Topicus.com Inc V.TOI

Preference shares conversion

[petebrown1963]

This has been known for a long time, and accounted for in the price. Topicus is a little more expensive than Constellation, but this is because it has higher potential growth. This is because of the Law of Big Numbers, ie. it is easy for a company with $2 million revenue to double sales, but it is very difficult for a company with $200 billion revenue to double sales. All in all, if you are looking for growth over the next ten years, you want to be in Topicus not Constellation. I say this as someone who first purchased Constellation at $75!

[hotdog123]

Where do you see the stock price settling? Now and after next February with the conversion.

[petebrown1963]

As far as a price target goes, CSU has gained 27% per year on average for the last five years. TOI is exactly like CSU was about 6-7 years ago in terms of market cap. Virtually identical from what I can tell in terms of strategy. There are two major considerations that skew the comparison however: the global economy is stronger than it was 7 years ago, due to stimulus coming out of Covid-19. This

[hotdog123]

Those 69M shares coming won't help the share price though...

[petebrown1963]

That's not how the market works. If the news is out, it is accounted for in the current price. The preference share issue is old news.  On the other hand, if the company announces a new issuance of shares next week, the share price would decline immediately after the announcement to compensate for the dilution.

[Capharnaum]

My problem is that the numbers don't look that good once you compare them to the $10B market cap with the converted shares. I mean it will trade at 25% of Constellation's market cap but revenues are 15% of Constellation's. So on a numbers basis, might just be best to buy Constellation, especially since CSE will own a good portion of Topicus anyway.