Webinar - Volatility, Buybacks vs. Dividends & Constellation Software
We expect strong first half growth rates in FCFA2S
Hi fellow Tortoise!
Volatility, the relevance of buybacks vs. dividends and Constellation Software (and its spin-out companies); that’s all you need to record what’s hopefully going to be an insightful webinar on quality growth investing.
Volatility is inherent to generating returns in the stock market, but as we frequently state: investing is a long process of adding and (sometimes unintentionally, due to unexpected events) withdrawing capital to and from your portfolio.
Achieving attractive returns on every purchase we’re going to make with as minimal volatility as possible is what leads to steady compounding. As volatility has been on the rise as of late, there are some interesting patterns to draw from the VIX and the implied forward returns for the stock market.
🔧 Our Favorite Tool to Buy Great Quality Companies During Market Corrections
How to Buy the Dip Effectively? Welcome to another weekly digest. We’ve received quite a lot of questions on when to the dip in the stock market. It’s a relevant topic as building wealth in the stock market is a process of buying high-quality growth companies, adding capital to those along the way and
We don’t know what’s gonna happen next, nor do we try to predict the future. We don’t know what our performance relative to the index will look like. Rather, what we’re aiming to do is to build conviction around a selective group of word-class compounders that keep delivering durable shareholder value in any economic environment.
What’s the relevance of buybacks vs. dividends? And how do these influence our analysis, stock-picking and allocation process?
Finally, it seems Constellation Software is on track track for another great growth year in terms of underlying FCFA2S (free cash flow available to shareholders), thanks to the ongoing M&A dealmaking and some special events: the Optimal Blue & Empower deals (Black Knight) and the conversion of the preferred shares of Lumine into subordinate voting shares in March of this year, which dramatically increased CSI’s direct economic interest (i.e. the cash flow that belongs to CSI shareholders).
After last year’s spin-out, Lumine was already a fully consolidated entity because of CSI’s Supervoting share but that didn’t mean CSI shareholders were earning a portion of Lumine’s FCF during FY23 (and in Q1 2024). In fact, it was 0%. That’s changed since March 24/25, 2024.
Constellation Software - Two Strong FCF Catalysts in 2024
At the end of last year, we published an introductory article on serial acquirers and how their acquisitive rinse-and-repeat strategy influences expected shareholders returns. Go check it out, if you haven’t already. When relying on stock screeners, chances are that
Is that enough to justify today’s multiple? Put another way, what’s our take on Mark Leonard’s VMS family? Also, we’re planning to do a deep dive on it in the fall of this year.
Webinar and material
You can watch the webinar through the below inserted video. The presentation material can be downloaded via PDF.