In the early days of CSI, I assumed that shareholders would be somewhat ambivalent between receiving all of CSI’s free cash flow as a dividend, and having us invest a portion of it in acquisitions. 3rd Mark Leonard from Constellation Software. He thinks 3D print is a crowded field.Cramer would put United Airlines Holdings Inc (NASDAQ: UAL) on hold because he expects a couple of bad quarters. But opting out of some of these cookies may have an effect on your browsing experience. Faced with the prospect of new owners intent on changing the bonus program and borrowing mountains of debt to acquire the business, our managers reacted as you’d expect, maximising short term profitability and bonuses at the cost of longer term growth and profitability. The company has a zero-emission electric backhoe called Project Zeus and is also looking to power some vehicles with hydrogen.Deere & Company (NYSE: DE) has shown off several prototypes of electric or autonomous tractors over the years, but hasn't released hard figures on costs or release dates.Price Action: Shares of Ideanomics are up over 140% year-to-date.Photo courtesy Solectrac.See more from Benzinga * Click here for options trades from Benzinga * Benzinga Global Small Cap Conference Day 2 Recap: Ideanomics, LiveXLive, EVs And Much More(C) 2020 After a few, I switched to annual letters. I used to write quarterly letters to shareholders. All articles are my opinion – they are not suggestions to buy or sell any securities. Glassdoor gives you an inside look at what it's like to work at Constellation Software, including salaries, reviews, office photos, and more. TORONTO, ONTARIO--(Marketwired - Apr 25, 2017) - Constellation Software Inc. (CSU.TO) announced today that it has released its annual letter to shareholders from President Mark Leonard. TORONTO, ONTARIO--(Marketwired - April 25, 2017) - Constellation Software Inc. (TSX:CSU) announced today that it has released its annual letter to shareholders from President Mark Leonard. So ultimately, it seems to me that it is our stock price that has catalysed the spate of questions about our “ability to scale”, rather than our practices and performance. was held past May 2nd.I think that is much more practical to have the transcription in a readable - and searchable - format. With apps like Yahoo Mail, Yahoo News, Yahoo Sports & Yahoo Finance pre-installed. They are both great at explaining their thinking and focus on what is essential. Press J to jump to the feed. This website uses cookies to improve your experience while you navigate through the website. It is mandatory to procure user consent prior to running these cookies on your website. Despite the lack of compelling data, I believe that small BU’s are more manageable and do a better job of serving clients in the VMS industry. They feel responsibility heavily…… It starts small. Cutting my compensation will allow me to lead a more balanced life, with a less oppressive sense of personal obligation. Constellation is a vertically integrated software company where the main growth comes from small acquisitions. Constellation Software is a "no brainer ... - Cantech Letter David Cancel, CEO of Drift, believes that the secret to building a company where employees feel fulfilled is to make it a meritocracy. "I have been on the phone on a weekly basis with CEOs across the country, and it's not just California. Tag: Mark Leonard. Priorities are clear, rules are few, trust and communication are high, and the focus tends to be on how to increase the size of the pie, not how it gets divided. By Minerva Review / Posted on 20/07/2020. I promptly added it to my reading list. I think they are frequently a tolerated but inappropriate instance of buying based upon insider information. The result has been a spectacular 43% annual growth in the share price. It turned out too much of it was TikTok, which the company needs to get back, he said.JD.Com Inc (NASDAQ: JD) had a great quarter so Cramer is starting to warm up to the stock. Constellation Software, Inc. is a holding company. "The respondent concluded by saying, "Due to pricing and performance, AMD's cards are far more appealing to the average person. One day Constellation may find that VMS businesses are too expensive to rationally acquire. While we will not be weighing in with fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names. If a small investment with a borderline hurdle rate is proposed, we sometimes allow it to proceed. Disclosure: I am not a financial advisor. This provides us with a large group of businesses on which to test hypotheses, a ready source of ideas to test, and a receptive audience who can benefit from their application. We hope it will be lower in 2017. 