Yahoo Finance Dubbed Canada's Berkshire, Constellation Software stock keeps hitting new highs
Shares of Constellation Software (CSU.TO) are on the rise after setting a record closing-high on Tuesday. It’s a bullish sign for investors convinced the Toronto-based software conglomerate is akin to Warren Buffett’s Berkshire Hathaway (BRK-B).
Shares hit an all-time intraday high of $3,495.91 on the Toronto Stock Exchange in early trading on Wednesday, roughly tracking gains in the broader market. On Tuesday, the stock closed at an all-time high of $3,452.35. Over the past 12 months, the shares have added nearly 60 per cent. In five years, they have booked a nearly threefold increase.
The company is known for buying niche software firms spanning a wide range of industries, from real estate, to education, to agriculture. Its reputation for buying companies focused on strong management, consistent revenue and profit growth has drawn comparisons to Berkshire Hathaway.
However, unlike most publicly traded companies, Constellation does not host quarterly conference calls with management, or issue guidance to investors.
In October, RBC Capital Markets analyst Paul Treiber estimated Constellation had deployed a total of $8.71 billion in capital on 867 acquisitions since 2005. Those numbers are climbing, and Treiber has called Constellation an “unrelenting cash-compounding machine.” He sees a strong start to dealmaking in 2024.
“Constellation deployed an estimated $235 million [in] capital on 23 acquisitions [in] Q4, which brings fiscal 2023 capital deployed on acquisitions to a record $2.27 billion, well above the $1.69 billion in fiscal 2022,” he wrote in a note to clients last week. “Moreover, Constellation has already entered into agreements to deploy an estimated $600 million [in] capital on acquisitions in the first quarter of fiscal 2024.”
Treiber boosted his price target from $3,400 to $3,900 on Jan. 7, while maintaining an “outperform" rating.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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