Today, just before the opening bell, CSI (Constellation Software Inc.) issued a press release, announcing the resignation of CEO and founder Mark Leonard as President. First and foremost, we wish him and his family all the very best, and thank him for all his insights, humility, and creating one of the world’s best compounding machines.
Following this announcement, CSI shares were trading down as much as 18% (!), reflecting the market’s belief in Mark Leonard’s influence on the future.
However, as talked about in our deep dive, CSI is an organization built on many many intelligent executives and employees. With CSI veteran Mark Miller now being the new President, the highly rational view on growing shareholder value won’t change. The decentralized eco-system was meant to eliminate key person risk.
Amidst uncertainty around AI, large M&A, CSI 2.0/style drift, CSI’s share price volatility and relative underperformance comes at a time of excessive optimism on themes with questionable long-lasting returns and valuation. While there’s FOMO around explosive growth stocks, there’s HTGO at several quality growth companies with no exciting short-term catalyst: “Hurry To Get Out”.
This tweet summarizes it quite well.
With this new announcement (shortly after the AI call which didn’t contain major news), we expect volatility to remain elevated. That’s quite atypical for CSI, but it’s the environment we’ll have to “deal” with.