J’investis 40k$ sur 2 Actions sous-évaluées (Analyse très approfondie)

I hope you are doing well. I have just invested $40,000 in two companies on which I expect about a 20% annual growth rate. And in this video, I will explain absolutely everything to you. And my only objective is extremely simple: to ensure you have enough knowledge about these two companies so that by the end of the video, you can make an extremely relevant decision based on you, your profile, and your portfolio. Okay? So it's going to be very, very heavy. I think this video will probably last over an hour because there are a lot of things to cover. It will also be a video in which I will really try to break down my analysis process, my methodology. You will see that we have quite complex cases regarding the accounting structure of these two companies. So we will have to address concepts that you can reuse on other companies throughout your life as an investor. So frankly, it's going to be great.

So, yes, these two companies, it's Topicus and Constellation Software, and more specifically, Topicus. Now, there are two types of people. There are people who already know these two companies, but with this video, you will really move up a level and finally understand how relevant it is right now to position yourself on Topicus, at least according to your profile. And you will also see that the CSU part can be very relevant for a certain type of profile and objective regarding the portfolio and construction. And then there are people who simply don't know these two companies. And so I will really do a review of the fundamental understanding and why these are exceptional companies. We will challenge everything. The risk part, the valuation part, the addressable market part. We will really look at everything.

Currently, we have indeed, I have already put $31,000 Canadian on Topicus. That's about €20,000 in my portfolio of $375,000, or rather $373,000. It has dropped a bit, but overall, it represents 5.5% currently on Topicus and 1.5% on Constellation Software. I aim to increase Topicus to about 8% and Constellation Software to about 3-4% if I find good opportunities in the future.

It's also worth knowing that I often talk about Mohnish Pabrai, and Mohnish Pabrai is a shareholder in these three companies. I say three companies, but I'll clarify in a moment. So this is the fund of Mohnish Pabrai, an investor who literally started from zero and is almost a billionaire with his fund, which has performed three times better than the S&P 500 over the last 30 years. As you can see, Topicus represents 4.5% of his portfolio, Lumine 4.5% of his portfolio, and Constellation Software 4.65% of his portfolio.

And by the way, I will briefly explain the business model in one minute right at the beginning of the video so that you really understand why we can aim for 20% per year on this type of company and how it directly stems from the business model. In fact, it's very simple. Constellation Software is a company that buys software, called VMS (Vertical Market Software) for very specific domains. Okay? So, I'll give you an example. This is actually the Constellation Software ecosystem with all the software it has acquired over time. Okay. And here is its Topicus branch, so they did a spin-off. So now Topicus is listed on the stock exchange independently, it's on the European market, and so this represents the names of the software they currently own.

And to help you understand, let's take your example. Okay, let's say tomorrow, because you can literally do it, Mark Leonard, the CEO founder and the one who made almost all the acquisitions and invented the playbook, etc., well, he started from zero. Okay? It's very simple. Tomorrow, you create a company. Okay? You create a company, let's say, to give you a figure, you start with 1 million euros. You start with 1 million euros, and you will start buying back software that, on average, as Constellation Software did, trades at 4 to 5 times earnings. Let me give you an example. This million euros in the first year, you invest it in a software that is worth 1 million, you buy it at 100%, and this software, if you buy it at four times earnings, then in year n+1, it will bring you €250,000. Okay? So far, we agree? And in fact, you will directly take the €250,000 from year n+1 and you will buy back software worth €250,000, which you also buy on average at four times earnings. So €250,000 times four times earnings is approximately €65,000. And what you really need to understand is what happens in year n+2? Well, you have, on the one hand, the software you bought for one million which generates €250,000, which allowed you to directly buy software worth €250,000, which now generates how much? €65,000. That is to say, if you add €65,000 to €250,000, that makes €315,000. Okay? So in year n+2, you have €315,000 to reinvest. And if you reinvest this €315,000 in software that is worth four times earnings, how much does that give you? If I divide by 4, that's €78,000. So in year n+3, you have €78,000 plus €315,000. So you have almost €400,000 in 3 years, by the third year, your portfolio is spitting out €400,000, and you will reinvest it like that. And this is even underestimated. Why? Because there is organic growth. Each of the software, the first software you bought for one million which generates €250,000 per year, well, its earnings will grow by about 5% per year. Organic growth, each year you will increase your prices.

And here, the picture on the screen, well, these are each of the software that Mark Leonard bought. On average, at 4, 5, 6 times earnings, each of these software currently generates a net profit that goes directly to Constellation Software to buy new ones. And this is how we grow over time, and this is how Constellation Software went from a company at $20 to almost $3,000 today. If I compare it to the S&P 500, which since its listing in 2006 has made 750%, so multiplied by 7. We have Constellation Software, which with the recent drop has made 20,000%. Okay? It's just stratospheric. So I'm going to directly fold up the mind map and we'll get straight to the point. Okay. Well, let's go, we're off. Plus, it has been quite streamlined, so that's good. We will see, as you can see together, the segment. Why is it an extremely high-performing segment, and even I would say the best performing on the stock market globally? Then, we will present Lumine. It's one of the two spin-offs of Constellation Software. The sourcing part, exactly the VMS market part, the advantage compared to AI, why is it a segment that is wrongly penalized, especially on the CSU and Topicus part. Don't worry if none of this makes sense to you, I will explain each term each time. The analysis part, what is called the free cash flow available to shareholders, the entire capital allocation part, that's where we will look together at the levels and the structure, exactly the number of shares outstanding, how to calculate all that, how to get the true valuation, because the problem is that if you go to sites like TradingView, any site on the internet, well, they give you the wrong figures, they give you a figure that is not valid with a number of shares outstanding like 83 million and a market cap of 7.57 billion, but in fact, that's false because there are other shares that are 100% eligible for Topicus' profits but are not listed, but they absolutely must be taken into account. And that's obviously what we're going to do, and you'll really understand how it works.

So, well, I'm going to zoom in directly. We'll start with the sector part. What I'm going to talk about refers to what are called serial acquirers, that is to say, companies that grow through external growth by acquiring other companies and integrating them directly into their portfolio. Okay? We will also differentiate between the two types of serial acquirers because Constellation Software and Topicus are a specific type of serial acquirer. By the way, it's not called exactly that, and that's why we'll clarify it. But indeed, if I take the example of Constellation Software, $10,000 invested 20 years ago would have turned into $2.7 million today. It's just enormous. We're talking about more than 27% per year on average compared to 10% per year for the S&P 500. Indeed, this is not Apple, it's not Amazon, it's not Google, but it's a Canadian software company that most investors have never heard of. It doesn't make headlines, nobody talks about it, it sells no dreams. It buys software for marinas, for golf clubs, etc., things that seem really old-fashioned, but that's precisely where the performance is. And yet, again, its capital has compounded at over 27% per year for nearly 20 years. And again, it's not luck, it's a category because when you zoom in on this segment, you realize that almost all the players, all the serial acquirers, have performances that blow the S&P 500 out of the water. So indeed, all the companies, if we take a basket of these companies, and the majority of these companies are in the Nordic countries, okay, Norway, Sweden, etc. So I won't pronounce the names, but you have them here, Atlas, etc., have delivered an average of 19.4% per year, compounded, which is just insane. It beats the global index, the stock market, and even Berkshire Hathaway. So these are truly exceptional companies, and if we look at the big names like Constellation, Dan, etc., each of them shows returns that pulverize the long-term average of the S&P 500, which is around 10% per year again. So indeed, you've understood, when a single company beats the market, there might be luck, but when an entire category beats it over 20 years, across several continents, it means there's something in the business model, there's really something structural in the business model of these companies that allows them to compound, that allows them to have more performance than other companies. And this will be both their strength and their weakness, and that's precisely what we're going to analyze together.

So, how does it work? It's very, very simple. So, you see, how does it work? Why does it work? That's really the core of the business model of these companies. It's extremely simple. We buy low, we reinvest the cash, and we repeat the operation. When we talk about buying low, it means we buy companies that trade at three to four times their revenue, their earnings. It will depend on the segment. Okay? Then, we improve these companies, we take the cash from these companies and reinvest it in other companies that are listed, and we repeat this. And in fact, this is also called a rollup in mergers and acquisitions. That's not what Constellation Software or Topicus does, we'll get back to that. But the historical part of these serial acquirers is companies that buy companies at four to five times earnings, but their own stock trades on the stock market at 20 times earnings. So, every euro of profit they buy at 4 to 5 times, when it's incorporated into the holding, it's valued at 20 times. So we have what's called a multiple rollup, which is extremely value-creating. Okay? So, mechanically, it's worth more once integrated into the group. And in fact, we have this value creation that happens almost instantly, and on the other hand, if we maintain the quality of the playbook and the quality of the acquisitions. And on the other hand, the cash that these companies generate for us will again allow us to buy other companies. And in fact, we apply the principle of compound interest to a stock portfolio of a listed company. And that's why we achieve such performance in the long term. So indeed, if we take cash and reinvest it at a 25% rate of return, well, we'll reinvest it again. And so over 10, 20 years, it's a machine that turns small sums into colossal fortunes. And the hidden bonus is also diversification. Too many people forget this. But in fact, you quickly end up with companies like Topicus, with their portfolio, or like Constellation Software, which are extremely diversified and uncorrelated without reducing returns. By acquiring dozens, even hundreds, of small companies in different sectors, these groups become ultra-diversified, and no acquisition can sink them. In fact, they won't make an acquisition that fails and really jeopardizes the company. Nothing like that. Okay? And that's why we can hold the stock for years without closely monitoring it and let the magic happen. We just need to monitor a few KPIs, a few data points that I will give you and explain how to manage the thesis for this type of company.

