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What if I told you there’s a company that has delivered a +30% return every year since 2006?
Don’t believe me? Go look at a chart of Constellation Software.
We’re going to spend all week diving deep into this true compounder.
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Constellation Software Week
It’s Constellation Software Week this week!
In four articles, you’ll get a full deep dive into the company (over 60 pages).
Here’s what’s coming up in this 4-part series:
Part 1 (today): The business model and management team
Part 2: Understanding the business and the industry
Part 3: Look into the profitability, growth prospects, and valuation
Part 4: Put everything together and decide if we’re buying Constellation
Constellation Software
👔 Company name: Constellation Software
✍️ ISIN: CA21037X1006
🔎 Ticker: $CSU
📚 Type: Owner-Operator/Serial Acquirer
📈 Stock Price: CAD 3,650
💵 Market cap: CAD 78.0 billion
📊 Average daily volume: CAD 183 million
📅 Last update: November 3rd, 2025
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1. Do I understand the business model?
Constellation Software History
Mark Leonard worked in venture capital for almost 11 years.
During that time, he learned something important.
There are many small companies that make a lot of money.
They are necessary
Grow without needing extra cash
Have strong pricing power
With strong moats.
But almost nobody wants them.
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Why? Because their Total Addressable Market (TAM) is too small. As a result, Venture Capitalist companies ignore them.
Mark Leonard saw this as an opportunity:
Buy amazing small companies for a cheap price that nobody else is looking at.Vertical Market Software
These companies are called Vertical Market Software (VMS) companies.
They make very specific software for one very specific type of customer.
Their software is mission-critical, meaning customers really need it, but it usually costs less than 1% of the customer’s budget.
So customers keep paying every single year.
Examples include:
Software to manage libraries