Why One Fund Is Buying Open Text Stock Despite Its 30% Slide From Record Highs

Montreal-based Jarislowsky Fraser increased its position in Open Text Corporation (NASDAQ:OTEX) by 117,436 shares during the third quarter for an estimated $3.8 million trade, according to an SEC filing on Tuesday.

What Happened

According to a filing with the U.S. Securities and Exchange Commission released on Tuesday, Jarislowsky Fraser Ltd bought 117,436 additional shares of Open Text Corporation during the quarter. The estimated trade size was approximately $3.8 million based on the average share price for the quarter. After the transaction, the firm held nearly 21.2 million shares valued at $790.7 million as of September 30.

What Else to Know

The buying activity brought the Open Text Corporation position to 4.3% of the fund’s reportable AUM.

Top holdings after the filing:

• NYSE:BN: $1 billion (5.6% of AUM)
• NYSE:TD: $938 million (5.2% of AUM)
• NYSE:CNI: $836.8 million (4.6% of AUM)
• NASDAQ:OTEX: $790.7 million (4.3% of AUM)
• TSX:BMO: $760.4 million (4.2% of AUM)

As of Thursday morning, Open Text Corporation shares were priced at $39.23, up 19.5% over the past year and outperforming the S&P 500's nearly 16% gain over the same period.

Company Overview

Company Snapshot

• Open Text delivers information management software and solutions, including content services, business network platforms, cybersecurity, digital forensics, and cloud-based analytics.
• The Canada-based company provides software licensing, cloud subscriptions, support services, and consulting, targeting digital transformation and information security needs.
• It serves enterprise and mid-market companies, public sector agencies, SMBs, and direct consumers globally, with strategic partnerships across major technology and consulting firms.

Open Text Corporation is a leading provider of enterprise information management software, with a global presence and a diversified product suite addressing digital transformation, security, and data analytics. The company's scale and strategic alliances with major technology partners strengthen its competitive position in the software sector.

Foolish Take

Jarislowsky Fraser added modestly to its Open Text stake last quarter by buying roughly $3.8 million worth of shares and lifting its total position to about $791 million—making it the fund’s fourth-largest holding after Brookfield, TD, and Canadian National. The increase comes as Open Text continues to stabilize following last year’s divestiture of its AMC/Mainframe business, with the stock still trading about 30% below its record highs.

The Canada-based software maker recently reported fiscal 2025 results showing $5.2 billion in revenue, down 10% year-over-year but only 3% lower when adjusted for the AMC divestiture. Cloud revenue, meanwhile, rose 2%, extending an 18-quarter streak of organic growth, while adjusted EBITDA margins held firm at 34.5%. Free cash flow declined to $687 million, though management announced a 5% dividend increase and a new $300 million buyback program, signaling confidence in cash generation and shareholder returns.

Jarislowsky’s buying stands out compared with trades in other tech names and suggests conviction in Open Text’s long-term AI-and-cloud pivot. For long-term investors, the combination of recurring revenue growth, disciplined capital returns, and discounted valuation could make this a quietly compelling investment.

Glossary

AUM (Assets Under Management): The total market value of investments that a fund or firm manages on behalf of clients.
Reportable AUM: The portion of a firm's assets under management that must be disclosed in regulatory filings.
Stake: The amount or percentage of ownership a fund or investor holds in a company.
Holding: A specific investment or asset owned by a fund or investor.
Outperforming: Achieving a higher return compared to a benchmark or index over a specific period.
Dividend Yield: Annual dividends paid by a company divided by its share price, expressed as a percentage.
Cloud Subscriptions: Ongoing payments for access to software or services hosted on remote servers rather than on local computers.
Digital Transformation: The integration of digital technology into all areas of a business to improve operations and value delivery.
Strategic Partnerships: Formal alliances between companies to achieve specific business objectives, such as expanding markets or sharing technology.
TTM: The 12-month period ending with the most recent quarterly report.
Consulting: Professional advisory services provided to organizations to improve performance or solve business challenges.
Business Network Platforms: Software systems that connect organizations to exchange information, goods, or services efficiently.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Brookfield and Brookfield Corporation. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.