Topicus. The Constellation Clone That Grows 5x Faster
A deep dive into the spin-off that took Constellation's playbook to Europe
“The real money is going to be made in the growing businesses, and that's where the focus should be.”
- Warren Buffett, 2012 Meeting
Let me tell you how close Warren Buffett came to missing the best investment of his life.
It was 1972. A candy shop in California. The owners wanted 25 million dollars. Warren and Charlie thought it was expensive. Twelve times cash flow. For two guys who had built their careers buying dollar bills for fifty cents this was pain. They almost walked away over 100,000 dollars. One hundred thousand. On a 25 million dollar deal.
“If See's Candies had asked $100,000 more, Warren and I would've walked. That's how dumb we were at that time.”
- Charlie Munger, 2003 Meeting
But they bought it. By 2026 that candy shop had returned roughly 3.15 billion dollars in pre-tax profit to Berkshire. A 130-bagger. From a candy shop.
“The ideal business is one that earns very high returns on capital and can keep using lots of capital at those high returns. That becomes a compounding machine. If you can put $100 million into a business that earns 20% on capital, ideally it would be able to earn 20% on $120 million the following year, $144 million the following year, and so on. You could keep redeploying capital at these same returns over time.
But there are very, very, very few businesses like that. We look for them, but they don't exist."
- Warren Buffett, 2003 Meeting
Today I want to tell you about a European software company that looks exactly like that animal.
It trades at 123 times earnings.
And I just bought it.
My name is Sandro. I run Cannibal Stocks.
You know my style. I buy hated companies in hated industries. Alpha Metallurgical Resources at 1.3 billion in free cash flow on a 2 billion market cap. Transocean at about 25 cents on the dollar of replacement value. Ugly cheap. So cheap that even if I am wrong about everything else the price saves me.
So when I tell you I just bought a stock at 123 times earnings you should probably check if someone hacked my account. 🙂
Nobody hacked my account.
What happened is that I spent two weeks inside this business and I found something I have been looking for my entire investing life. A machine that takes one dollar and turns it into twenty cents of cash every year. Forever. Into a market so big that the machine cannot eat through it in my lifetime. Or my kids’ lifetime.
The stock is called Topicus.
And the 123 PE is a lie.
Let me show you.