And precisely, the nuance I will bring is the distinction between serial acquirer and programmatic acquirer. We will focus on the programmatic acquirer. So, serial acquirers are companies like RER, etc., that buy and integrate a part into their own company. Okay? In fact, they seek to create synergies and merge the acquired company into their own company. So, let me give you an example. If we have two identical segments in both the acquired company and the acquiring company, then one segment will be eliminated, and costs will be pooled. So we will restructure teams. We will make a lot of changes. Whereas with programmatic acquirers, like Constellation and Topicus, we don't touch anything. We simply buy a company cheaply. We put it in the constellation, okay? We put it in the ecosystem, and we create no synergies. And in fact, each company keeps its name, its team, and its autonomy. It just changes CEO on that side. But again, we don't start by buying a company and trying to merge it with another company in the group. We let them operate independently, but all their profits go directly to the group to buy another company. And on this point, there is a great study by McKinsey that shows that 70% of acquirers who do many small deals outperform those who do few. And secondly, the more you multiply small, disciplined acquisitions, the more you dilute risk and the more you perform. So that's really what we want to achieve.

And finally, the conclusion. The big problem, again, is the biggest strength of these companies: they grow, they make a lot of money. And therefore, the biggest weakness is the law of large numbers. We will cover a whole section on the law of large numbers. What is currently being put in place at Constellation and also at Topicus, on a smaller scale, to overcome this problem, to overcome this hurdle, and to continue to compound in the long term. So indeed, the enemy is mathematical. It's the law of large numbers. All these acquirers share the same enemy, a mathematical enemy that catches up with them over time. The law of large numbers: the more you grow, the more you must, obviously, deploy capital each year, capital that is more significant to continue growing at the same pace. That is to say, for example, for companies like Danaher or Roper, they now have to do deals between $500 million and $1 billion. And these deals, you can no longer pay them at three times earnings. These deals are already paid for much more expensively, so you have less advantage. Okay? And it's the same for Constellation Software. If you take a growth rate of, for example, 20% per year, applying the rule of 72, it means that in about 3 to 4 years, your earnings double. So the amount you have to allocate today will literally double in 4 years. It's just enormous. And the problem is that the pool of targets, they make about 130 acquisitions per year. Well, these companies won't double. So you will inevitably have cash left in your hands that you won't be able to reinvest, or if you can reinvest it, it will be at a reduced return. And that's why, again, we will have a section on how they overcome the law of large numbers to ultimately invest the same amount of cash year after year at a rate of return that does not decrease. That's really the key point again.

So indeed, Topicus, for example, because it is 8 times smaller than Constellation, means it still has many years, perhaps decades, of runway or growth ahead of it. And in fact, it is often said that Topicus is a bit like Constellation Software 10 to 15 years ago. That's why it's extremely relevant. And what we will dissect together in this video, as you have understood, is the business model, figures and performance, valuation, so DCF multiples, risks, solutions to these risks, and uncertainties, and the price and decision part. Okay? So that's the little introduction. And I suggest we move directly to the VMS market part. What is a VMS market? The origin part, the hunting ground, on what terrain will they make their acquisitions, and the acquisition model part. The story is very simple, the lineage with Constellation Software. Topicus was spun off, so separated, from Constellation Software in 2021 and was built around the Dutch TSS. So Constellation also, it's important to know that it's a bit their objective, their goal, to spin off these smaller entities like this to solve its redeployment problem, the law of large numbers. So here, at Topicus, we are at Topicus, an entity 8 times smaller with a longer reinvestment runway to maintain this growth rate of 20%, 30% per year, rather 25%, we will see together. So the investors' formula, it's true that we often hear that Topicus is like Constellation, as I told you before, from 15 to 20 years ago.

What is Vertical Market Software? I've already explained it briefly, but it's indeed software designed to meet the very specific needs of a single industry, as opposed to horizontal software like Excel, Salesforce, Slack, etc., which is generalized. Okay? And this is where we have more competition, whereas VMS serves a single, precise, and narrow business. We will see why it's a huge moat compared to AI. Let me give you examples. The software that manages billing and routes for a funeral home company. For example, the one that manages bookings and tee times for a golf club, or the management software for a marina, berths, contracts, fuel, the software for a municipal library for when you return books, etc. These are very simple things, okay? And these are things that are indispensable for the library, indispensable for the marina, indispensable for the funeral home or the golf club, but they represent less than 2-3% of their overall cost for the company. These are software that are very, very low in cost but are indispensable. So, we are in a situation where, will the golf club start wanting to cut costs on software that is indispensable but costs them very little? The answer is no. And that's why we have a churn rate, a subscription rate, that is close to zero. That is to say, more than 95% of contracts are renewed year after year with an organic increase of 5% per year in pricing power. Okay? So these are small, fragmented, unglamorous, unappealing, and often invisible markets to the general public. Okay? So the central idea to remember is that a VMS represents a tiny part of its client's budget, but it is absolutely critical to its daily operation. So, we really have an asymmetry that is foundational: low cost multiplied by extremely high criticality. So it is this asymmetry that is the source of all economic power and really the essence of the VMS business model.

There is also, I could briefly address the AI part now because I know you're asking this question. How does it differ from software like Adobe? Adobe is also a software. In fact, it's very simple. What is the risk for Adobe? The risk for Adobe is that AI improves, or a competitor arrives with AI and makes a better SaaS than Adobe currently has. Okay? And in such cases, a client would rather go for Adobe. I took the example of X-Files, for instance, where everyone does their advertising campaigns with this site. And we see that, for example, X-Files has put a plugin directly into Adobe Premiere Pro, and also into DaVinci Resolve, which is free and a competitor to Adobe. So if tomorrow, this type of startup arrives and attacks the sector from a differentiating angle and is better, well, people will leave Adobe to go to the better software. Whereas, we don't have that with marina software, even with AI, there's nothing to optimize. It's already optimized, and if there is optimization, don't worry, Topicus and Constellation Software also have teams that will improve it. And that's why, in my opinion, it's very simple, and this is just my opinion. So I'm presenting it to you very quickly. It's an equation with two factors. On the one hand, you need to look, you need to ask yourself to what extent AI can improve the value for the client using your software. Okay? And secondly, you simply multiply that by the switching cost. Let's take the example of Meta. We agree that AI can really improve the value, can allow to extract more value from Meta's user base. That is to say, if they implement AI in their advertising algorithms, they have better targeting, and therefore advertisers, those who pay Meta to broadcast their advertising, will earn more money because Meta will be able to offer their advertising to people who are truly interested in the advertising and therefore will buy more often and at a higher price. So, this is how Meta was able to increase the average price of its ads by 10% last year, or rather the previous quarter. Okay? And on the other hand, those who pay Meta 10% more to broadcast their advertising, well, on the one hand, they are profitable because they earn more money, and above all, they have no alternative. The switching cost part, they have no alternative other than YouTube ads, but that's it, because Meta has 3.5 billion users who are constantly there. So there is no alternative. If tomorrow you want to advertise, you only have Meta or Google, or rather Meta, you could say. So, well, they are 100% winners. That's why I love this company. On the other hand, if I take a company like Adobe, that's where it gets a bit more complicated because AI can indeed improve its product, and it can also improve the competitor's product. Okay? And there are fewer switching costs. That is to say, yes, you will tell me that people will be bothered, etc., but ultimately, when you take the first step, if tomorrow companies like X-Files arrive that are 10 times better, don't worry, people will directly switch to the better product. Okay? So we have less of that. And if I move directly to the vertical market software part, well, it's not that we don't have switching costs, it doesn't improve your product. Okay? Again, for a golf club, there's nothing to improve. Okay? That's the whole point again, and besides, it represents a minor part of the annual budget for the switching cost. Okay? And a golf club is better off focusing on acquiring new customers by spending on advertising with Meta than changing its tee time and booking management software. That's why we have something that is extremely relevant.