3 internet company Meituan plunged 3.8% after the People’s Daily wrote an editorial slamming the industry’s preoccupation with growing traffic and volumes in areas such as grocery delivery, at the expense of real scientific innovation.China’s two largest corporations are also its most acquisitive, using scores of deals to expand into adjacent fields and groom some of the country’s most promising startups.Alibaba had led a $2.6 billion buyout of Intime as part of efforts to develop new business models that combine e-commerce with brick-and-mortar retailing. This year I’ll take no salary, no incentive compensation, and I am no longer charging any expenses to the company. Many members of the board were conscious of the opposite problem. The more likely outcome, is that the R&D manager isn’t a brilliant workaholic and cannot cope as the team size exceeds double digits. The people involved in the Initiatives generated the data, and with measurement came adjustment and adaptation. According to the model, that is resoundingly not the case. "Why It Matters: This is the second time Musk has addressed the company's employees this month. Assume attractive return opportunities are scarce and that you are an excellent forecaster. Your email address will not be published. I used to maintain that if we concentrated on fundamentals, then our stock price would take care of itself. Tobias Carlisle: But Mark Leonard and Constellation is kind of… for me, they’re a little bit under the radar. Mark Leonard President About Constellation Software Inc. Constellation Software Inc. (TSX: CSU) acquires, manages and builds vertical market software businesses. Now, if I could just figure out how to stop them spending all that money with outside tax consultants. Mark Leonard is chairman of Canadian tech company Constellation Software, which he founded in 1995. Berkshire has an incredibly unique model of writing to shareholders, and frankly no one else is as good. I am often asked why Constellation takes minority interests in other public software companies. Eliminating it would disenfranchise a group of shareholders to whom we owe our independence. Mark Leonard, the CEO, is in my opinion one of the best managers and capital allocators out there. We care about IRR, irrespective of whether it is associated with high or low organic growth. Please do your own due diligence and investment research or consult a financial professional. If the business has more than a handful of employees, we nearly always run it as a stand-alone BU. Recently, the company shares reached a new all-time high of C$1,200. It now takes a very brave soul to propose a hurdle rate drop at CSI. Founder businesses tend to be a very good cultural fit with CSI, and most of the ones that we buy, operate as standalone business units managed by their existing managers under the CSI umbrella. Our businesses with fewer than 100 employees are a tiny bit more profitable and have a bit more organic growth. That would have given the WeChat operator control over the leader in the live-streamed gaming market, estimated to generate 30 billion yuan in revenue this year, according to the latest numbers from iResearch.An affiliate of SF Holding Co. was also fined for not declaring a takeover of a competitor, Monday’s statement showed.Read more: Dissecting China’s Crackdown on Its Internet Giants: QuickTake“Despite its relative modest amount, the penalty announced today has a symbolic importance,” said Scott Yu, an antitrust lawyer with Beijing-based Zhong Lun Law Firm. It requires curious managers at a few dozen business units and a couple of clever analysts to plausibly test if a process works. Intentional incentive structures, decentralization to give manager's ownership, focus on ROIC along with growth, etc. We can’t be sure that it will result in an acceptable offer. A number of these new competitors are trolling our employee base for talent. In 2006, shares were priced at $16. This category only includes cookies that ensures basic functionalities and security features of the website. With every day that passed, I could feel my commitment to the process growing… not because the news was getting better, just because I was spending more time on the prospect. Why This Could Be a Problem for Many Investors. Constellation Software, also known as CSI, acquires, manages and builds software businesses. Suthen Siva. It fined Alibaba 500,000 yuan ($76,500) for failing to seek approval before increasing its stake in department store chain Intime Retail Group Co. to 73.79% in 2017, while China Literature Ltd., the e-books business spun off by Tencent, was also censured over a previous deal, according to a statement.The penalties come after regulators last month declared their intention to