WCM Stock in Focus | Amphenol: Connecting People With Technology

A key focus of the WCM Quality Global Growth portfolio is to find quality global companies with durable, strengthening economic moats and corporate cultures aligned to this growth. An example of a company that demonstrates these characteristics is Amphenol Corporation.

Amphenol is one of the largest manufacturers of interconnect products that help power megatrends such as 5G, the ‘internet of things’, virtual reality, and high-performance computing to name a few. The company designs, manufactures and markets electrical, electronic and fiber optic connectors, coaxial and flat-ribbon cable, and interconnect systems. The primary end markets for its products are communications and information processing markets, aerospace and military electronics, transportation and industrial markets. With that in mind, there is opportunity for Amphenol’s products in any electrical IT hardware.

In this ‘Stock in Focus’ Brian Huerta, Client Portfolio Manager of WCM Investment Management discusses how Amphenol has maintained its competitive advantage in the market, enabling the company to be brought in at the earliest stages of product development for their clients.


Tom Hickey (TH): Hello and welcome to this ‘Stock in Focus’ update with WCM Investment Management. Today, I’m joined by Brian Huerta. How are you Brian?

Brian Huerta (BH): I’m doing well, Tom. How are you?

TH: Very well, thank you. Today, we’re talking about a company that has been in the Quality Global Growth portfolio for some time, Amphenol. Can you tell us a bit about what this company does?

BH: Amphenol is an electronic components maker based in the U.S. Amphenol well-known for its connectors and coax cables. It supplies a lot of different industries, and that’s one of the reasons why we like them.

Essentially, Amphenol is a play on the electronification of the global economy. Its products help power some of the big megatrends that you hear about like 5G, the Internet of Things, virtual reality, or high-performance computing. You really can’t get to those without Amphenol’s products.

There’s a lot of drivers to the business, and its business that we have watched and have owned for quite some time.

TH: Specifically, it supplies the connectors in iPhones and computers, and devices like that? Is that right?

BH: It’s supplying all the circuitry and some of the silicon that is out there. Whether that be an iPhone, a military system, a healthcare system, or any IT hardware that has, I think, electrical – there’s an opportunity for an Amphenol connector, cable or electronic component.

TH: A big tailwind. What’s the competitive advantage like at Amphenol?

BH: It’s nearly 100-year-old company with an excellent reputation that has built up over the years. It has a lot of trust with its clients.

The most important thing to know about Amphenol and its competitive advantage, is just how well it’s entrenched with its customers. From years of relationships, Amphenol get brought in at the earliest stages of product development. It has almost become like an outsourced R&D partner to these companies.

There are incredible advantages to be in the design stage in a product’s lifecycle. At the design stage and then, ultimately, the commercialisation or the rollout. This gives Amphenol excellent visibility and longevity of revenues, which makes Amphenol quite different.

It’s a great competitive advantage versus its competition.

TH: What do you like about the culture within the organisation?

BH: We like to say that Amphenol has one of the strongest cultures that we know – it’s very different. It’s a decentralised, flat organization.

Based in Pennsylvania in the United States, Amphenol has 130 general managers worldwide that are managing their own PNL’s. They make their own decisions based on local trends and customs, which enables them to stay close to their customer, work with their customer, identify new opportunities, and address any quality control issues. That’s quite different than what you see at the more centralized competitors.

Amphenol have had years of experience doing it this way. It’s the winning recipe in our view. It gives them so many competitive advantages. This is an example of when we think the culture has become the moat, and we continue to see that competitive bench widen over the years.

TH: Brian Huerta, thanks for your time.

BH: Thank you, Tom.

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