Constellation Software

Last year I asked my friends to send me the names of the companies run by able and honest managers like Warren Buffett. Without hesitating both of them mentioned about Mark Leonard, a terrific guy who runs Constellation Software. I promptly added it to my reading list. In a recent interview, Shane Parrish mentioned about Mark Leonard. Click here to read the rest.

10 thoughts on “Constellation Software

      • hi Jana sir its a nice article of tf-idf cosine similarity. i have doubt that log(1/3) this u have calculated as ln(1/3). because once mistake had done means whole problem will get wrong. so i need clarification and perfect answer ..reply to my mail id sir, and one more thing is i need this in matlab code.

  1. Thanks, Jana! Your posts are deliver a lot of value to the readers, keep up the good work.

    On a different note, assuming you have a full-time job, what does your daily routine look like to be able to contribute so much?🙂

  2. Constellation Software’s stock price is in canadian dollars but it’s accounting/financial statements are reported in US dollars.

    • You are correct. I should adjust the valuation numbers to account for that.


  3. Hi Jana,

    Thanks for the wonderful write up. The company is in a low to medium barrier business but run by a competent manager. This could be categorized as a stalwart but may not be a 20 bagger in next 5-10 years due to its size for an IT company.

    One quandary that I face is , there are good companies available at reasonable valuations but their size is so big that long term results from those investments may not exceed a CGAR of 7-8% which is roughly equivalent to a return of an index fund, so the question arises why risk it in one company. Any thoughts on rationally dealing with this mindset will be highly appreciated ?


    • Manoj,

      Thanks for your comments. You have a valid point. Chances of CSI generating an IRR of at least 10 percent is very high. The long term return from US stock market indexes should be around 6 percent including dividends. If you can compound at 8 to 10 percent over a very long period without losing your capital, then that’s a lot of money.

      Let’s look at what Benjamin Graham told about investing – An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative. The two key points are “safety of principal” and “an adequate return”.

      According to me any return above the long term inflation rates is good. For the effort that we put in analyzing securities requires some alpha above the S&P 500 returns. Generating an alpha of 4 percent (IRR of 10 percent) is very good and doing that consistently over the very long term is not a joke.


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