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Holdings Update: Buy Amphenol

Jensen Investment Team Re-Enters Amphenol Holding

Know What You Own

Founded in 1932 as a developer of radio components, Amphenol (APH) is a designer and manufacturer of interconnect systems, sensors and fiber optic and coaxial cable.    

The investment case for Amphenol is largely unchanged from that of our 2008 purchase, based on the company’s strong competitive position in the global market for interconnect and sensor products. Interconnect and sensor systems are used in a broad variety of end markets and applications, including mobile devices, information technology systems, automotive design, and industrial manufacturing. These products are typically critical components to end product design, placing Amphenol in an advantageous location within the OEM (original equipment manufacturer) supply chain.

Outlook

We expect Amphenol to grow and create business value due to end market growth and technology leadership. End market activity is boosted by secular growth drivers including mobile device development, cloud computing, electronic vehicle manufacturing, and industrial automation. Amphenol’s manufacturing scale and reputation as a technology leader are beneficial in end markets with shorter product cycles and product design lead times.

We finished liquidating the Strategy’s previous Amphenol holding in December 2020 at a price of $65.71 due to elevated stock price valuation. Since that decision, Amphenol shares appreciated 15.23% but underperformed the S&P 500 Index by 5.62%. However, due to an improved growth outlook, we now view the shares as attractively valued and are pleased to resume a stake in what we consider a quality growth business.

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Strategy holdings are subject to change and should not be considered recommendations to buy or sell any security. For a listing of the Strategy’s current holdings, please click here.

The discussion of the specific security identified in this article is solely intended to illustrate the application of our investment approach. Our views expressed herein are subject to change and should not be construed as investment advice and are not designed or intended as a basis or determination for making any investment decision for any security. This information is current as of the date of this material and is subject to change at any time, based on the market and other conditions. Past performance is no guarantee of future results.

Jensen Investment Management, Inc. is an investment adviser registered under the Investment Advisers Act of 1940. Registration with the SEC does not imply any level of skill or training.

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