After following the entire CSU playbook from the sidelines for a while, this is the first time I’m actually getting involved in this type of investment case
what I don't fully understand is why the company agreed to sell a 14.8% stake to TSS at 85 PLN, when the market price then was already way higher (119 PLN on 4.2.2025). Did the management have a mandate to sell stock (previously bought back) at a 30% discount to the market price?
The market price and economic reality are rarely aligned. As Warren Buffett says, price is what you pay, value is what you get. Most people engaged in the public market find themselves swept up in a speculative frenzy and the euphoria of others. This explains why we have booms and busts in the stock market.
In contrast, when a corporate entity buys a stake in a company, it does so following proper due diligence and valuation processes. It enters into a negotiation with the company and they attempt to settle on a mutually agreed 'fair' valuation.
- On January 31, 2025, TSS acquired 8,300,029 shares of Asseco Poland from Cyfrowy Polsat, representing 9.99% of the company’s capital, at a price of PLN 85 per share.
- On February 4, 2025, Asseco Poland signed a conditional agreement to sell 12,318,863 treasury shares to TSS, representing 14.84% of the company’s capital. The sale price was set at PLN 85 per share. Upon completion of both transactions, TSS will hold 20,618,892 shares of Asseco Poland, representing 24.84% of the company’s capital.
So here we are with two recent transactions that provide us with a great benchmark of the price at which both TSS and Asseco agreed to be fair. That price was PLN 85 versus PLN 131 today.
As Benjamin Graham used to say, even the best company at the wrong price makes for a bad investment.
Howard Marks says, it isn't buying but buying well that makes the difference.
It is all about price.
I haven't done any due diligence myself yet, but these signals suggest that the stock is over priced. The gradient of the price curve changed dramatically in January 2025, yet the company is still the same - only the shareholders have changed. Does that make sense to you? Or does it look like a speculative spike that is likely to pull back once the dust settles?
Regarding the price TOI.V paid: They are not invested for the sake of quick multiple expansion. Their focus is on cash returns from their investment, which is why they implement all the mentioned measures. For me, it's the complete opposite—I’m interested in multiple expansion and see TOI’s investment as an indicator of the underlying earnings
If PLN 85 was fair price I can assure you TSS wouldn't buy :)
Can't really understand your point there, maybe you could tell me what I'm not seeing.
The price movement is mainly speculative as you said but still extremelly cheap for a company with an activist shareholder on board with one of the best trackrecords out there in turning arounds VMS businesses.
You say, "If PLN 85 was fair price I can assure you TSS wouldn't buy"
Two alternative points of view here:
(1) Charlie Munger always advocated that it is better to buy a wonderful company at a fair price than a fair company at a wonderful price. So TSS would pay a fair price if it valued Asseco as a great company (which it must do or else why take a stake?)
(2) If the fair price was way higher than PLN 85, in line with the current share price, Asseco would not have sold such a huge stake in the business at a 35% discount to intrinsic value.
Regarding your first question: Exactly. They already view ACP as the company it is destined to become, and through their investment, I argue that we can anticipate this development and see their involvement as a strong indicator. They have different expectations regarding their holding period, and again, they are not in it for multiple expansion
If I understand you correctly, you wouldn’t have sold the stake at this price if you were the CEO? Again, in my opinion, they are the best software operators. If I were the CEO, I would see opportunities arising from TOI’s involvement, which has been well documented in many different cases, as well as the potential impact on revenue and earnings.
The way you argue makes it sound like, when looking for a coach for a sports team, you would pay the same price regardless of who you get. TOI/Constellation itself should be considered an asset that comes at a cost.
my question was not whether the price was fair or not, but about the legality of the sale far below market price and fiduciary duty of executives. In some countries, disposing of treasury stock at such a discount to prevailing market prices would be illegal.
"(2) If the fair price was way higher than PLN 85, in line with the current share price, Asseco would not have sold such a huge stake in the business at a 35% discount to intrinsic value."
You assume here that the interests of the managers and/or the key shareholder are aligned with the interests of "Asseco" or the individual shareholders. I may be cynical, but this is in most cases an unreasonable assumption. I am pretty sure this transaction was not in the best interest of shareholders (stock sold way too cheap), but managers were probably offered a nice employment/package and the main shareholder a juicy buyout down the road... (these are just guesses without any factual basis, I'd just call it "a hunch")
Time will tell I guess. I think it's also a far stretch to assume that TSS follows Charlie's philosophy. Charlie was a legend but idk how relevant that is tbh
CSI has been laser focused on 'vertical software' not just software - which is a key differentiator.
Software generally is hugely competitive and moats may be eroded fast as technology evolves and software becomes obsolete. However, vertical software, like a bespoke system to manage a dental practice, is so niche that there are no disruptors, the software doesn't change that much over time, and the customers rely on it because it is mission critical, ensuring recurring revenue.
CSI focused primarily on N.America and built its stable of companies itself over ~25 years. Doing this right takes time. It can't be rushed. It is important to buy the right companies at the right price.