Secondly, why is the VMS economy so attractive? You've understood, the switching cost is still huge, and we'll see that when we delve into Topicus' portfolio. When a golf club has been using the same software for 15 years, members, payments, bookings, changing it involves migrating data, retraining staff, a risk of business interruption, etc. It's the famous phrase. Go tell Giselle from accounting to get used to a new tool, it will be a bit more complicated than telling a dynamic executive working at Salesforce or at an Adobe client company. They will be much more receptive to potentially making the change to another software, and these are people who are much more flexible than small SMEs that are really not at all, it's not their business to manage software. These people. So the risk-reward ratio is truly catastrophic, and the client never leaves. That's why we have this retention again. Secondly, recurring revenue and especially predictability. The model relies on maintenance, support, and now SaaS. Once the software is installed, the client pays every year without thinking about it since it represents a minor part of their budget. So we have remarkably regular cash flows, very insensitive to the economic cycle. A golf course or a funeral home operates in recession as well as in expansion. So in this regard, it is truly counter-cyclical by nature of the model. Thirdly, pricing power is very high because the software is critical and can be costly, and relatively inexpensive compared to the client's budget. The publisher can really increase its prices by 3 to 8% per year without causing departures. And it is this price inflation that is the main driver of organic growth in the sector, which remains modest compared to the overall growth in this area. On this point, I often take the example of Gifi. Gifi is a company that you all know, which literally went bankrupt by changing its inventory management software. They changed this software, and in fact, the new software had a bug. They didn't manage it well enough and couldn't manage the supply to the different points of sale from the suppliers to the different stores. We had stockouts, it was catastrophic. They literally went bankrupt because of it. Well, it's the most extreme and well-known example. To give you an idea, often, in fact, no one working in a golf club or any company will be incentivized to change software that represents a minor part of the company's costs for potentially catastrophic results. Can you imagine when we talk about retraining staff, migrating data, risk of interruption, etc., and in fact, it's too much risk compared to the added value you will gain from it. Okay? So you simply don't do it. And finally, fourthly, the market is too small for giants. No major publisher, Microsoft, Oracle, etc., SAP, will develop software for 800 marinas in the world. And especially, they won't have pricing power, they won't have anything to implement. And even if I took the example of marinas, there are many other segments, but the market is too small to justify the investment, and also, if you do market research, you will prospect about ten marinas, and you will quickly realize that their software still suits them very well. They simply don't want to change, and you can't offer them half the price because it's not worth it for Microsoft, etc. You won't do a segment like that. Not at all. So this small niche eliminates competition from major players and allows a supplier to dominate a quasi-local monopoly. Okay? And that's what makes it so that when we do

