Constellation Software Price Selling Pressure
The one shareholder group and cohort, most $CSU analysts overlook
I don’t care what other people say, all investors and business owners are like The Blind Men and the Elephant — we simply don’t know what is the full picture.
I think that’s what Morgan Housel was saying about humility and a healthy dose a survival mechanism.
And today we’re going to explore why most $CSU pundits overlook why this shareholder cohort is (IMHO) the ones putting pressure on the stock price of late.
Of course Mr. Leonard’s sudden stepping down at the CEO (but remains as a general board member of Constellation Software) weigh on things.
And people like myself as a CSU nerd and others here on StackX and FinX keep talking to each other saying how there is the death to software becaus of AI and/or how the price action is dramatic and uncalled for all I want to point out is one thing.
It’s the shareholders not catching the bids.
And my thesis is the current selling pressure is due to the EMPLOYEE share owners.
This is a tale of too much of a good thing is a bad thing.
Long ago and rightly so, $CSU’s board and the two marks, Leonard and Miller (current CEO), set up a great incentive plan. They basically said that above a certain salary, all employees with 1) need to buy shares in CSU over a period of time, using their after-tax personal income and 2) there are restrictions in waterfall over 4-5 years. I’m working from memory here and it doesn’t matter the exact terms. All you need to know is that a big part of the compensation particularly with those who were in management was made to be heavily aligned to the medium to long term growth of the company.
But too much of a bad thing can be not such a great thing.
If part of your salary is “locked” in to the shares of the company that you continue to work for, you might think twice when you have both your assets and your income tied to the same company.
That’s risk.
And the people that work there are smart.
Not only that, when you see your income, turned assets going up year over year for years on end, and suddenly and violently reverse, it does something to your psychologically.
On earning the shares and on the way up (every single year prior to 2025), you’d like to think that your income was way way higher than it was. Say you make 130k a year as a Product Manager in one of the BUs of $CSU. Say you needed to “buy” CSU shares above 100k over 5 years. That 6000 per year that you buy into your own company would mean that over 2015 to 2020 would mean it’s like that you made a return of 70k or so which means you might feel as though you made something closer to 150k per year.
That seems amazing — when the winds are in your favour.
When it reverses, it might feel like for the past 5 years, you made 110k instead of 150k. That sucks.
So that’s all to say that I think Professionals and Amateurs shareholders of $CSU might be talking amongst each other on where there will be bottom and why it’ll continue or not. But we’re preaching to the choir here.
If the biggest shareholder group in 2026 is now the long-term employees themselves who feel like their compensation is tied to the company, that’s where I believe the selling pressure is mostly coming from this group and cohort.
Again this publication is to be an $CSU nerd. I’m just trying to call out what I see and what I've seen since following this company in 2010. I don’t know what solution there will be, nor do I have an opinion that management needs to change their variables comp strategy either.
All I’m saying is that, we don’t know much and sometimes we need to look outside ourselves to see the truth, like the Blind Men and the Elephant.
Regardless, a lesson I keep thinking to myself is that any current “strength” can be eroded when it’s taken too far.