Constellation Software & Lumine: 

Who Is Your Daddy and What Does He Do?

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Constellation Software Inc. (TSX: CSU) is one of the more interesting companies we follow, given its unique management style, serial acquisition strategy and ~1,300% return over the past decade (Desmond discussed it on BNN Bloomberg last December).

Our Senior Analyst Desmond Lau's research found that Lumine Group Inc. (TSX: LMN.v), a spin-off of Constellation, shares much of its parent's DNA. 

Lumine is a value-based acquirer (paid ~1x sales for businesses on average) and has deployed more than 100% of its free cash flow on acquisitions over the past three years, just like the parent CSU.

Lumine's CEO, David Nyland, also has the added benefit of extensive experience operating companies that provide telcos with support services. Lumine now owns three of these businesses in its portfolio.  

We are offering two presentations by Desmond on Lumine and Constellation on April 3 and 4. Some of the topics Desmond's presentation will cover include: 

  • Parent or child? We discuss the factors that investors should consider in deciding whether to invest in CSU or Lumine (ability to deploy FCF on acquisitions, organic growth, ROIC, etc.).
  • Lumine's lower organic growth: Should investors pass on Lumine given that it has generated lower organic growth (~2.3% vs. 4.5%) and has had four quarters of negative organic growth since Q4-F20?
  • Regular adopters: Of Lumine's 29 portfolio companies, 11 were acquired via "carve-outs", where sellers dispose of non-strategic/mismanaged assets. We explain why Lumine is perfectly positioned as a buyer and how these acquisitions can be financially attractive.
  • Eyeing the next birth: Why investors should pay attention to the next CSU spinout and what companies might be spun out next. 

Purchase Your Seat Now

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We have two options. If you're interested in a group discussion after the presentation, we suggest the in-person session in our boardroom. This discussion will follow  Chatham-House Rules , in which anyone who comes to the meeting is free to use information from the discussion, but is not allowed to reveal who made any particular comment. 

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Lunch & Learn In-person Presentation and Questions/Discussion After

$499

Wednesday, April 3, from Noon to 1:15 PM in person at the Veritas office, with lunch provided

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or  

Webinar with Questions After

$450

Thursday, April 4, from 2:00 to 2:45 PM ET

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The title of the webinar is inspired by the classic comedy Kindergarten Cop with  Arnold Schwarzenegger, in which he plays a game with his class called Who is Your Daddy and What Does He Do? (clip ).

 

 

Desmond Lau, CPA, CA, CFA, has been covering the Communication Services and Technology sector since joining Veritas in 2010.

 

Or contact Sales to ask about the option to access Desmond's research coverage of Constellation and Lumine Group on an annual subscription basis.

Contact Sales