The difference between VMS and horizontal software, so Excel, Salesforce, etc., in fact, at the competition level, we have two or three niche players for each segment. Compared to truly horizontal software, there are many more. Switching costs are very high, and horizontal software can be more variable, often lower. Customer retention is much better with VMS. Organic growth too, we have good growth in both. Pricing power, we also have a higher price setting with VMS as in fact, once again, we have no alternative compared to what we can have with horizontal software, and the interest of giants is almost nil in this area. So, indeed, we have high switching costs, recurring revenue, pricing power, and a trophy market for large players. And this is, in fact, the recipe for performing well and for truly generating a lot of cash in the long term. Now, regarding Topicus' hunting ground, it's very simple, we are in continental Europe. So, in fact, we are really on a segment that is more fragmented and multilingual. We are talking about 24 official languages in the European Union. We have 287 languages that are, in quotes, indigenous, that's what we call it, well, we call it that, compared to 3 in North America, and also in Europe, private equity is less developed. We will see this in the competition section. The result is a larger, less contested pool, and lower acquisition multiples. And we also have the linguistic and regulatory barrier, which is truly a mode that will protect its positions. So, the Topicus model is to buy VMS and leave them independent. Okay? We don't integrate them into the company. We really buy software and let it run on its own, and we just collect its profits to buy a second, a third, and so on. Regarding competitors. Precisely, it's very simple. What is Topicus' advantage over Constellation Software compared to private equity, and we will see this together. Now, the main competitor families, in fact, we have other listed consolidators. So, the consolidators, the most direct competitors, share the same acquisition philosophy, so programmatic, that's the technology acquirer part, and also Visma in the Nordic region, which is one of the closest competitors, if we can say that. So, here, for example, we have 2.5 billion in revenue. It was founded in '96. We have made nearly 200, that's enormous, acquisitions, so more than 40 in a single recent year. It's a very serious competitor, but they have a different philosophy, meaning they tend to focus on fast-growing niche SaaS, whereas we are more about buying cheap software with organic growth, which doesn't exceed about 5-6%, but we have roughly the same European hunting ground as Topicus. And then there's the PE fund, private equity. So, Vista, Thomas, [grunts] Bravo, Francisco, etc., have colossal capital in private equity. So, they have an advantage there. Okay? And also expertise that is more specialized in software acquisition. But in fact, where Topicus has the advantage is with the founders. What we can offer founders, when I say, where Topicus offers founders a permanent home. That is, what is the objective of PE? It's to buy a company, restructure it, cut costs, lay off half the people, transform the software, well, the company they buy, and resell it within 5-6-7 years maximum to make a profit. So, when you are a founder, you have spent 20-30 years of your life literally building your company, you know that if you do it, if you are acquired by a PE fund, yes, you will perhaps earn, and on average, it's 15 to, well, 10 to 15% more than if you go to a company like Topicus. But in fact, in return, you know that your company will be destroyed. There, it will be literally bought by sharks who will fire half the employees you recruited. Well, even if you didn't recruit everyone in these types of companies, which are also enormous, but you understand, your company culture will collapse entirely. Okay? And there is a lot, precisely, the non-monetary weapon of Topicus is the promise of permanence. That is, Topicus, like Constellation, doesn't win its deals by paying more. They would often lose them to private equity, okay? But simply, it's the promise made to the founder who is selling, which is: we will never resell your company. So, they will keep the company for life. We will not dismantle it. Your employees will not be fired, and your culture will remain, okay? And moreover, you will keep operational autonomy for the Topicus part. Well, you will see in the valuation section, we have what are called minority stakes, and most of the time, in fact, we will buy only 60-70% of the company. So, the founder will keep 30-40% of their company. Okay? Who will remain a shareholder of their company. So, for a founder, as I said just now, they have spent 25 years building their niche software, in fact, this promise is often worth more than a PE check of more than 15%. So, it's truly a structural and non-replicable competitive advantage because, in fact, it's outside the business model. PE makes money only because it restructures everything, cuts all costs, and so on and so forth. Otherwise, it doesn't have the playbook, etc. In fact, it's not the same business model as Topicus at all. Okay? So, that's why it's similar, but we are not at all on the same thing, and we still have a huge advantage in this part for Topicus and Constellation Software. Okay, that was for the competitor part. Then, the Constellation part, it's the same DNA, okay? Same ball, even Salesforce, meaning that how they find companies to buy, in fact, it's a Salesforce CRM, quite simply, with all the targets on that side. And, moreover, their, their, they have managed to outsource, or rather decentralize, that's the right word, the acquisition part. That is, it's not just, for example, Mark Leonard, the founder, who does the acquisitions, but they have managed to decentralize this, which means they manage to make 120-130 acquisitions per year. That's just enormous. But in fact, Topicus differs by its European territory versus North America and by its size. We have roughly, well, the equivalent of the cash that remains for shareholders. We are at 222 million for Topicus compared to 1.9 million dollars for CSU. Okay? So, in fact, it's 8 times smaller. Hence, once again, a theoretically longer growth path. Okay. [grunts] After, we will move on to the Lumine part, I should have moved on to it from the beginning, because, in fact, if we take Constellation and the Constellation Software ecosystem, we have Constellation Software, and then, in fact, we have Lumine and Topicus on one side. These were two companies that were really within Constellation Software and have now been separated, so spin-offs that you can buy independently on the stock market, they are listed. In fact, Lumine, I'm less of a fan because it's, well, a younger and riskier platform. That is, in fact, the segment they are positioned in is software for communication and media at the heart, excuse me, of a sectoral recomposition. And indeed, why does this interest me less? Because precisely, I have less predictability in this segment, okay, compared to, well, the other VMS software that Topicus may own in terms of segment and what they are positioned on. Because here, well, broadcast, we have a decline and a rise of streaming and digital. And this is reflected, well, it translates into negative organic growth of the portfolio. That is, each year, they don't increase prices by 5%. Each year, they decrease the prices of their, their, their software by 2%. Which means that the growth they can achieve is only through acquisitions and external arbitrage that must compensate for this decline. So, they can achieve it, but in my opinion, well, it's another risk profile, and I prefer not to take it directly. Although, anyway, we will get to it in a moment, well, anyway, you are already exposed to Lumine when you buy Constellation Software. And precisely now, well, yes, we will take a detour on the three-tier structure between, well, CSU, between also, hop, I'll put it here, Topicus, and also, well, we'll go back to the CSU part, which, in fact, well, will own an economic part and also a voting rights part of these three companies. So, if I start directly with tier 1, so control, who commands Constellation? It's, in fact, very simple, don't overthink it. In fact, we have Constellation which will own a part of Topicus and Lumine. It's not that simple. So, the only problem is that at the Constellation level, if it's not a problem, Constellation will own a share called a super-voting share. So, a super-voting share, in fact, which allows them, no matter what, to permanently own 51%, well, 50.1% of the voting rights. So, in fact, they will always be the majority. What I mean by no matter what is that if tomorrow Topicus increases its number of outstanding shares by x2, diluting shareholders, we don't care. Constellation, with the super-voting share, will retain its 51% voting rights and will remain at 51%. Okay? All of this with only 30% of the economic stake, so 30% of the market cap of the company as a whole. Okay? Which means that this share gives them the right, and it does so, to appoint six directors out of ten to the board of directors. So, we indeed have Constellation Software, which is, in fact, not the majority in terms of economic stake but is the majority in terms of decision-making. Okay? So, control is locked. Regardless of the number of shares issued, CSU's voting share will automatically recalibrate to 50.1%. Tier 2 is the economic stake, the 129.88 million shares, and this is where everyone makes a mistake. I think 50% of YouTube videos or those sent to me, or even articles, take into account 83 million shares outstanding, which is, in fact, people don't look any further, they don't go into the annual reports. Well, they stop there, they go to, well, the 2+4.8, and it doesn't work. And in fact, the problem is that if you take the number of outstanding shares in the market cap, you will have a multiple of 21, and then you will say, which is not the case at all. So, as I said earlier, let's calm down, let's re-evaluate. We indeed have Constellation Software, okay, which has 30% of the economic stake. We have Jed, who is the historical founder, who also has 30% but is not listed with the part, well, with the shares, that Topicus has on the stock market in Canada. After that, we have the IJCL part, I don't know how to pronounce it, but in fact, he has 10%, and we have the public, which is listed on the stock market, which I bought, which you can buy on your end, which is the remaining 30%, which everyone sees. Okay? So, we have a total of 129 million shares. This is the complete economic base. That is, the listed figure of 83 million shares only shows the public plus a part. But you absolutely need the 129.88 million to value it, since the founder Jed, obviously, has the right, in the same proportion as you, and as Con Software, and as, well, GEL, to a part of the proportional profits, okay? Except that simply, he has these shares aside, and they are not listed on the stock market, but they exist, and you must take them into account. So, the trap, indeed, is, well, that Constellation controls 50% of the voting rights with only 30% of the economic stake, and well, owning control doesn't necessarily mean owning the economic stake. Okay? We are not the majority in terms of economic stake, but in terms of control. Okay? Secondly, so this is the economic part that I detailed for you, and the minority stake in subsidiaries. Topicus only holds an average of 63% of its SaaS subsidiaries, and thus leaves 30-40% to the founders. In Q1 2026, for example, 99 million euros, so 37% of the free cash flow, went to these minorities before, what is called free cash flow available to shareholders, A2S, available to shareholders. So, in essence, how does it work? It's very simple. Here again, you have Topicus at the top. Then, you have, well, all the software that Topicus has bought. For example, SaaS 1, here Topicus owns 60%, SaaS B 70%, SaaS C. You average it, that gives you, well, about 63%. Then, you consolidate, and this is also where the net profit is completely biased, because accounting-wise, you will account for 100% of the revenue. You will account for 100% of the revenue from SaaS. Yes, but except that the founder, in fact, is still at 30%, so he will have to be paid back at some point, and that's why we have the minority share here, in this case, of 99 million out of, well, 264 million. Okay? And that gives us the famous free cash flow available to shareholders, which takes into account the minority share, and so on and so forth. This is the cash that must be taken into account for Q1 2026. Well, this cash is 165 million euros. Here again, two specificities, I don't know why, but we have CSU, okay, which is in Canadian dollars, and we have US dollars, excuse me, we have CSU Constellation Software, which is in US dollars, and on the other side, Topicus, which is in Canadian dollars, and the problem is that Topicus' revenue on the stock market is in Canadian dollars, but it's in Europe, so it's in euros, so you have to convert each time, otherwise, you are completely biased, okay? And indeed, what you need to remember is that the sites display 83.3 million shares, which gives us a false multiple of 21 times the free cash available to shareholders. However, this free cash comes back to all holders, namely, well, a market cap of 11.5 billion Canadian dollars and not 7.5 billion Canadian dollars, which gives us a real multiple of 33 times, and you must always use these 129 million shares. Here, I've made a small summary, we'll come back to it later. But indeed, the trap, also, well, with the Canadian dollar and US dollar part and reporting in euros and listing for both in Canadian dollars, is that in fact, Topicus, we have a price, so at 91 Canadian dollars, we have, well, the shares, which gives us the market cap, except that we have a reporting on the Topicus website in euros, because we sell in euros. So, you have to convert these 122 million euros into Canadian dollars to get our multiple. And in the same way as for Constellation Software, we have the