
Yet Another Value Podcast
Speedwell Research's Drew Cohen shares thesis on FinTwit favorite, Constellation Software $CSU.TO
Mar 11, 2024
Speedwell Research's Drew Cohen discusses Constellation Software's unique acquisition strategy, capital allocation decisions, and potential risks like AI. They explore the company's culture, operational synergies, and ownership structures, comparing it to Berkshire Hathaway. The podcast also touches on favorite write-ups and quick thoughts on $RH.
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Quick takeaways
- Constellation Software acquires niche market software companies, focusing on long-term ownership despite competition from private equity.
- Capital deployment and decentralized decision-making drive Constellation Software's growth strategy and successful acquisition track record.
Deep dives
Evaluating Constellation Software's Business Model
Constellation Software operates as a holding company for vertical market software companies, acquiring businesses at multiples of one to one and a quarter times revenue with a focus on niche markets. By creating a conglomerate of such companies, inspired by long-term investment models like Berkshire Hathaway, Constellation aims to provide a permanent home for these businesses, differentiating from private equity's short-term flip model. They have shown a track record of successful acquisitions and organic growth, targeting specific markets and maintaining high client retention rates.
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