The Untold Story of Amphenol: Part II

**Douglas Ott** (0:05)
Preferred Shares is a podcast started by three guys interested in business, history, and business history. We follow our interests and go down the rabbit holes of current and bygone topics. We'll talk about individual companies, product wars, famous founders, forgotten failures, and anything else that strikes our fancy. To find our episodes and show notes, please visit our website at preferredsharespodcast.com.
The hosts for the podcast are Devin LaSarre, Douglas Ott, and Lawrence Hamtil. Devin is a private investor with a background in design and brand development and is the author of the Invariant newsletter. Douglas is a founder and chief investment officer at Andvari Associates, a registered investment advisor. Lawrence is a co-founder and principal at Fortune Financial Advisors, also a registered advisor. All opinions expressed by the podcast hosts and guests are solely their own opinions and do not reflect the opinions of their respective employers. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Andvari and Fortune Financial may have positions in any of the securities discussed in this podcast.

**Devin LaSarre** (1:26)
Hello, I'm Devin LaSarre. And as always, I'm joined by Doug Ott and Lawrence Hamtil. This is episode 24 of the Preferred Shares Podcast, and it's part two of our series on Amphenol. Joining us is special guest, Will Kerwin, who is a senior equity analyst covering technology at Morningstar. Will, thanks for joining us. We're thrilled to have you here.

**Will Kerwin** (1:47)
Thanks for having me on.

**Devin LaSarre** (1:49)
To start, I think it would be interesting for our listeners to learn a little bit about you, just your general background, and how did you end up getting to your current position at Morningstar?

**Will Kerwin** (1:59)
Absolutely. So I've spent my entire young career at Morningstar in the equity research department covering technology. So joined out of undergrad in 2019, have been on the technology team in our equity research department, covering specifically tech hardware for the last six years. So my coverage is a little bit miscellaneous. I lovingly call it a hodgepodge, but there's a spattering of semiconductors on there, semiconductor equipment, networking, Apple is on there. And then a lot of miscellaneous names that I like to call making up the IT supply chain. And so Amphenol would be one of the latter.

**Devin LaSarre** (2:38)
No matter how you slice it, it's all very much deeply in tech. Yes.

**Will Kerwin** (2:41)
Yeah, very much so.

**Devin LaSarre** (2:42)
Fantastic. In part one of our series, we covered a ton of ground on Amphenol's history and spent a good deal of time on the company's early history. Prior to diving right into the modern day version of the company, I was curious to get your take on the connector industry's history. Not the whole history, but any particular moments you found to be most critical or most interesting.

**Will Kerwin** (3:08)
You know, I think what comes to mind is that it's a very diversified industry across end markets and end verticals. So you've got a lot of automotive or transportation exposure in there. The data center is becoming a lot more prevalent these days as well, which I'm sure we'll talk about. Industrial is a very broad bucket, but there really isn't an industry that connectors don't touch. I like to call them kind of the electrical plumbing, if you will, of modern electronics. And so in my somewhat brief or maybe moderate tenure covering this industry for about six years, I think I've just seen that that diversification allows for evolutions of what the trend of the day is. And so I think if you had asked me back in 2020, 2021, it would have been electric vehicles and that transition. That seems to have cooled off a little bit now, but now you've got AI powering a lot more electronics in the data center. So it's really kind of a pick and choose of what trend you want to have at the moment because it represents such a broad bucket.

**Devin LaSarre** (4:06)
That makes sense. Connectors are so ubiquitous. It seems like going through the history of Amphenol or related companies, every single year, there's kind of a new focus, a new angle. Some of these end markets are super cyclical, others not so much. There's continual evolution every which way. Leading to the modern day Amphenol, could you touch on when you first started looking at the company? What did you see right then and what year was that?

**Will Kerwin** (4:36)
So this would have been back in 2020, picking up coverage on the company. I hate to sound like a broken record, but I think that diversification is a really important play here. And then also a lot of just the phenomenal characteristics of the business and of the stock that I'm sure we'll talk about over the course of the pod today in terms of the profitability, the excellent management team, etc. But yeah, really that end market diversity for a long time, no end market was more than 20% of Amphenol's total sales. And that stood in stark contrast to some other companies that might be very concentrated in automotive or in communications infrastructure.