market cap in Canadian dollars, but we have the reporting in US dollars. So, you have to convert the 1.9 billion US dollars of free cash available to shareholders into 1, excuse me, into 2.6 billion Canadian dollars. Which gives us a multiple of 22, and it's from this basis, from this difference, that we can start our valuation. So, we can indeed draw the first conclusion, which is that Constellation at 22 times earnings, well, free cash available to shareholders, remains cheaper than Topicus at 33 times. So, Topicus is currently priced 50% more expensively than Constellation. And so the question is, by how much does Topicus need to grow over the next 10 years to finally close this overvaluation of its multiples, and is the gap truly justified? So, that's the first answer. After that, we will really delve into it so that you understand how we get these figures. But if we do a simple reverse DCF, we have, in fact, for Constellation, the market currently, okay, well, it prices a growth between 6-8% per year over the next 10 years, which is extremely low. Whereas for Topicus, the market prices a growth of 10-13% per year. But again, I think Topicus can aim for 20% annual growth. I think Constellation Software can aim for 12-13-14-15% annual compound growth over the next 10 years. Okay? So, again, the annualized growth gap to close, we will see it together. In essence, it's between 3 and 5 percentage points per year for 10 years to mathematically justify the 50% premium. And I think, given that Topicus is 8 times smaller than Constellation, we can largely achieve, well, deliver 3-5% more growth per year than Constellation Software, especially considering the market potential and the addressable market share they currently have. We are talking about 2% of the addressable market for Topicus. We will come back to this, I'll close it, and now I'll move on to the analysis part. So, the takeaways are very simple. Indeed, organic growth, you need to know that it's truly the bedrock of quality. It's stable, it's 3-5% over, for example, the last three years, there are no shocks, it's superior to Constellation. Okay? And this is what distinguishes Topicus from a simple acquirer, from a simple company, okay? This ability to have both external and internal organic growth. Secondly, revenue growth is solid and slightly accelerating. We are talking about growth of over 15%, plus 20% in 2025, with quarters up to +24%, driven by an increase in acquisitions. Thirdly, we have free cash flow available to shareholders, which is volatile on a quarterly basis. Okay? You should never take the last quarter and multiply by 4 to get the TTM. Okay? But it is also growing strongly annually. We are talking about +23% in 2025. We have a deceleration in Q1 2026. We only have +2%. We will see exactly why they made an acquisition of Seco. It's one of the largest software companies in Poland that they bought. They have a super capital gain on it, but we have an accounting categorization that means we don't receive cash from this company. So, it biases the accounting metrics. So, we will explain it quickly. And thirdly, fourthly, net profit is unusable in 2025, polluted by the Asseco charge of 221 million euros. In fact, this is why it's useless to look at revenue, to look at net profit for companies like Constellation Software or Topicus, because, well, just Constellation Software, you understand, in its revenue, in fact, well, we have 100% of Topicus' and Lumine's revenue, whereas we only own, as you see here, 30% of Topicus and 61% of Lumine. So, that is to say, if we record 100% of this revenue, then we have to give back the 70% to Topicus plus the 39% that we don't have from Lumine, since we only have 61% of Lumine. Okay? So, this doesn't belong to them. So, we will deduct this. That's why there is a huge minority interest line at CSU. Which means that, in fact, once again, the revenue and profit part is biased. You absolutely must rely on the free cash flow available to shareholders. Also, the small difference, I think you see it here on Constellation Software, we own 100% of the software, whereas, well, Topicus, in fact, we only own 63% of the software. There is a small part to the founder. I am more inclined with this part, how to say? I don't find it at all bothersome, and on the contrary, it allows the founder, since we don't internalize the company, it's still important that the founder remains, well, not only a shareholder but also a decision-maker. That is, there is still the founder, well, not a decision-maker because he is a minority shareholder, but he is still the one who, well, partly manages the company, and he is still the one who founded this company, so he has a much finer knowledge of his segment, his small competitors, etc., around. So, it's still a strength of incentive to leave the founder like that, who is a shareholder and therefore still has skin in the game. Okay. [grunts] Now, I'm going back to the free cash flow available to shareholders growth, because in fact, we have just incredible growth, and you understand that. That is to say, if here, so I have taken all the reports from the fiscal year 2024, quarter by quarter. So, we indeed have here the revenue. We have the revenue growth, so in percentage, +15, +16, +20, +24, +20, +20, +23. We have the organic here. We see that we really have, well, almost all the time, we have +4, +5% organic growth. So, it's really very, very solid. Okay? So, for five consecutive quarters, organic growth remains in the range of 3-5%, and this regularity is truly the signature of an extremely healthy VMS portfolio. Okay? With constant pricing power. When the organic part starts to decrease, hmm, you can say, "Okay, this is not good, we haven't managed to renegotiate with current customers. Well, they didn't want us to charge them more." So, that can start to be a problem. This is not the case at all. And precisely here, I will move on to the free cash flow available to shareholders part. So, we start from operating cash flow. Okay? Operating cash flow, we subtract the share for minorities, so the people who are shareholders of the software. We are the majority shareholder at about 63%. The rest goes to these minorities, in this case, the founders. Okay? Then, this gives us the growth here. Now, there isn't all the data, but in fact, what, because, well, I haven't taken the previous data, but in essence, what I'm showing you, the most important thing to remember is that if we accumulate, well, the fiscal year 2025, we have a growth of +23%. Very, very good growth. And then, if we go to Q1 2026, we only have a growth of +2%. Okay? This is really very, very low. So, how do we explain this? In fact, we explain it by what they have done in the last quarter with the acquisition, or at least with the stake in a company listed on the Polish stock exchange called ASO. And in fact, this is truly one of the most important switches to understand, because it can potentially call into question the thesis of this company, the equity method part, and precisely Asseco, because Constellation Software is also starting to implement it. So, what I will do is explain to you what they have concretely done. In essence, usually, you understand, the business model is to have money. Okay? With this money, well, with these profiles, we buy software, and with the profits from this software, we buy another software, and so on. You have really understood that. And in fact, what we have done this quarter, I will show it to you here. Okay, we took 390 million and we indeed made classic VMS acquisitions as we do habitually. This truly feeds the virtuous circle, the flywheel. Their cash goes up in free cash flow available to shareholders, which is available to buy other software the following quarter or year. Okay? And in addition to that, we have, look, immobilized 384 million euros by taking a minority stake in what is called an equity method investment, I know this may not mean much to you, I will explain it, it's very simple to understand, and which, in fact, does not feed the free cash flow available to shareholders. So, in essence, we take money that we will immobilize in a company that is listed on the stock market, but we do not have the right to the profits of this company. So, in fact, the profits, well, they do not go up into the free cash flow available to shareholders that we can reinvest in other acquisitions the following year, because these profits remain in the listed company. Okay? And we only have the right, well, to dividends, to a portion of dividends, if the company decides to pay them. So, I'll show you a bit what they did, because they made a lot of money, but again, it's Latin, it's on the stock market, and it doesn't appear in the cash. In fact, if I show you Asso, it's one of the largest IT companies in Poland. In Poland. Well, wait, why is Mastercard there, I don't know. Okay. Top. I've switched to Asso, I'll switch directly not to zloty, but to euros to have the same conversion. In fact, they bought right here. Okay? So, for 385 million euros, so in essence, that's 25% of the business, because the business currently, well, trades at, well, here again, it's still in dollars, well, it's still, excuse me, in zloty, but if I switch to the market cap, if I convert to euros today, it's 3.71 billion euros, and we bought it at 1.88 billion euros. So, we really got a great multiple, because here, well, we took a 25% stake in a company that is currently worth 115% more. In terms of EBITDA, they bought this company at 8 times its EBITDA, well, it's here. And today, ASECO is valued at 20 times EBITDA. So, we can say, indeed, they made a very good deal. That's the case, but again, its value is only on the stock market. In fact, I could give you an example. You see, I have Chipotle in my portfolio. You'll say it has nothing to do with it, but in fact, it does. If I take Texas Roadhouse, Chipotle, Constellation Software. Okay, so these are companies, you'll tell me they have nothing to do with it. Chipotle sells burritos. Texas Roadhouse literally is a company that sells steaks in the United States in, well, in restaurants. But in fact, they all have a common point in their business model, and they have, well, first, the common point is that they have all literally exploded the S&P 500. You see, if I put here, hop, S&P 500, on, well, on Texas Roadhouse, we are at +2000%. If I add Chipotle, then it's even more striking. Chipotle at +4000% despite the drop, we had reached +7000%. So, we are approaching Constellation Software's performance. In fact, indeed, whether it's Constellation Software, Chipotle, or Texas Roadhouse, how do these companies make money? Well, it's very simple, they have profits, they reinvest these profits in production units, namely restaurants and software. Okay? And it's the profits from these restaurants and software that will allow them to buy a second restaurant, a third restaurant. So, in fact, growth is financed by the ability to open more profitable restaurants and buy more software and reinvest profits in other software. Okay? It's really the same thing on paper. Okay, I'll put it like this, you'll see better. And what I want to explain to you is that the growth we are delivering at Chipotle, at Texas Roadhouse, or at Topicus, Constellation Software, we don't do it, again, with existing software, with the profits from existing software. Software, we saw it together at Topicus, it's about 5% organic growth rate. That is to say, if you immobilize, we saw it together at the beginning of the video, 1 million euros, then yes, you have 250,000 euros, but these 2500 euros do not increase by 25%. Okay? These 2500 euros only increase by 5% the following year. So, all the growth is the fact of reinvesting these 250, these 2500 euros in new software at 4 times the profits. It's the fact of taking the profits from a current restaurant and reinvesting it to open a new restaurant. That's the whole mechanism. And if I take the Asseco case, why does it change everything? Because it would have been the equivalent, you see, if I put on the income statement, hop, I'll put it like this, for Chipotle, what do we have? We have about 700 million in capex on a TTM basis. If these 700 million in capex, we reinvest them, let's say at a 30% growth rate that Chipotle has, in about two and a half years, it has, it has fully paid back, what is called a cash on cash for its restaurant. That is, they have a restaurant today, in two and a half years, the restaurant is 100% paid for by the profits of that same restaurant. That's exceptional. Okay? And these 700 million, if we assume a 30% return on them, 7 x 3 makes 21. So, well, 210 million. That is to say, these 700 million will generate 210 million for us. And it's again these 210 million that we will reinvest in other Chipotles which will generate another 30%. And that's where we achieve growth, because, in fact, all current Chipotles, again, have a growth rate of only about 5% per year. But if now, precisely, these 700 million, we put them, for example, we buy a minority stake, for example, in Texas Roadhouse and Topicus. So, they bought 25% of Asseco. If Chipotle, tomorrow, buys 25% of Texas Roadhouse with its profits. Then, given the market cap, it will be more than 700 million, but it's so you understand the mechanism. We agree that Chipotle will buy 25% of a company where, in fact, the profits of this company will not be distributed to Chipotle, because, in fact, Chipotle will not own, well, it's not its company. So, in fact, Chipotle will only have the right to 25% of the dividends, if the company pays dividends. And if the company does not pay dividends, Chipotle has no profit. So, Chipotle will not be able to reinvest, well, the famous 210 million it would have had by reinvesting in its own Chipotles. So, now you'll say, "Yes, but what's the point of increasing by then, why does it disconnect every time? I don't understand. Anyway, you'll say, yes, but what's the point of increasing by 100%? Yes, but that's a stock market gain again, and that's the whole point where I'm telling you that if they reinvest a much larger portion of their profits each year in stakes.

