Capital Compounders Show The Compounding Machine: Mark Leonard & Constellation Software
In this episode of the Capital Compounders Show, host Robin Speziale interviews the anonymous investor known as The Compounding Tortoise (CT), who shares in-depth insights on the Constellation Software Universe Universe - $CSU, $TOI.v, and $LMN.v - its CEO Mark Leonard, and the broader investment strategy surrounding serial acquirers. CT discusses the unique business model of Constellation Software, emphasizing its decentralized management structure, the importance of M&A, and the challenges of organic growth. The conversation also touches on the complexities of financial metrics like ROIC and the implications of recent spin-outs, including Topicus and Lumine. Throughout the discussion, CT provides valuable perspectives on the risks and future expectations for Constellation and other compounding machines in the investment landscape.
KEY TAKEAWAYS:
- Mark Leonard is likened to a wizard in capital allocation
- Constellation Software focuses on vertical market software (VMS)
- 71% of Constellation's revenues are recurring, providing stability
- The company operates on a decentralized management model
- Organic growth is limited; M&A is the primary growth strategy
- Incentive programs are tied to return on invested capital
- Understanding ROIC, ROIIC, and IRR is crucial for investors
- Spin-outs like Topicus and Lumine have strategic implications
- Investor expectations need to be managed as growth rates normalize
Ownership Disclosure: $CSU, $TOI.v, and $LMN.v - Yes
#investing #stocks #personalfinance #wealth #podcast
Tags: Constellation Software, Mark Leonard, M&A, serial acquirers
🎙️WANT TO BE A GUEST? Email me at r.speziale@gmail.com.
📰 SIGN UP TO MY FREE NEWSLETTER (JOIN 5,000+): https://robinspeziale.substack.com
📚 BUY MY BOOKS:
Market Masters: https://amzn.to/3Vfexu6
Capital Compounders: https://amzn.to/4eYP7bn
Lessons From The Successful Investor: https://amzn.to/3Zj2ai1
𝕏 FOLLOW ME: https://x.com/RobinSpeziale
💰 DOWNLOAD KOHO AND ADD $50 CASH TO GET $20 FREE: https://web.koho.ca/referral/UGXXKO6S
***
DISCLAIMER:
This content is for informational purposes only, and should not be construed as offering of investment advice or stock recommendations. This content is based on the author's independent analysis and research and does not guarantee the information's accuracy or completeness. The information contained in this video is subject to change without notice, and the author assumes no responsibility to update the information contained in this video. All information contained herein this video should be independently verified with the sources and companies mentioned. The author is not responsible for errors or omissions. The author does not purport to tell or suggest which investment securities viewers should buy or sell for themselves. Those viewers seeking direct investment advice should consult a qualified, registered, investment professional. The author is not a professional or financial advisor, and does not provide financial advice. Viewers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author will not be liable for any loss or damage caused by a viewer's reliance on information obtained in any of this content. It’s important to understand that investing involves risk, including loss of principal. The author is not engaged in any investor relations agreements with any of the publicly traded companies mentioned. The author does not receive compensation of any kind from any publicly traded companies that are mentioned in any of this content. The author has acquired and may trade shares of some of the companies mentioned through open market transactions and for investment purposes only. Refer to the “author’s ownership disclosure” where applicable. There may be affiliate links to Amazon, and other companies in which the author is compensated if any of the affiliate products are purchased from Amazon.ca/.com or any other companies.