RE:RE:CSU business model - buying growing or declining businesses?Thank you for the response. Reading the president's letters, it still seems that there is not a whole lot of organic growth in the growing businesses that the company is aspiring to acquire.
The 2017 letter for example lists the average 10-year organic growth as 7.6% while the price increases consisted of 82% of this values (average of 6.1% per year and largely declining from 9% to 5%). That is far higher price rise than inflation and will eventually run into a ceiling.
I understand that the software cycle is multiple years and new initiatives will take several years to just break even. However, CSU and its underlying businesses have been operating for many years and are not new startups... meaning, that they should have a stabilized pipeline of growing revenue (some cash-cow existing software, some almost finished products, and also just some brand new concepts in the works).
Does anyone know what is the CSU leadership/management style when it comes to innovation investment in their subsidiaries? In some of the other investor letters the CEO was mentioning working on a better tracking system for the return on investment on internal projects and how they can be risky and not generate as high returns as what the development team originally anticipated in most cases. In the long run, will CSU be a consolidator of cigar butt declininc legacy businesses or are its businesses encouraged to heavily invested in long-term vision, working on new revenue streams which might provide growth in several years from now?
CSU stock has fairly high multiple. Knowing whether there is a lot of potential upside in its businesses as it is right now without any new acquisitions would help me better understand its valuation.