Minority stakes, in fact, it will no longer be the business model of a serial acquirer or a programmatic acquirer, but of a holding company. And there, the multiple collapses because in these cases, we no longer have, once again, this snowball effect which is only produced by reinvesting profits. Okay? And again, if they indeed take, say, 25% of Asseco and we are entitled to 25% of Asseco's profits and we actually receive the cash from this 25% of net profit, well, why not? Again, this is not the case because we will only receive 25% of Asseco's dividends. And Asseco's dividends on, so everything is in zloty here, but in fact, Asseco's dividends are not even 10% of the free cash flow. So we receive 25% of 10%, we receive almost nothing. Okay. So again, it's cash that is tied up. Yes, in a good company that will compound, but we cannot reinvest the cash. I have elaborated a lot on this because it is extremely important to understand that these are companies that make money, that generate cash because they have this integrated part where they take the profits from a company they bought to buy a second one. Okay? And if you take these profits and tie them up in a company that will perhaps increase in value, but if you don't have the cash, if you don't see the cash flow, then you can only hope that this company makes very, very good acquisitions so that it itself compounds at 25% per year. This can be the case, and it was the case, for example, we will do a case study on the previous one they bought. So, here, I'm already giving you the case of Asseco. So indeed, yes, they deployed in 2025, I'm talking about Topicus, 775 million euros, a record amount, but half of it is for Asseco. And in fact, it is dormant and outside the flag, okay? Because we will not be able to reinvest these profits since we will only have, once again, 25%, the stake we have in dividends. And so this is exactly the tension of the visible thesis in figures. So indeed, what do we have on Topicus? We have a free cash available to share of only +2% of the 6, while we have a turnover that has increased by 23% and we still have organic growth of 5% because again, we could not reinvest the the this part, in fact, it did not produce any interest, or rather, yes, interest, simply, okay. And so the case in 2025, yes, Topicus, we saw it together, is accounted for using the equity method, meaning if I take the example of Google, of Amazon, meaning that Google, after taking a stake in Anthropic. Amazon took a stake in Rivian, and in fact, since they did not reach, like Asseco, like yes, like Asseco, 25%, it's a different accounting treatment. That is to say, it's an accounting treatment for the case of Amazon or Google. If I put myself, again, in Google's shoes this year, we had a net profit that exploded by almost 100% because precisely, we have an equity method, we don't have an equity method. See here, look at Google's net profit. If I look at TTM, +29%, +32%, wow, +80%, these guys are too good. Yes, but in fact, no, it's, you see, and here we have what is called non-operating income, unusual income, expense, +36 billion. The +36 billion is exactly the stake they had, for example, in Pic, in the long-term investment part, so in assets, which went from 68 billion to 106 billion. So, in short, the stake in Topique increased by 36 billion in valuation. And in fact, since they only, since they did not cross the thresholds of +15% and so on, well, in fact, it is accounted for directly, it passes directly and directly increases the balance sheet of the stock market valuation. Okay? Whereas when you have a 25% stake, this is not the case. It's not a question of valuation. Tomorrow, if you have your company on the stock market that increases by 10,000%, you will not have a revaluation of +10,000% of your investment. You will simply have a revaluation of the share of profits minus dividends. I will show you this very quickly on Topicus' balance sheet. In fact, what do I mean by the share of profits? It's the share of profits, so to speak, to which you are entitled, which you own, namely 25%. Moreover, to be precise, it's 28% of the profits. So, in fact, the long-term investment, here you see that from 15/25, we had a first stake, and then we went to over 800 million. So indeed, the valuation of Asseco on the balance sheet is 800 million. And these 800 million will be evaluated with, well, the purchase price plus 25% of Asseco's profits over the period minus the dividends we have received. So this is what is called the equity method, meaning that again, regardless of the valuation we have on the stock market. Okay? And then on the other hand, again, Google or Amazon with Rivian, and Google with Anthropic, it's not the equity method, it's what is called the fair value method. And the fair value method has nothing to do with profits, it's simply that we will revalue based on the stock market valuation compared to our purchase price. Like your portfolio when you buy a stock, it's exactly the same. But where the little subtlety lies is that this is at the balance sheet level. At the balance sheet level, we saw it. So it's the acquisition cost plus the share of profits minus the dividends received over the period. But at the income statement level, the profit and loss account, well, here we will account for 25% of the net profit. That is to say, in Topicus' profit and loss account, there will be a line where we will have 25% of Asseco's net profit. That is to say, so here, yes, it's not in euros, but roughly here, 1.1 billion, so we will have 250 million zlotys that will directly increase Topicus' net profit. However, we are not entitled to it. Or rather, we are entitled to it, but it doesn't belong to us. It belongs to the company, we are entitled to 25%, so indeed 250 million, which if they pay it to us, because in fact, we cannot use this cash, this cash belongs, once again, to Asseco, okay. It is for this reason that there are enormous distortions in the profit and loss account of Topicus, just like Constellation Software, which also owns 30% of Topicus, well, in fact, we also record it in the profit and loss account, except that afterwards we will deduct it directly in the free cash flow available to shareholder section. That's why you really have to rely on, at a minimum, the cash from operating activities section and obviously the free cash flow available to shareholder section. Okay, very important. And so, here is what I have written. Balance sheet value: cost plus share of profits minus dividends, unrelated to cost. Okay? So it's not the valuation, we don't revalue it with the fair value method, but it's really the equity method. The direct consequence is that Asseco's cash does not flow up. So free cash available to shareholder, only dividends count, but dividends of 2 million over the period on an investment of 400 million, that's zero. Okay? That's the whole problem. So yes, Asseco is an excellent purchase, but its value is latent. And only if we sell our stake, but that is not at all the objective and not what we will do. Okay? So the strategic question is not a quarterly slowdown, okay? But is Asseco a simple one-off cost or the beginning of a transformation of Topicus into a holding company? Because if we start reinvesting 100% of our cash in external businesses, for which we cannot directly have the profit in our accounts to buy more, then we no longer have the same business model at all, and we are in the multiple of a holding company, meaning the market will re-evaluate Topicus as a holding company with a much lower growth rate. Okay? This is really the risk for Topicus, that we transform ourselves into a holding company by doing more and more deals like Asseco, okay? Before addressing the valuation and conclusion section, we absolutely must go to the PEMS model they are putting in place. I say putting in place again, because we already talked about Constellation Software in 2008. So, what is the PEMS model and the law of large numbers? We already addressed it in the introduction. It's actually you take the rule of 72, the rule of 72, which you divide by a growth rate, and that gives you the number of years it will take for the sum to double. So, if you have something that compounds, let's say at 20% per year, you do 72/20, that gives you 3.6. That's in years. Meaning that any sum that compounds at 20% per year will take 3.6 years to double. If currently your company, in this case Constellation Software, generates a free cash flow available to shareholder of 2 billion, and if it compounds at 20% per year, in 3.6 years, it will not have 2 billion, but it will have exactly 4 billion. And these 4 billion, well, the challenge is to reinvest them at, you've understood, a 20% compound growth rate at a 20% return. And the problem is that the addressable market does not grow by 20%. So you have your company growing by 20% per year, and the addressable market, in fact, at some point, it will clash, and that means they will not be able to reinvest 100% of the cash at a 20% rate of return, and the rate of return year after year will decrease, and that's precisely why we talk about PEMS. In fact, it's simply taking stakes in publicly traded companies like Topicus and Asseco. So, permanent for the objective is to hold forever, like everything Constellation Software does. Engaged, in fact, is with a board seat and active influence, and minority, a stake between 12% and 28%, and not a 100% buyout. So, indeed, instead of buying an entire company, we take a minority stake in a large listed company that is undervalued. Point number 1, we talk about the undervaluation of a company on the stock market. Be very careful. And we exert our influence. So this unlocks a truly enormous reservoir. If you have a company valued at 10 billion on the stock market, you take 10%, that directly gives you 1 billion of directly injectable capital, and you can invest 1 billion directly. Okay? And this is not a betrayal of the model. As early as 2008, Marc Leonard was already writing that he was taking minority stakes in listed companies to unlock value when opportunities arise, when there are massive discounts. And it is in this sense that companies like Asseco, in my opinion, at 8 times EBITDA, are still quite undervalued, okay, on this point, so it's interesting. Okay, so it's indeed, in fact, just the large-scale formalization of a practice that has been around for 20 years in this regard. So, the benefits are that it absorbs very large amounts, okay? It will unlock growth beyond the classic reservoir. We have access to companies that are too large to be bought in their entirety. We can buy them at a discount because, in fact, we can really have, instead of currently, they have, indeed, a watchlist on Salesforce CRM, on all the software we can buy 100%. Well, here, they will have a watchlist on all the companies listed on the stock market, and they will be able to be in sniper mode, where as soon as a company collapses, they have the possibility to take 15%, 20% of that company, to have board seats to go and, well, really, in fact, to become activists. Ultimately, it's a bit like what investors like Bill Ackman do, they arrive, they restructure the company at the management level, they bring their expertise, etc. So that's why, in fact, we have a different risk. We have a different accounting treatment as well, and it is in this sense that we must really, it will be a criterion to look at much more precisely than what they were doing before. So, we also have an opening to new geographic markets, and we have the same discipline of return, meaning that, well, they will look for companies that have a real capacity to grow and buy them at an undervalued price. But the risks are, first, the accounting flaw, so equity method. The key indicator, free cash flow available to shareholder, only captures dividends and not the value created, a rather significant problem. Secondly, trapped capital. This is also, we will see it together on the last acquisition, or rather the last minority stake of Constellation Software in Saber, or Sabre, I don't know how to pronounce it, but in fact, the target Sabre resisted, and so if you have the company resisting, and in fact, with its own agenda, you cannot get to the board of directors if everyone doesn't want you to be there. Then the ideas you will submit will never be validated. So in these cases, the company can continue to stagnate, can continue to decline, and you have cash that is tied up in a company that does not generate returns and, moreover, does not increase its profits. So here you really have double jeopardy, okay? And also, yes, the transformation of nature. If it's too repeated, the company will compound towards a holding company, and then the multiples will obviously be lower. So the management itself also recognizes the flaw. He admitted that free cash flow available to shareholder captures nothing of his investments, indeed, and he is currently trying to create a new metric called economic net income to correct this. Here, I'm giving you some concrete examples of the latest, finally, the latest investments in stakes like this in companies they have made. So I will take Asseco, indeed, we have already seen it together, also Signity on one side and Sabre on the part of Constellation Software. So we have already seen it together, and in fact, the previous one they did was Signity, they took a stake in 2022, and it became a ten-bagger in 3 years. That is to say, the company x10 in 3 years. Okay, 1000%. Hats off, great, it went very, very well. And the Constellation Software case, I will also put it on the screen because here, indeed, it's a bit more complicated. Here, we are really on turnaround, and it is precisely in this