On both of these points, we can distinguish what is happening in Europe.
Topicus was intended to replicate the CSI model in Europe. However, from what you say, it would appear that instead of rolling up vertical software companies, Topicus is instead investing in other businesses that roll up software companies. Does this suggest that Topicus is struggling to replicate the CSIU model in Europe? Or is Topicus just trying to fast track what CSI achieved? Either way, that would be a concern.
These other companies in which Topicus is investing - do they focus exclusively on vertical software or just software?
I will of course do my own digging around, but I wondered if you knew the answer to these questions whirring around in my mind?
If Topicus is successful, one would imagine that it will gradually acquire more ownership and control of these other companies. Maybe it is spreading its bets - some will work out and some will not. Either way, wouldn't it just be better to invest in Topicus?
I’ve spent a few years learning about CSI, but I’m not an expert. From what I understand, Topicus isn’t struggling to bring CSI’s model to Europe, and they’re not rushing things either. They have a clear rule for investing money, aiming for solid returns on their investments—25% plus inflation for smaller deals and 20% plus inflation for bigger ones. They’re focused on vertical software, just like CSI.
For example, Volaris (part of CSI) has a venture capital arm and recently acquired Crealogix, a small Swiss company. Topicus won’t buy more shares in ACP. Because it’s already a big commitment for them it's unlikely they will "spread its bets", they also evaluate each project on its own merits. That said, Topicus is trading at high valuations, so investing directly in them might not be the best option if you’re cautious about that. Personally, I think investing alongside them could lead to better returns.
This is just my personal view, and I’ve talked to reliable sources—former employees and big shareholders of CSI and Topicus—to get a sense of how they operate. I’m also invested in ACP, I might be biased, but hope it helps!
PS: Crealogix was taken private, and the venture capital arm thing was mentioned just to explain that everything is fair play as long as they meet the hurdles, the M&A people are incentivized based on meeting hurdles and EBITDA margins over time so if they don't see a clear way to that they won't do it and won't get approval. In this case I'm certain the CEO was involved bc it's such a big commitment.
You had me at Low-IQ!
It was great to help in any way with your research! Hope it's the first of many :)
How big is your position?
I‘ll send you a DM.
AdaptIT (listed in South Africa) was also an interesting case. Acquired by CS for 700 ZAC in 2022, share price was just ~250 ZAC at the end of 2021
hey Christian, why dont you own Pinetree instead of Asseco?
What percentage of their revenue is from SAAS versus traditional IT?
They don’t explicitly state the proportion of recurring revenue, but it can at least be roughly inferred from their slides.
https://inwestor.asseco.com/en/financial-information/asseco-in-numbers/
How big is your position and what‘s your entry price?
what I don't fully understand is why the company agreed to sell a 14.8% stake to TSS at 85 PLN, when the market price then was already way higher (119 PLN on 4.2.2025). Did the management have a mandate to sell stock (previously bought back) at a 30% discount to the market price?
The market price and economic reality are rarely aligned. As Warren Buffett says, price is what you pay, value is what you get. Most people engaged in the public market find themselves swept up in a speculative frenzy and the euphoria of others. This explains why we have booms and busts in the stock market.
In contrast, when a corporate entity buys a stake in a company, it does so following proper due diligence and valuation processes. It enters into a negotiation with the company and they attempt to settle on a mutually agreed 'fair' valuation.
- On January 31, 2025, TSS acquired 8,300,029 shares of Asseco Poland from Cyfrowy Polsat, representing 9.99% of the company’s capital, at a price of PLN 85 per share.
- On February 4, 2025, Asseco Poland signed a conditional agreement to sell 12,318,863 treasury shares to TSS, representing 14.84% of the company’s capital. The sale price was set at PLN 85 per share. Upon completion of both transactions, TSS will hold 20,618,892 shares of Asseco Poland, representing 24.84% of the company’s capital.
So here we are with two recent transactions that provide us with a great benchmark of the price at which both TSS and Asseco agreed to be fair. That price was PLN 85 versus PLN 131 today.
As Benjamin Graham used to say, even the best company at the wrong price makes for a bad investment.
Howard Marks says, it isn't buying but buying well that makes the difference.
It is all about price.
I haven't done any due diligence myself yet, but these signals suggest that the stock is over priced. The gradient of the price curve changed dramatically in January 2025, yet the company is still the same - only the shareholders have changed. Does that make sense to you? Or does it look like a speculative spike that is likely to pull back once the dust settles?
I'll leave you to decide.
Regarding the price TOI.V paid: They are not invested for the sake of quick multiple expansion. Their focus is on cash returns from their investment, which is why they implement all the mentioned measures. For me, it's the complete opposite—I’m interested in multiple expansion and see TOI’s investment as an indicator of the underlying earnings
If PLN 85 was fair price I can assure you TSS wouldn't buy :)
Can't really understand your point there, maybe you could tell me what I'm not seeing.
The price movement is mainly speculative as you said but still extremelly cheap for a company with an activist shareholder on board with one of the best trackrecords out there in turning arounds VMS businesses.
