A 'Canadian Berkshire Hathaway' is quietly outperforming the FAANG stocks
Constellation Software (CSU.TO) is a Canadian stock market darling — often compared to Berkshire Hathaway (BRK-A) for the way it gobbles up smaller firms — that has quietly outperformed some of the biggest names in U.S. tech.
Facebook wasn’t public back then. But all of the other ‘FAANG’ (FB, AAPL, AMZN, NFLX, GOOG) stocks trail Constellation Software since its 2006 IPO, which is up around an astonishing 9,600 per cent.
And yet, few outside of the investor community have likely heard of it. Constellation Software’s COO Mark Miller is just fine with flying under the radar.
“Wouldn’t you rather work for a company where all of our businesses matter,” Miller told Yahoo Finance Canada.
“So we really care more about them than we do about building a story about us.”
The companies Constellation Software buys aren’t household names either. Acquisitions include companies that make software for transit systems and museum curators.
Miller himself was part of an acquisition. He joined the company when his firm was bought in Constellation Software’s first purchase in 1995.
Miller won’t put a number on the total number of acquisitions. The company stopped disclosing last year when the tally hit around 400. It was around the same time that post-earnings conference calls stopped.
“We basically feel it’s in the best interest of our shareholders to not be sharing all of the information with some of the other people, who are trying to do similar things to what we’re doing,” said Miller.
Miller adds to the mystique by not sharing Constellations Software’s employee count. Despite criticism from some on Bay Street, he says the tighter-lipped approach has been the right move.
“We hope people will trust what we’re doing and we continue to execute,” he said.
Miller generally takes a hands-off approach and lets the businesses Constellation Software buys do their thing because they are “their babies”. It also thinks very long term, a similar strategy to Berkshire Hathaway. Miller says he has a lot of respect for the house that Warren Buffett built. But he is humble about comparisons.
“I read as much as I can about them and it’s been a great business and it wouldn’t be fair for us to say we’re in their league because they’ve been doing this for a while successfully,” he said.
Miller says as a Canadian, he’s passionate about home-grown companies doing well. He says Canadian companies often struggle to get over the hump to grow into larger businesses, compared to Silicon Valley. He preaches patience to Canadian companies who sell their businesses too soon instead of trying to build something.
So what happens if and when Constellation Software eventually runs out of businesses to buy?
“That’s really something I can’t comment on,” said Miller.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains
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