sense that when we buy software, it's not software that is in turnaround, it's software that directly spits out cash. Whereas here, they have, they bought this company. So, it's a small stake. It's still a company that went from 27, in fact, that literally collapsed on the stock market, -92%. So they said, well, indeed, yes, everything has been slashed, it's still a company that generates money. We know Constellation Software perfectly, we know the business model perfectly, etc. So they said, "Okay, we'll join the board, we'll challenge the board a bit, and we'll try to turn the company around." So that's what they are trying to do. Will they succeed? Will they not succeed? That will be a bit of a surprise. But indeed, so currently, they have 12.7% of the American travel tech giant. They are capped at 15%, they cannot go beyond 15%. And yes, as I just told you, it first resisted, negotiations broke down, etc., before accepting, and this perfectly illustrates the risk of trapped capital because if this company continues to decline, then it's clearly lost money. Whereas we don't have this risk at all, much less, and much better, and yes, much more controlled when we directly position ourselves on classic VMS software that we know perfectly. So, if we do, here you have a bit of the conclusion of the different types of acquisitions they have made. And in fact, the PEMS is really the most intelligent response a company has found to continue to grow when it becomes too big for its own targets. But it's also a bet that could transform, as we saw together, the business model into a simple holding company, and everything will really depend on the execution, how much it will create value. So I spent a bit of time on this because for me, it's one of the two risks I can see for Constellation Software and Topicus. And in fact, when I talk about risk, it's also one of the main metrics I will follow quarter after quarter. And in fact, I will always pay close attention to all the stakes they take, and I will really watch this very carefully. Okay? Now, I will directly move on to the valuation section. So, we have already seen this part together. Okay. So Constellation at 22 times free cash flow, Topicus at 33 times, and the only question is, at 33 times, how much must Topicus compound to justify this increase, this 50% overvaluation of multiples? Well, that's exactly what, well, that's exactly what an inverted DCF allows us to do. So, here, I have put a small document, well, I have made a document for you on an inverted DCF, inverted DCF, well, inverted. In fact, we start from the end, and in fact, we compare, okay, based on the current valuation, what is the growth rate the company must achieve to deliver us a growth rate? Here, in this case, I put 15%, and then we will make some assumptions. So, yes, by how much must Topicus grow faster than Constellation to justify its 50% premium? So here, we will evaluate this based on exit multiples that will obviously be independent between CSU and Topicus. Here, I have put the summary. Okay. So obviously, we need to convert the Canadian dollar here with, well, euro to Canadian dollar for the market cap. Same here, US dollar to Canadian dollar. Here, the calculation rule is very simple, it's an inverted DCF, it doesn't change. I will take the Topicus multiples. I will make the assumption that in a bull case, we will trade at 37 times free cash flow. In a base case, 30 times free cash flow, and in a bear case, 22 times free cash flow. For CSU, it will be 28 times in a bull case, 22 times in a best case, and 18 times in a bear case in 10 years. Okay? I'm talking about in 10 years. Okay, so first, first slide, okay? The first result, result 1 of our valuation, is that for a purchase today to yield 15% per year over the next 10 years, what annual growth of free cash flow available to shareholder is required? Okay? Well, for Topicus, if in 10 years it trades at 30 times free cash flow available to shareholder, this free cash flow must grow at 16% per year. Okay? If Topicus trades in 10 years at 37 times earnings, then we will obviously need a lower growth of only 13.7%. And if Topicus trades in 10 years at 22 times free cash flow, then we will need an annual compound growth rate of 19.8% per year of its free cash flow to deliver us 15% per year. So why did I put 22? Because, in fact, I made the assumption that, as we saw, Topicus is 8 times smaller than Constellation Software, and that in 10 years, Topicus will be roughly the same size as CSU if things go well. And today, CSUS trades at 22 times free cash flow. So, I thought we could make this assumption for the future at 22 times earnings in the bear case, since I think today, well, I think it's quite negative, 22 times earnings for Constellation Software today. And that's why I valued Constellation Software in, how to say, in 10 years at 22 times earnings. Okay, which again, 10 years ahead of Topicus in terms of growth. So for Constellation Software, obviously, if in 10 years it trades, all else being equal, as they often say, at 22 times earnings, then we only need 15% free cash flow growth to generate 15% stock price growth. Okay? For the bear case, it's 17%. And what should be understood is that if Constellation Software trades at 28 times free cash flow in 10 years, we only need 12% annual growth to achieve 15% growth. This is really, in my opinion, not a lot. Just like for Topicus, I think Topicus can both trade, let's say, at 35 times, 37 times free cash flow in 10 years, and also deliver us a compound annual growth rate of free cash flow of 15%, 16%, 17%. And in these cases, we will see it in the next results, we are at 20% per year, because if we also take the trouble to look at historical multiples. So, here, if we try to see at what multiples Constellation Software traded when it traded at 5,000 Canadian dollars. Okay? 5,200. Well, it's very simple, we multiply 5,200 by the number of shares. The number of shares at Constellation Software here, we have it here, it's 21 million. So, if I do 5,200 x 21 million shares, that will directly give us, well, in billions, it's 109 billion Canadian dollars. Then, we take the free cash flow available to shareholder. Well, we will take the free cash flow from 2025, which we will [grunts] convert to Canadian dollars, namely, here, we have it precisely here, namely, 2.61, okay, and we will divide this finally to get, let's say, the multiple, divide by 2.61, which gives us 41. So, in short, Constellation Software traded at 41 times its free cash flow available to shareholder in 2025 for a company that is quite, quite large, and which will have difficulty compounding at a 25% growth rate per year. It's complicated because, again, at the valuation level we had in 2025, the market assumed that we would continue to deliver 25% compound annual growth rate per year. In terms of free cash flow, well, we saw it with the law of large numbers, it will be complicated. Okay? However, today at 22 times free cash flow, that changes everything. And in the same way as for, so for Topicus, Topicus, it traded here, similarly, we had, we had insane valuations. If I take, indeed, yes, we were at the peak. Well, I'll take the peaks, well, here I'll take 190 multiplied by 129 million outstanding shares. We had a market cap of 24.6 billion Canadian dollars. If we divide it also, well, by 351, so divided by 351 million, that gave us a multiple of 70. Okay? It traded at 70 times free cash flow available to shareholder. But that's crazy. And that's also why I want to tell you that yes, these are companies that have grown, well, by 50%, but these are companies that, in fact, had such a high multiple, such a high valuation, that it's only after a 50% drop that it becomes interesting. Okay? I would never have bought the company at 50 times, at 70 times its free cash flow, even if it grew by 20-25% per year. Okay? However, buying a company today at 33 times its free cash flow, which I believe will grow at a 20% compound annual growth rate over the next 10 years, that's very interesting for me. Okay? And here, I think you now understand why we can aim for these 20% compound annual growth rates for Topicus, which is, again, small. Okay, we only have 351 million Canadian dollars compared to almost 3 billion for Constellation Software. So I'll lower my DCF. Okay, let's move on to result number 2, the actual scenario-by-scenario difference. The additional growth that Topicus must provide is not constant. It varies significantly depending on the exit multiple scenario chosen for each. So CSU, Topicus. That is to say, if I take the assumption that Topicus, okay, is indeed in the bull case, and also CSU in the bull case, CSU must grow by 12% and Topicus by 13%. That is to say, in fact, we see that Topicus simply needs to deliver a growth rate of 1.4% per year to have the same return. I think Topicus will compound at much more than 1.4% per year. Okay? So, in fact, we see that in the bull case, well, again, Topicus simply needs to have a growth of more than 1.4% per year compared to CSU. And if Topicus grows by 5% more because it is smaller, in fact, we blow up Topicus, we blow up CSU in terms of return. For the base case, we see that it's a bit more pronounced, and in fact, it's in the bear case where we see that we have much more margin of safety on CSU. We see that in the bear case, Topicus needs to have a growth rate of 2.5% more per year for us to have the same return. That is to say, in fact, we will need more return in the bear case than in the bull case. So, it is in this sense that if you are, in the bull case, Topicus can largely and will largely outperform CSU. But in the bear case, Topicus, if Topicus trades, well, indeed, at 22 times earnings in 10 years, then it will require more growth compared to the bull case to finally have the same performance. So, it is in this sense that we have more margin of safety and more resilience on CSU than indeed on Topicus. In other words, in the central and bullish scenarios, Topicus, well, only needs to grow one point faster than Constellation. So, an additional growth that is easily within its reach, given its 8 times smaller runway. And the real disadvantage, as you understood, of Topicus only materializes in the bear case, where the compression of its multiple is higher and weighs more. Okay? Because, in fact, we would start from, we would have a more significant compression. And finally, scenario 3, realistic scenario side by side. Here, we will now apply a plausible growth to each, okay? And its own exit multiple for the same scenario. That is to say, if we take Topicus, if I take the assumption that we will be in the bull case, a growth rate of 25% with an exit multiple of 37, we have 26% per year stock price growth, which is x10 in 10 years. You put 100 bucks today, you have 1000. Okay? You put today, as I did, 30,000, and I increased it to 40,000, I will have 400,000 in 10 years if the bull case materializes. There's a significant increase, okay? But with everything I've shown you, it wouldn't be unreasonable, okay? That is to say, I honestly think, again, that we can aim for, in the very optimistic case, 25% growth over the next 10 years for Topicus. And then, can it trade at 37? That's the question, probably. That's also why it's a bull case. Then in the best case, here I put 17% growth rate, a multiple of 30, that's still 16% per year, which is really, really very honest. That's x4.4, and even in the bear case, and this is where the solidity of this thesis lies, is that even if Topicus grows by only 11%, meaning a holding company, etc., we do almost no more acquisitions. Realize that, this means that if we assume that we already have 5% organic growth, we would only need to seek 5-6% more on the merger and acquisition part, or rather on the software purchase part, whereas here we are compounding at a 25% growth rate per year. So it's really negative, and we trade at an exit multiple of only 22. Well, in that case, we still have 6-7% compound annual stock price growth per year, and we still make x2 in 10 years. Okay? And the same for Constellation. So, here, yes, the bull case, I made the assumption that we would achieve a 28% growth rate. Exit multiple of 28, we are still at 20% per year in the bull case, 14% in the base case, and 8% roughly in the bear case. So, reading the realistic scenarios, we see that Topicus' profile is clearly asymmetric. In the bull case, it crushes CSU, strong growth and multiple expansion. And in the bear case, Topicus conversely will suffer much more. We are at only 6.6 versus almost 8% growth rate at CSU because it will suffer both low growth and multiple compression. Okay? And it is in this sense that it can be very relevant to have both in the portfolio, to have Topicus and CSU. Molish Pabra, he has 5, well, 4.5 and 4.5, because that way, in the bull case, Topicus will perform well, and if we have the bear case, we will also be protected by Constellation. So it's really relevant to have both in this regard. And then there's the tipping point. Well, we've already seen that a bit. I'll put you on pause. But indeed, in fact, I find it very interesting. I find the business model also very interesting. And then, after that, what else could I say? Knowing that I did a coaching session with the members, which lasted 2 hours, two weeks ago, where we started putting it in the portfolio, so with the members of the mentorship. So, in fact, afterwards, it was more of a Q&A session, etc. There were many questions, and we answered them. That's why it would be more of a live format, which could be more enjoyable, where I could really answer your concerns about this business model or this company. But I honestly think I've made a good summary.

