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On his Wagons fund quarterly update call Monish Pabrai spoke about two interesting new investments he made in the Constellation Software family (Constellation, Topicus, and Lumine) and Kaspi.
For Constellation he spoke about how he was always enamored with the company. In the past he had read all of Mark Leonard’s letters, and had spent some time with Mark Leonard and at the company and came away very impressed with the company and culture but the price was never right, until now, the Saaspocalypse presented a very attractive entry price into all 3 companies.
He mentioned that his background was in software and he has lots of friends and connections in the software industry, he feels the AI software fears, especially as they relate to Constellation, are overblown. If you game theorize out what can happen to Constellation going forward, there are many favorable possible outcomes that can occur such as; less competition for acquisitions at more favorable prices, more acquisitions, lower software development costs, revenues that remain unchanged/don’t decline as much as expected/ or even rise.
He also spoke about his investment in Kaspi being a “heads I win, tails I don’t lose much” scenario. The valuation of Kaspi is attractive, their business in Kazakhstan is great, and their business in Turkey has great potential. He said the investment is mainly a “jockey bet” on Kaspi’s founder and CEO Mikhail Lomtadze, who he regards as a superstar.
I invest in all four of these companies. With Constellation I am more comfortable with the businesses and the thesis, so hearing Pabrai was invested was nice. But with Kaspi it was really reassuring. Because of the geopolitical risks of Turkey and Kazakhstan, I always felt like I could be missing something. Like it was very cheap for a reason, and maybe it is. But Pabrai really knows the Turkish market and economy well. While there are still significant risks, I’m more confident that I’m not completely missing the boat on something. I’m a bit more comfortable allocating more money to what is a pretty small investment.