Letter From the Field - Constellation Software
05.06.26
Constellation is a company we have followed for years, but one that rarely traded at a price we found attractive. Recent concerns surrounding artificial intelligence and its impact on the software industry prompted us to take a fresh look at a business we have long admired, but seldom found attractively valued.
To deepen our understanding, we returned to the shareholder letters of founder Mark Leonard, conducted interviews with former employees, and met with management at one of Constellation’s largest operating groups in Toronto.
What we found was a company that comes remarkably close to the ideal business: a decentralized collection of mission-critical software companies with recurring revenues, strong competitive advantages, and an exceptional track record of reinvesting capital at attractive returns. While many investors worry that AI may disrupt the sector, we believe Constellation is well positioned to benefit from many of the innovations ahead.
This letter is our way of sharing why we believe the recent market dislocation has created an opportunity to invest in an exceptional business at an attractive valuation.
