year, and the reinvestment runway is a genuinely fragmented universe of tens of thousands of niche software companies nobody else wants to buy. Honest caveats: organic growth is roughly flat so the whole thesis rides on continued M&A discipline, deal sizes have crept up, and the AI disrupts legacy software debate has kept the stock in the doghouse, but for a 10-year hold I would rather own the compounder whose returns do not depend on winning the AI capex race.

Since Fairfax is already on the list you are clearly fine with the TSX, so I will add Constellation Software (CSU, or CNSWF on OTC): serial acquirer of hundreds of tiny vertical market software businesses run on Berkshire-style hurdle-rate discipline, and it has not issued a single share since the 2006 IPO so every dollar of compounding accrues to the same shareholders. The moat is that each product is mission-critical, deeply embedded, and a rounding error in the customer budget compared to the multi-year nightmare of ripping it out, so churn stays in the low single digits while they push through mid-single-digit price increases year after year, and the reinvestment runway is a genuinely fragmented universe of tens of thousands of niche software companies nobody else wants to buy. Honest caveats: organic growth is roughly flat so the whole thesis rides on continued M&A discipline, deal sizes have crept up, and the AI disrupts legacy software debate has kept the stock in the doghouse, but for a 10-year hold I would rather own the compounder whose returns do not depend on winning the AI capex race.

I'm not sure if I like the acquisition model. OTAH, with the ongoing selloff of non-ai software companies, CSU has insane opportunities now.

The 15x–25x FCF range is interesting. I’m just not sure I’d use the historical 22x multiple as the main anchor going forward.
The thing I keep coming back to is organic growth. If recurring organic growth stays around 2–3% for a while and more of the FCF growth is coming from acquisitions, I wonder how much of that historical premium multiple the market will actually give CSU.
At the same time, I don't think the AI concern automatically breaks the thesis. CSU owns a lot of niche software businesses where switching costs and the workflow itself may matter more than just the software.
So I guess my question is what matters more here ... getting back to the historical FCF multiple, or seeing organic growth pick up again? Because if organic growth stays low, I’m not sure a cheaper multiple by itself is enough to make the case...

CSU: Constellation Software - Investment Thesis