Pieter Slegers — Buying 2 Stocks (Compounding Quality)

One-line take: February's second buy issue, and the one that states the machine behind the whole newsletter. Market timing is dismissed on a structural argument — "you need to be right twice," and "the best days on the stock market usually take place just after the worst ones" — so the answer is a fixed monthly add. The goal is quantified and, unusually, so are the inputs: $1 of free cash flow per minute ($525,600 a year), needing a $10.5m portfolio at a 5% FCF yield, from $1.4m today plus $50,000 a month at 12% a year — "a little bit more than 7 years." The two adds are $25,000 each. Brookfield is "the best holding company I've ever seen," valued on Price/Distributable Earnings (20.4x 2025 → 18.1x 2026 → 15.8x 2027) against a company-stated intrinsic value of $68, i.e. "a 30% discount," with Bill Ackman, Chuck Akre and Tom Gayner named as co-owners. Constellation is bought for the second time in a month on a yield rather than a multiple — 6.8% FCF yield, "the highest it has ever been," rising to an expected 9.7% on 2027 numbers — and on a position-sizing argument: "a low weight of 3.8% within Our Portfolio. It deserves a higher weight."

1. Stocks & names mentioned

Two names, both Positive — each an executed add with a published quantity and limit price. Research legend: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis; the Canadian row points QT/SA at the US OTC symbol. Written post with no timestamps — the At link opens the article.

Stance = how each name is framed in this post. The closing summary states a CAD 64 limit for Brookfield against CAD 47 in the transaction block; the transaction block is taken as authoritative (CAD 47 × 730 shares ≈ $25,000, which reconciles; CAD 64 does not). The post's slug reads "buying-3-stocks" while the published title and content are two. Bill Ackman, Chuck Akre and Tom Gayner are named as co-owners of Brookfield and are left to the talking points.

2. Talking points

Ticker	Name	Research	View	What he said	At
BN	Brookfield Corporation	QT · SA · STK · FA	Positive	ADDED $25,000 — order Q 730, limit CAD 47. "Brookfield Corporation is the best holding company I've ever seen," the subject of "an extensive Deep Dive of 79 (!) pages." The case in four lines: "An amazing track record of compounding money / Significant cash available for future growth / Led by one of the best capital allocators in the world / An attractive valuation level." Valued on Price/Distributable Earnings — 20.4x (2025), 18.1x (2026), 15.8x (2027) — against management's own goal "to grow its intrinsic value by 15% per year." After results published the previous week, "Brookfield says its intrinsic value now equals $68. This means the company is trading at a 30% discount." Co-owners named: Bill Ackman, Chuck Akre, Tom Gayner. "The perfect example of the art of compounding at scale."	read ↗
CSU.TO	Constellation Software	QT · SA · STK · FA	Positive	ADDED $25,000 — order Q 13, limit CAD 2,550. The second add in three weeks (after 1 February's $15,000 at CAD 2,600), and the first time the sizing argument is made explicitly: "Constellation Software has a low weight of 3.8% within Our Portfolio. It deserves a higher weight, especially at these valuation levels." Valued on yield rather than multiple: "Constellation Software now trades at a FCF Yield of 6.8% (the highest it has ever been)," rising to an expected 9.7% on 2027 numbers. The reported yield is called an understatement — "Constellation isn't even trying to maximize its Free Cash Flow yet. They are re-investing heavily in future growth. This means the stock is even cheaper in reality." Verdict: "The stock decline is completely unfair if you ask me… seems like a no-brainer to me."	read ↗

Why timing is refused, structurally

"It's impossible to time the market. There are only two kinds of people who can do this: fortunetellers and liars."
The mechanism: "When you try to time the market, you need to be right twice" — the exit and the re-entry — and "The best days on the stock market usually take place just after the worst ones." Missing the ten best trading days over 27 years leaves "only a fraction" of the return.
The conclusion is operational rather than philosophical: "Always stay invested (time in the market > timing the market) / Regularly add to your portfolio… That's why we are adding to Our Portfolio every single month."

The goal, with every input published

"Let Our Portfolio generate $1 in Free Cash Flow per minute for us" — $60 an hour, $1,440 a day, $43,200 a month, $525,600 a year.
The requirement: "At a FCF Yield of 5%, we would need a Portfolio of $10.5 million."
The path, with three stated assumptions: a $1.4m portfolio today, $50,000 added every month, and a 12% annual return — "a little bit more than 7 years."
Worth noticing what this discloses. The monthly contribution is roughly 3.5% of the current portfolio value, so at this stage new money, not compounding, is the dominant driver of the balance.

