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Mawer New Canadian Equity Fund Comments on Constellation Software

December 13, 2013 | About:
Holly LaFon

Holly LaFon

261 followers
Constellation Software (TSX:CSU) is a Toronto-based firm that delivers software solutions to customers in 30 countries around the world. Their software systems are used by a diverse customer base that includes government entities, hospitals, schools, public utilities, and private businesses. It's quite possible that in a typical day you encounter a Constellation Software system numerous times as you visit a doctor, pay a utility bill, renew a driver's license, or visit a fitness facility. Since it can be costly and onerous for an organization to switch software vendors, Constellation tends to have a high degree of client retention.

Though Constellation Software was founded in 1995, it remained privately owned until its initial public offering in 2006. This was when Mawer established our initial investment in the company. During our research process we gained confidence in the ability to generate shareholder wealth with this business model, and we specifically came away impressed with the quality of the Constellation management team. They appeared highly skilled in the way that they evaluated opportunities, allocated capital, and executed their business plan. Their ability to identify accretive acquisitions and successfully integrate them into the business model was especially noteworthy. In time, they would become our own internal benchmark for managerial excellence, not just in Canada, but on a global stage.

From the Mawer New Canada Fund third quarter 2013 newsletter.


Rating: 5.0/5 (1 vote)

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