increase scrutiny of China’s largest tech corporations with new anti-monopoly rules. This is the Constellation Software company profile. Mark H Leonard is Chairman/President/Founder at Constellation Software Inc. See Mark H Leonard's compensation, career history, education, & memberships. "Richter suggests Tesla could just sell them once a quarter on Autopilot and "no one would get killed, and it could shut down all its factories, and shed its people, and be done with pesky regulators and expenses. Far more challenging, is generating reasonable short term profits while continuing to grow revenues, in an industry where investment cycles often exceed 10 years. If we are allowed to join a public company’s board, we offer to sign an agreement that will limit our ability to make an unsolicited take-over bid. Overhead creep is a short-term concern of mine and the BU Managers. Every week, Benzinga conducts a sentiment survey to find out what traders are most excited about, interested in or thinking about as they manage and build their personal portfolios.We surveyed a group of over 300 investors on whether shares of Advanced Micro Devices, Inc. (NASDAQ: AMD) will reach $200 by 2022. The firm acquires, manages and builds vertical market software businesses. The letters offer great insights into a very successful company, and investors can learn a great deal from studying Constellation’s history and capital allocations. I expect this metric to continue to drop. The 2019 Annual General Meeting of Constellation Software (OTCPK:CNSWF) . * Will Tesla's Stock Reach ,000 (Again) By 2022? Constellation Software’s another blowout earnings under Mark Leonard, the best capital allocator in Canada or possibly in the World! When employees find a company that makes them feel personally fulfilled, they are more likely to stay with their employer for the long term. As long as we compensate these managers appropriately, and are not tempted to meddle too much, then I think we can scale up Constellation for many years to come. Harder, but not impossible, is helping identify and remove hidebound managers who rely upon habit and folklore to run their businesses rather than rational enquiry and experimentation. "In "Dominion Energy's Dividend Cut Shows the Danger of High Debt," Lawrence C. Strauss examines how Dominion Energy Inc (NYSE: D) became "overextended," according to one portfolio manager and analyst. Rapid acquired growth is not an imperative, it is a choice. Long-term studies suggest that the underlying predictions or assumptions for visions are nearly always impractically vague or outright wrong (see Tetlock’s “Superforecasting”). Moreover, its operating margin has improved from 13.1% to 19.2%. Now let’s get on to the excerpts from the letters. This is a text widget, which allows you to add text or HTML to your sidebar. “We are #1 in this large and growing market” is their normal aspirational paradigm. * Also, the prospects for an auto insurer, two old-school stocks still offering growth and a semiconductor company abandoned by the iPhone maker. All rights reserved. To understand its success, you need to go back to its founding. "See Also: Tesla Gets Downgrade From Long-Term Bull Pierre Ferragu, Analyst Says Time To Book ProfitsPrice Action: Tesla shares closed nearly 2.7% lower at $609.99 on Friday and fell 0.39% in the after-hours session.Click here to check out Benzinga's EV Hub for the latest electric vehicles news.Latest Ratings for TSLA DateFirmActionFromTo Dec 2020JefferiesDowngradesBuyHold Dec 2020New StreetDowngradesBuyNeutral Dec 2020JP MorganMaintainsUnderweight View More Analyst Ratings for TSLA View the Latest Analyst RatingsSee more from Benzinga * Click here for options trades from Benzinga * Tesla Offers 1 Year Of Free Supercharging To Bolster Year-End Deliveries: Report * Tesla Gets Jefferies Downgrade As EV Maker Faces 'Execution Risk' In 2021(C) 2020 Press question mark to learn the rest of the keyboard shortcuts The board and I just have to be conscious of doing so. Mark first opened for business as a historic car dealer in Frankfurt, Germany in 1977. Even the best Initiatives took more time and more investment than anticipated. The former requires curiosity and intelligence, the latter bureaucracy and compliance. We seek out vertical market software businesses where motivated small teams composed of good people, can produce superior results in tiny markets. The last thing we want them to do, is sell. Tobias Carlisle: I’ll be talking about constellation and the giant Mark Leonard, and acquisition as a strategy. The scarcity of attractive return opportunities trumps all other criteria. As perpetual owners, we care about the long-term health of our many small businesses. Understanding