Drew Cohen from Speedwell Research, joins the podcast to discuss his thesis on Constellation Software (TSX: CSU), who acquires, manages and builds vertical market software businesses.
For more information about Speedwell Research, please visit: https://speedwellresearch.com/
Speedwell Research profile on Constellation Software: https://speedwellresearch.com/companies/reports/constellation-software/
Chapters:
[0:00] Introduction + Episode sponsor: Tegus
[1:41] Who is Constellation Software and why are they interesting to Drew
[6:05] How $CSU.TO is scaling their business model / competing with private equity
[13:00] Reverse DCF, deploying capital, competing now with other billion dollar software businesses
[21:02] Mark Leonard - is $CSU.TO a jockey bet / capital allocation / sellers
[28:32] $CSU.TO - what takes this company out
[30:57] AI risk?
[32:52] Price increases / TransDigm comparison / competition risk
[40:08] $CSU.TO vs. parking capital at index fund / likelihood of deploying at least 50% of their cash flow over next 10-ish years
[45:07] Operating synergies with 6 verticals? Why not more spin-offs?
[47:07] Additional worry about $CSU.TO - changing incentive system
[51:58] Aside from Berkshire, what are other examples of Constellation-like culture
[54:57] Speedwell's favorite write-ups he's done recently + quick thoughts on $RH
Today's episode is sponsored by: Tegus
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