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Constellation Software: A History Of Shareholder Wealth Creation

Ben Howard profile picture
Ben Howard


  • Constellation Software has a history of shareholder wealth creation delivering returns over 13,000% since IPO'ing on the Toronto Stock Exchange in 2006.
  • With a focus on acquiring good or excellent vertical market software companies, I believe Constellation has a diverse moat because of the broad range of niche segments they operate in.
  • By coupling potential organic portfolio company growth with possible future accretive acquisitions, Constellation has the ability to continue delivering shareholders' value, in my opinion.

Winter Constellations Star Chart

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I believe Constellation Software, Inc. (OTCPK:CNSWF) [CSI] will continue to deliver long-term returns supported mainly by three points.

I believe CSI has a diversified moat through the portfolio companies under their umbrella. With a focus

This article was written by

Ben Howard profile picture
Industry-agnostic, special situations/GARP investor. My focus is on businesses that the market is significantly mispricing. This includes special situations and high-quality companies whose future growth is being undervalued. I look for companies with high normalized earnings yields and quality business models that possess high or growing reinvestment rates. My portfolio is typically highly concentrated on a few ideas that I know well.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This analysis is not a guarantee of future results, models and projections are based on inputs that are likely to exclude all factors that may reflect a complete analysis. Furthermore, calculation errors, inaccurate reporting, and unseen inputs could bias results. For financial advice please consult with your advisor or other professional. This commentary reflects the personal opinions, viewpoints and analyses of the Alpha Squared Capital, LLC’s employees providing such comments, and should not be regarded as a description of advisory services provided by Alpha Squared Capital, LLC or performance returns of any Alpha Squared Capital, LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this article constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Alpha Squared Capital, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Alpha Squared Capital, LLC provides links for your convenience to websites produced by other providers or industry-related material. Alpha Squared Capital, LLC is not responsible for errors or omissions in the material on third-party websites, and does not necessarily approve of or endorse the information provided. Users who gain access to third-party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from use of those websites.

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Comments (9)

What do you think of Topicus? Same CFO, same board, same business model. Smaller and potentially faster growing however it would seem to me.

Wish I had dug into this more when it was split off. But glad I at least didn’t sell: it has more than doubled, yet is still only about 2/3 the price/FCF as Constellation.
I have a limit buy order for a share at $1500. Will it be filled?
Briar profile picture
You might have wait patiently for a market sell off. CSI is thinly traded. You can get some opening and closing prices—when CSI cannot be in the market. Spend your time trying to understand the company. You might be willing to bid higher, as I did.
@Briar I have several shares that I purchased between $1400 and $1500 earlier this year. I just think the current level is a little pricey and I hope it decline so I can buy more.
Great overview of the perfect company. I just missed your view in risk part on the valuation of the company. As currently it is stretched and one of the risk may be the ratios may fall and that would be one of the biggest risk in short time for the investors. But sure they have incredible business model and are performing incredibly on it.
Disclaimer: have some shares and planning to add.

Agree, this is definitely my favorite business in the world.
Beyond the features highlighted here, the only other business in which the CEO has identical downside as well as up is Berkshire. Leonard is priceless.
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