TIP531: Mark Leonard: The Best Capital Allocator You've Never Heard of
We Study Billionaires - The Investor’s Podcast Network
Exploring Acquisition Opportunities in the Software Industry
This chapter explores the vast potential for acquisitions within a leading software company, emphasizing over 30,000 possible targets. It discusses the company's growth through strategic mini vertical acquisitions and highlights the coaching provided to managerial teams of acquired businesses to ensure sustained success.
On today’s episode, Clay Finck does a deep dive into Constellation Software (Ticker: $CSU).
Constellation Software is a Canadian holding company that has acquired over 600 vertical market software businesses. The company was founded by Mark Leonard, and has delivered exceptional returns to shareholders since their IPO in 2006. The stock has had an average annual return of over 34% from 2006 through the end of 2022. If you are like Clay and enjoy learning about high-quality businesses, then you won’t want to miss this episode.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
03:01 - What makes Constellation such a high-quality business.
08:32 - The similarities between Mark Leonard and Warren Buffett.
09:57 - What Constellation’s business model is.
19:32 - How Constellation garnered a reputation that founders are more than willing to sell to.
21:39 - Clay’s takeaways from reading Mark Leonard’s shareholder letters.
42:21 - How Clay views the valuation of Constellation Software today.
44:10 - Why Clay took a position in Constellation Software to hold for the long-term.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
- Mark Leonard’s Letters.
- Chris Mayer’s blog post on Constellation Software.
- The 10th Man Blog.
- Don’t miss our review of Joel Tillinghast's book - Big Money Thinks Small. Watch the video here.
- Check out Clay’s episode covering legendary British Investor Terry Smith. Watch the video here.
- Follow Clay on Twitter.
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