Brookfield: the valuation is management's own number

Price/Distributable Earnings rather than a PE, because reported earnings understate the cash: 20.4x on 2025, 18.1x on 2026, 15.8x on 2027.
The discount is anchored to a figure the company publishes: "Brookfield says its intrinsic value now equals $68. This means the company is trading at a 30% discount." The same $68 reappears in the April portfolio update.
The growth target is likewise management's: "To grow its intrinsic value by 15% per year in the years ahead" — the number the 5 February reverse DCF used to override a multiple that looked 39% too expensive.
Co-ownership is offered as corroboration: "By investing in Brookfield Corporation, we are in great company. Other investors include Bill Ackman, Chuck Akre, and Tom Gayner."

Constellation: a yield, and an understated one

"A FCF Yield of 6.8% (the highest it has ever been)" — an all-time record stated as a fact about the price rather than a forecast.
The adjustment argument: reported free cash flow is depressed on purpose. "Constellation isn't even trying to maximize its Free Cash Flow yet. They are re-investing heavily in future growth. This means the stock is even cheaper in reality."
Forward: "If you look at the expected numbers for 2027, it gets even better: Expected FCF Yield: 9.7%."
Note how the framing has moved through the month: 16.2x cash flow on 1 February, "just 16x FCF" on 12 February, and a 6.8% yield here — the same fact expressed three ways as the price kept falling.

Position size as the trigger

"Constellation Software has a low weight of 3.8% within Our Portfolio. It deserves a higher weight, especially at these valuation levels."
This closes the gap the 15 February update exposed without commenting on it: a Strong Buy sitting as one of the two smallest positions in an eighteen-name book.

The month's total, and the discipline behind it

$50,000 on 1 February (Constellation, Visa, Topicus) plus $50,000 here (Brookfield, Constellation) — $100,000 deployed in three weeks, all into existing holdings, all with published limits.
Constellation alone takes $40,000 of it across two orders at CAD 2,600 and CAD 2,550.
Buffett closes the issue: "If you don't find a way to make money while you sleep, you'll work until you die."

Two slips worth recording

The conclusion prints a CAD 64 limit for Brookfield against CAD 47 in the transaction block. Only CAD 47 reconciles with 730 shares for $25,000.
The closing summary also mis-states the goal as "$1 in Free Cash Flow every single month" rather than per minute.

3. In plain English

A jargon-free summary of the thesis behind each argued name. (Renders on each name's consolidated page.)

BN — Brookfield Corporation Positive

Brookfield owns the physical backbone of the economy — office towers, ports, toll roads, pipelines, power plants — and also manages money for pension funds and insurers who want to own the same things. So it earns twice: the cash the assets themselves throw off, and fees for running other people's money invested alongside its own.

Ordinary accounting profit is close to meaningless here, because depreciation on infrastructure is a bookkeeping entry rather than money leaving the business. Brookfield reports "distributable earnings" instead — the cash actually available to shareholders — and on that basis the shares cost 20.4 times this year's figure, falling to 15.8 times by 2027 as the earnings grow. Management's own estimate of what the business is worth is $68 a share, roughly 30% above the market price, and its stated goal is to grow that figure by 15% a year.

Slegers calls it "the best holding company I've ever seen" and notes he is in company he respects — Bill Ackman, Chuck Akre and Tom Gayner all own it. He added $25,000 at a CAD 47 limit.

CSU.TO — Constellation Software Positive

This is the second Constellation purchase in three weeks, and the argument has shifted from the multiple to the yield. Turn the valuation upside down: instead of asking how many times cash flow the shares cost, ask what percentage of your purchase price arrives as cash each year. That figure is now 6.8% — higher than it has ever been in the company's history — and on 2027 estimates it reaches 9.7%.

There is a second layer. Constellation deliberately holds its reported cash flow down by ploughing money into buying more software businesses. The cash it could report if it stopped growing is higher than the cash it does report, so the true yield to an owner is better than 6.8%. Slegers' word for the sell-off is blunt: "completely unfair."

The other reason for the purchase is housekeeping rather than valuation. Constellation had drifted down to 3.8% of the portfolio — one of the two smallest positions in an eighteen-name book — despite being one of the seven highest-conviction holdings. "It deserves a higher weight, especially at these valuation levels." He added $25,000 at a CAD 2,550 limit, on top of the $15,000 added on 1 February at CAD 2,600.

Summary derived from the archived Compounding Quality post (text in transcript.txt) for personal study. Not investment advice. © Compounding Quality / Pieter Slegers for source material.