Constellation Software (TSX:CSU) in Andvari 2024 Q3

Strategic Acquisitions Drive Long-Term Growth

Apr 14, 2025

Summary

Continues to acquire vertical market software companies, enhancing its portfolio.
Decentralized structure allows for efficient integration and management of acquisitions.
Faces challenges in maintaining acquisition pace and integration efficiency.
Recent acquisitions align with historical performance, supporting long-term growth.
Outlook remains positive with potential for continued market outperformance.

In the Andvari 2024 Q3 fund letter, Constellation Software (TSX:CSU, Financial) was highlighted as a key holding due to its strategic acquisition approach in the vertical market software (VMS) sector. The company’s decentralized structure enables it to efficiently integrate new acquisitions, which is crucial given the 22 software businesses acquired in the prior quarter. This strategy positions Constellation Software as a semi-permanent holding with the potential to outperform the market over the long term.

"Our three serial acquirers of vertical market software (VMS) companies are Constellation Software, Topicus.com, and Lumine Group. This trio acquired another 22 software businesses in just the prior quarter. Given the decentralized nature of all three companies, and their many different business units and sub-business units, a few acquisitions may have flown under our radar. We continue to view this group as a semi-permanent holding still capable of outperforming the market over the long term." — Douglas E. Ott, II, Andvari Associates, Q3 2024 Fund Letter

Read full letter at gurufocus Andvari 2024 Q3 page.

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