You say, "If PLN 85 was fair price I can assure you TSS wouldn't buy"
Two alternative points of view here:
(1) Charlie Munger always advocated that it is better to buy a wonderful company at a fair price than a fair company at a wonderful price. So TSS would pay a fair price if it valued Asseco as a great company (which it must do or else why take a stake?)
(2) If the fair price was way higher than PLN 85, in line with the current share price, Asseco would not have sold such a huge stake in the business at a 35% discount to intrinsic value.
Regarding your first question: Exactly. They already view ACP as the company it is destined to become, and through their investment, I argue that we can anticipate this development and see their involvement as a strong indicator. They have different expectations regarding their holding period, and again, they are not in it for multiple expansion
If I understand you correctly, you wouldn’t have sold the stake at this price if you were the CEO? Again, in my opinion, they are the best software operators. If I were the CEO, I would see opportunities arising from TOI’s involvement, which has been well documented in many different cases, as well as the potential impact on revenue and earnings.
The way you argue makes it sound like, when looking for a coach for a sports team, you would pay the same price regardless of who you get. TOI/Constellation itself should be considered an asset that comes at a cost.
my question was not whether the price was fair or not, but about the legality of the sale far below market price and fiduciary duty of executives. In some countries, disposing of treasury stock at such a discount to prevailing market prices would be illegal.
That's how I read your comment:
"what I don't fully understand is why the company agreed to sell a 14.8% stake to TSS at 85 PLN, when the market price then was already way higher"
The CEO said they had shareholder support for selling the shares. I would assume they wouldn’t sell the treasury shares if they weren’t allowed to.
"(2) If the fair price was way higher than PLN 85, in line with the current share price, Asseco would not have sold such a huge stake in the business at a 35% discount to intrinsic value."
You assume here that the interests of the managers and/or the key shareholder are aligned with the interests of "Asseco" or the individual shareholders. I may be cynical, but this is in most cases an unreasonable assumption. I am pretty sure this transaction was not in the best interest of shareholders (stock sold way too cheap), but managers were probably offered a nice employment/package and the main shareholder a juicy buyout down the road... (these are just guesses without any factual basis, I'd just call it "a hunch")
Time will tell I guess. I think it's also a far stretch to assume that TSS follows Charlie's philosophy. Charlie was a legend but idk how relevant that is tbh
Very interesting write up. Thank you.
CSI has been laser focused on 'vertical software' not just software - which is a key differentiator.
Software generally is hugely competitive and moats may be eroded fast as technology evolves and software becomes obsolete. However, vertical software, like a bespoke system to manage a dental practice, is so niche that there are no disruptors, the software doesn't change that much over time, and the customers rely on it because it is mission critical, ensuring recurring revenue.
CSI focused primarily on N.America and built its stable of companies itself over ~25 years. Doing this right takes time. It can't be rushed. It is important to buy the right companies at the right price.
On both of these points, we can distinguish what is happening in Europe.
Topicus was intended to replicate the CSI model in Europe. However, from what you say, it would appear that instead of rolling up vertical software companies, Topicus is instead investing in other businesses that roll up software companies. Does this suggest that Topicus is struggling to replicate the CSIU model in Europe? Or is Topicus just trying to fast track what CSI achieved? Either way, that would be a concern.
These other companies in which Topicus is investing - do they focus exclusively on vertical software or just software?
I will of course do my own digging around, but I wondered if you knew the answer to these questions whirring around in my mind?
If Topicus is successful, one would imagine that it will gradually acquire more ownership and control of these other companies. Maybe it is spreading its bets - some will work out and some will not. Either way, wouldn't it just be better to invest in Topicus?
I welcome your thoughts
I’ve spent a few years learning about CSI, but I’m not an expert. From what I understand, Topicus isn’t struggling to bring CSI’s model to Europe, and they’re not rushing things either. They have a clear rule for investing money, aiming for solid returns on their investments—25% plus inflation for smaller deals and 20% plus inflation for bigger ones. They’re focused on vertical software, just like CSI.
For example, Volaris (part of CSI) has a venture capital arm and recently acquired Crealogix, a small Swiss company. Topicus won’t buy more shares in ACP. Because it’s already a big commitment for them it's unlikely they will "spread its bets", they also evaluate each project on its own merits. That said, Topicus is trading at high valuations, so investing directly in them might not be the best option if you’re cautious about that. Personally, I think investing alongside them could lead to better returns.
This is just my personal view, and I’ve talked to reliable sources—former employees and big shareholders of CSI and Topicus—to get a sense of how they operate. I’m also invested in ACP, I might be biased, but hope it helps!
PS: Crealogix was taken private, and the venture capital arm thing was mentioned just to explain that everything is fair play as long as they meet the hurdles, the M&A people are incentivized based on meeting hurdles and EBITDA margins over time so if they don't see a clear way to that they won't do it and won't get approval. In this case I'm certain the CEO was involved bc it's such a big commitment.