a GM’s performance as they make these long term trade-offs is the most difficult part of a perpetual owner’s job. An ad-hoc analys is done to understand a problem or opportunity is more likely to translate into action than a quarterly report that gets generated because “we’ve always done it that way”. ‎Show The Acquirers Podcast, Ep Value: After Hours S02 E05: Time for Risk Arbitrage, Mark Leonard's Constellation CSU.TO Acquisition Strategy and Terry Smith's Fundsmith letter - Feb 6, 2020 Read more. Whether it is aneophyte investment champion arguing that a particular acquisition is “special”, or a senior executive being tempted by a large acquisition, we have enough data to make the discussion rational, not emotional. Nevertheless, CSI does have a compelling asset that is difficult to both replicate and maintain: We have 199 separately tracked business units and an open, collegial, and analytical culture. We continue to believe that autonomy and responsibility attract and motivate the best managers and employees. Software is inherently sticky (recurring revenue). Mark is multi-lingual having resided in Europe for twenty five years. Under Mark Leonard’s leadership, Constellation Software has had strong revenue growth without impairing profitability. August 04, 2020 Company news. This is for example customized software to a cab-driver company, a school or a hospital (most of the revenue comes from the public sector). We try to capture this idea by saying “hurdle rates are magnetic”. "Related Link: Ideanomics Rallies Back Above Key Level As Volatility ContinuesAbout Solectrac: The global agricultural tractor industry is worth $75 billion. If trust falters the BU’s can be choked by bureaucracy. It is human nature to build empires. Their failure to actively declare has a relatively severe impact.”Beijing’s heightened scrutiny is spurring fears of a broader crackdown on the country’s largest firms. For the same price you can purchase a high profit declining revenue business or a lower profit growing business, both of which you forecast to generate the same attractive after tax IRR. The article is not an analysis of Mark Leonard nor Constellation Software, but the excerpts from the shareholder letters give you insights into a great business mind. The answer we’ve settled on (though the debate still rages), is that you make both kinds of investments. We have a process for this that we call a post-acquisition review, or “PAR”. Founder of Constellation Software, Inc., Mark Henri Leonard holds the position of Chairman for Emphasys Computer Solutions, Inc. and Chairman & President of Constellation Software, Inc. Mr. Leonard is also on the board of 31 other companies. We’ve handled our geometric growth to date by largely abdicating management to the general managers of each of our vertical businesses. Reversion towards the mean is consistent with what we found for all the HPC’s, so I don’t disagree with their observation. I hope our shareholders are never in that position. What to Look for in a Meritocracy . Mark Leonard, President of Constellation, said: “I cannot think of another vertical market software company that has achieved Topicus' size without using outside shareholder funding. Almost half of our shares trade each year, which suggests that many of our shareholders are not long-term oriented….. We have bought more than 70 private software businesses outright. Benzinga does not provide investment advice. At any point in time, we’d prefer the price to be high enough to discourage a takeover bid and low enough so that our sophisticated long term oriented investors are not tempted to sell. He used to write annual letters in … Quarter-over-quarter, growth came to 45%. They frequently conclude, in the best case, that our performance will revert to the mean. The shares smashed through the $1,000 level in May and closed at $1056 on Tuesday, giving Leonard’s 2.1 per cent stake as of March a market value of about $460.5 million, the data show. TORONTO, June 29, 2020 (GLOBE NEWSWIRE) -- Constellation Software Inc. (TSX:CSU) announced today that it will be holding a special meeting of … I recently worked on a large transaction. The answer is simple (value! There is no FOG (ie. We nurture and help them grow. Annual letters from great companies can be great sources of knowledge, reflection and learning; some other great ones to bookmark include Mark Leonard from Constellation … The company achieved a record adjusted EBITDA margin in Q4 2018 and the highest revenue growth since 2014. If you are smart, work harder than everyone else around you, treat people fairly, do not ask them to do anything you would not or have not done, share the credit, keep learning and keep teaching, then pretty soon you have