On this part. If well I could also talk about Monish Fabraille. This Monish Pabry, according to him, the AI part will be a catalyst for Topicus and and finally especially especially for Topicus. According to him, the AI part could create many more opportunities because there would be more founders who would say to themselves "Ah, maybe precisely, here, this smells bad, I'm taking advantage of it to do my exit, I already wanted to do it for a long time and so hop they will go see companies like Con Software to get bought. Con Software precisely, we can play on that to tell them yes but here, precisely, we will buy you at even lower multiples. So there, it will make even more potential targets to buy back. This is the test of Molish Fabra that I partly share but which has not yet been validated at all in recent acquisitions. Finally, the management, we talked about it in the conference call, the management of Constellation Software and Topicus. And well, listen, I'm getting back to the roadmap because I think we're gently arriving at the end of this analysis. I think the video will be about 1 hour, 1 hour 20, 1 hour 30, given how it's going. You have quite a bit of material, something to re-analyze the file and so on, on what I've done for you. After, as I told you, I will put about 10% of my portfolio. Here, I'm well on my way to, I have, well, 6.5 here on the two, I don't need much more, I don't need much more. It can obviously go down again, honestly, I don't care, frankly, the more years pass in investing, the more I am totally detached from my purchase prices. All that, all that concerns me is at what price I buy the business compared to my understanding of it over the next 10 years and the hypothesis I make about its cash generation over the next years. Oh dear, the rest, you know how much I don't care. And in addition, the more, well, the more time passes, in fact, the more I realize that the majority of the companies I buy, well, there are quite a few companies. Again, if I take PEX and so on, I was at a loss for 6 months. Yes, that's it. For almost 6 months. I had bought it, it had gone up, it had gone down, then it exploded, in fact, and now it's going down a bit again. You have to let time do its work. You just have to have good analyses and in fact, you have to simplify things. Now, I'm telling you to simplify, I've done a 1.5-hour analysis for you, but even that is the strict minimum. I re-heard an analysis, well, a quote, I reread a quote from Peter L that really made me laugh because it's something that's been on my mind a lot lately. In fact, he said, in short, people have the ability, individuals have the ability to spend more time choosing, for example, their next piece of clothing they will buy on sale than their stocks on which they will go and put 10,000 bucks, well, whatever, proportionally to your portfolio. And that's just crazy. And the more I invest, the more I see it. I've accompanied more than 300 people with mentoring, I've taken many people on calls and so on, and it's true that I, the number of people I've had with good portfolios, well, large portfolios, more than 100,000, 200,000, 1 million, and the overwhelming majority of people I've had on calls, each time they were incapable of doing this type of analysis. And the problem is that if you don't know how to do this type of analysis independently, on your own, how can you have confidence in your portfolio if it's not, again, by buying all the companies that everyone already has? In that case, what is your advantage? None. And what is your advantage compared to the 90%, well, what is your difference compared to the 90% of individuals who underperform the S&P 500? How do you expect to be part of the 10% of guys who will outperform? This year, I paid, again, 40% with 30% cash in my portfolio. Okay? It's because each of the companies I bought, I know them perfectly and so on. And in short, this follows from that. There, you've been following me for quite a while on YouTube, you see a bit how I analyze companies. But what I mean is that at some point, you have to put things in place. And, and I don't remember why I was saying that, but yes, well, yes, in short, understand what you're buying, and to understand what you're buying, you have to spend a certain number of hours. Again, if I assume that to do this type of analysis, it takes me 5 hours, well, if I put 50,000 bucks on it, and if again, in the bull case, I get a x10, and so it generates 500,000 over the next 10 years, I think the hourly rate is quite good. Okay? And regardless of the performance, in any case, you have to do this work because, well, [grunts] I think the money you have in the stock market, it didn't fall from the sky. Take care of it. And it's true that when I see people who invest in anything, I find it crazy. Or after watching 10-minute analysis videos, I say to myself, but that's not right at all. That's not right at all. And again, I'm not saying this to criticize, I'm saying this because, again, Pyon mentioned it very well 40 years ago, it's a psychological bias that is that we have, I don't know why, but there it is, and it's a person, a member told me "Yeah, it's the same people who will put 30,000 bucks on a stock they don't know too well and who, in fact, in the evening will look at the price. will take the 20-buck meal instead of the 30-buck meal at the restaurant. It's the same, it's the same thing, it makes no sense. And I'm telling you this, it's not a value judgment, I'm telling you this because it's just a psychological trap. Be careful about that. The money you have in the stock market is real money. It sounds super dumb what I'm telling you, but think about it for 5 seconds because I think that here, well, this video, there are necessarily many who will watch it and who will be in this situation with companies in their portfolio with quite a bit of money on them compared to your assets and your portfolio on which, in fact, you don't have that much conviction. And if you have conviction, it's certainly because everyone already knows it, because, well, it's Visa or Mastercard. Mastercard, what's the risk globally of having it in your portfolio? Sine for example, it's the same. But is it with that that you will have 30%, 20% per year? The answer is certainly no. Okay, and it's better to have a Nasdaq or an S&P 500 at that point, which is extremely performing. But well, at the current valuation, will it [grunts] go to 10% per year? I don't know. In any case, this video will end here. Those who are not on my school group, we are 3000 on it. So it's a group that is totally free on which I put my courses. So here, for example, it's my entire methodology on small caps. It's my free courses, obviously. Then there's the mentoring part. You also have the links in the description, but I think you know that. And there's the options part, for example, how I used options on a long-term portfolio. You have four courses here. Also, the 3D method part, the annual report part. In short, I can only encourage you to join this group, it's a masterclass. Well. And well, anyway, after I will give you the summaries. I will give you the update. Each time results are published, I will make a short video on Topicus. I think I will also do a live. If the market continues to fall, I will do a live with Paul. So on my YouTube channel to answer all your questions and so on. And then, well, tell me in the comments what you think, do you like this type of company? Do you really see huge risks and precisely based on the risks you will identify, with great pleasure, at a pinch, there, I'm thinking about it live. what you will do, if you identify risks that prevent you from positioning yourself or that scare you, you will necessarily find a lot and I hope you will find a lot and well, put them in the comments and I will then make a video that I will put as unlisted on my school group where I will answer what I think about the different types of risks and a bit of the counter-arguments and that will allow me to play the devil's advocate. It will be very interesting. There, well, that was all. It was Léo and we'll see you in another video. Bye!