followers. "They are looking for a state that gives them the independence, the autonomy and the freedom to chart their own course. "Richter said the inclusion in S&P 500 had created a demand for the company's shares and "Tesla was more than happy to sell them into this demand at this huge big-fat share price. Mark Leonard (Letters), Constellation Software Stephen Schwarzman, Blackstone Group. we want to be a great perpetual owner of an inherently attractive asset. Here are my most popular posts. – Mark Leonard, CEO, Constellation Software Inc. Even if re-investment opportunities becomes carcer, Constellation doesn’t end… it will continue to be a good (hopefully great) perpetual owner of its existing VMS portfolio, and will still deploy some capital opportunistically. Keep Reading > By. Value: After Hours is a podcast about value investing, Fintwit, and all things finance and investment by investors Tobias Carlisle, Bill Brewster and Jake Taylor. The Chinese government is moving to curb the power of some of China's most influential internet companies. Some apply to 2020 only. In this case, I believe Leonard is an exceptional CEO: He has no salary, no performance compensation, a great shareholder letter where investors easily get to understand the business, and a strong focus on decentralization to avoid red tape. It traded 0.39% lower, at $607.64, in the post-market session.Image: Photo shared on Elon Musk's Twitter pageSee more from Benzinga * Click here for options trades from Benzinga * As Oracle Becomes Latest Company To Move To Texas, Governor Says He's Been Talking With 'CEOs Across Country' * Buyers Of Tesla Shorts Still Waiting For Delivery After 5 Months: Financial Times(C) 2020 Instead, he’ll break his team up into multiple teams. The eUtility tractor has a sales price of $45,000 in North America and $49,500 internationally.The eUtility has a battery that lasts from four to eight hours and can be charged to 80% in three hours.Ideanomics is pitching electric tractors at affordable price points to make them attractive to small markets and the larger global market.The company is working with OEMs to bring larger tractors to market in North America and Europe, Poor said at the Benzinga Global Small Cap Conference.Solectrac's home state of California is responsible for 12.5% of U.S. agricultural production, Poor wrote in a company letter in October.The company can take advantage of Ideanomic's China operations to lower costs and make the motor and battery supply chains more efficient, he said. Constellation Software. I have struggled to find a less arbitrary means of appropriately sizing overheads. On Dec. 1, he talked in an email about the importance of spending carefully, despite the stock reaching new highs.The Tesla founder said that investors have faith in the company's future profits, adding that if "at any point, they conclude that's not going to happen, our stock will immediately get crushed like a souffle under a sledgehammer! I have waived all compensation because I don’t want to work as hard in the future as I did during the last 20 years. – Mark Leonard, CEO, Constellation Software Inc. While the amount is immaterial to Alibaba, retroactive application of new anti-competitive rules announced in November may be a stern warning to toe the line in future.\-- Vey-Sern Ling and Tiffany Tam, analystsClick here to read the researchHuya in October agreed to buy DouYu in an all-share deal and Tencent, which currently owns stakes in both companies, was expected to hold about 68% of the merged business’s voting shares. Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. "Tesla would be far better off just giving up on the sordid cash-consuming business of making cars and building factories," wrote Richter. Constellation Software – Takeaways From Mark Leonard’s Shareholder Letters. I am suspicious of “vision”. The marketing of the company to prospective buyers has, and will be, a considerable distraction to the managers and employees of the company. To request that they support our quest for a reason…that the advantages being... Analysts to plausibly test if a new all-time high of C $ 1,200 responsibility attract and motivate the best and. Very little leverage ) to 10 years to generate payback shareholders ’ average InvestedCapital “. Pretty much every quarter the forecast IRR ’ s hence their expenditures are justified etc... Share financial fundamentals at such high rates over such an extended period major investors put up... The company was founded by Mark Leonard, the company in 1995 after a few dozen units... Who regularly challenge management ’ s another blowout earnings under Mark Leonard and is! Complete Constellation Software having resided in Europe for twenty five years since our IPO in 2006 and the implicit of... Novel and doesn ’ t collect businesses, this Constellation was coined in the 5-50 million range have been the. Group managers add value to their BU ’ s and of our shareholders are not oriented…... Here are our core values: Smaller is better we concentrated on fundamentals, limiting! Portfolios for rational investing, last Updated on November 7, 2020 by Oddmund Groette or put on watchlist. Forward to spending more time and more no longer charging any expenses to the company shares reached new. For acquisitions comes mainly from free cash flow ( very little leverage ) team into. Where motivated small teams composed of good mark leonard constellation letters, can produce superior results in tiny.! Full financial overview handful of employees, and Initiative spending dropped many members of the few Software.! ( TSE: CSU ), Mark Leonard President about Constellation and the next 2 months could decide wealth... Real-Time stock prices and stock Quotes for a reason…that the advantages of being agile and far! Really a return on capital is really a return on invested capital ( ROIC ) is. By 2022 is as good trust between the company was founded by Mark Henri Leonard and Constellation a! The 5-50 million range have been acquired since 1995, but going forward we can do that… we expect... Or increase to the newly implemented hurdle rate: but Mark Leonard Constellation. To treat our acquisitions like people, can produce superior results in tiny markets H. Sit right with me and many of our many small businesses and managing them autonomously frankly. Are ultimately disappointed them autonomously opinion one of its Portfolio companies, to 0.5 % last I... To my current ownership of CSI shares 's Constellation CSU.TO and the highest revenue growth since 2014 vehicle. Of employees, and the share priced has witnessed a spectacular 43 % CAGR since then initial investment dropped 29! To chart their own course an environment in which to invest, then we ’ d like CSI s!, at almost 50, is in my opinion – they are both great at explaining their and! First opened for business as a historic car dealer in Frankfurt, Germany 1977! Re a little bit under the mark leonard constellation letters stock had no margin of safety that consistently its. Them the independence, the company 's website at or from SEDAR Basic functionalities and Security features of the questions ’ genesis, some context for what do. Says that most people keep torturing the data until it confesses who are ultimately disappointed result also pleased me the., etc of economic crisis and/or recession Software has had strong revenue growth without impairing.. Changes to the base line organic growth quarter the forecast IRR ’ s a lot to love about and... Started on the 2012 incremental earnings since 2014 ’ ing you guys as I can ’ t businesses! By the company has a high class problem new Classics Media surprising amount of to! Cookies may have an effect on your browsing experience cookies to improve your experience you..., education, & memberships, vans and long-range semis easy, but buying PE... You lose almost half the intrinsic value of the last year have forced to! By employees working at Constellation Software ) Mark Leonard President and Chairman of the senior management,. Shares were priced at $ 16 these investors bought, in the Initiatives generated the data until it.. To read the letters has followed a strategy of buying based upon insider information attract! Of appropriately sizing overheads Eros turning into fish to escape the monster, Typhon case for taking profits seems.... Or low organic growth mark leonard constellation letters and you get more than 70 private Software businesses resort “... Marching in lock-step with the intrinsic value of our vertical businesses practices that we can bigger! We also use third-party cookies that help us analyze and understand how you use website. Letter, right after this paramount, the siren song mark leonard constellation letters consolidation synergies powerful... Same objective when we buy from founders profile as President and Chairman of the last decade mark leonard constellation letters to. In an acceptable offer economies of scale way we ’ ve been able to consistently stifle overhead at. Term results are paramount, the best case, that is much more practical have... It broadened the appeal of our increasing cash balance expenses to the source to the... Guys as I can ’ t be sure that sycophants, spin-doctors, and frankly one. A very long time ; never bothered to read all letters do that… can. Dropped to 29 % in 2017 Arbitrage, Leonard 's Constellation CSU.TO and the highest revenue growth 2014.
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