We had the pleasure of speaking with Anthony Glickhouse, portfolio manager and business analyst at WCM Investment Management.
In this conversation with John, Anthony discusses the philosophy, process, and insights underpinning the quality value approach he and his team employ at WCM Investment Management. With an investment career that traces its roots back to early influences from Warren Buffett, Glickhouse reflects on his evolution from a curious teenager tracking stocks to a portfolio manager focused on qualitative depth over quantitative shortcuts.
Central to the conversation is Anthony’s investment approach, defined by a commitment to identifying and holding high-quality businesses with durable competitive advantages and shareholder-friendly management. Rather than relying on traditional quantitative screens, Anthony emphasizes deep qualitative analysis to uncover long-term compounders.
Illustrating this philosophy, Anthony delves into specific sectors that exemplify his team’s investment criteria. He provides insights into the decking industry, highlighting leading players Trex Co (TREX) and Azek Company (AZEK), which dominate the market. Anthony breaks down the competitive advantages of these companies, such as Trex’s manufacturing efficiencies and brand presence, as well as Azek’s evolving competitive positioning. This live case study shows how qualitative analysis can uncover sustainable moats and long-term growth even in seemingly mundane sectors.
The discussion further explores the underappreciated analog semiconductor industry, focusing on MACOM Technology Solutions (MTSI), Silicon Laboratories (SLAB), and Allegro MicroSystems (ALGM). Anthony explains how these companies, although operating outside the flashy headlines of digital semiconductors, provide essential technologies with defensible niches and compelling long-term prospects.
Insights you’ll gain in this conversation:
Anthony Glickhouse’s Path in Investing
The Philosophy of Quality Value Investing
Deep Dive: Composite Decking Industry (Trex and Azek)
Analog Semiconductors: Underappreciated Investment Opportunities
Portfolio Construction and Risk Management
Building a Concentrated Portfolio: Why Less Is More
Generalist vs. Specialist Approaches in Investment Management
Enjoy the conversation!
The following transcript has been edited for space and clarity.
John: It is a great pleasure to welcome to this conversation Anthony Glickhouse, portfolio manager and business analyst with WCM Investment Management. Anthony joined WCM in 2016. His responsibilities include equity research for the firm’s fundamental value strategies.
Since the start of his investment career in 2006, his experience has included a position at Opus Capital Management, where he was a research analyst as well as a founder of and portfolio manager for a small-cap fund. Before that, Anthony held positions at The Private Client Reserve of US Bank, where he conducted economic and capital market research. He’s a graduate of Miami University (Ohio) with a BS in finance and is a CFA charter holder as well.
Anthony, it’s so great to have you here to talk about your approach to value investing. Before we get into the details of it, I’d love to hear more about your path in investing.
Anthony: Thanks for having me on today, John.
I’d say the path started early on. I could probably trace it back to when I was as young as 11 or 12. I remember my grandma was really into investing, and both my parents worked during the summer, so I found myself hanging out with my grandma a lot at that age. She taught me about this guy named Warren Buffett – how he went about investing, looking at quality businesses, and holding them for a long time. That was when the bug first bit.
She told me, “You should pick a few stocks and follow them.” I would look up the stock quotes in the newspaper every day. I’d write them down in a notebook and track how the prices moved.
Fast forward to college, I knew pretty early on that I wanted to go into investing. It’s a very dynamic field. Things always change, and that always interested me. I was always very curious, too. If you’re a curious person, I don’t think there’s a better area than investing, especially if you’re a generalist. You can go anywhere, learn, and discover new things all the time.
In my senior year in college, it was time to look for a job. I wasn’t having much luck. I wanted to stay in Cincinnati, which is an important caveat. I figured out two things fairly early. One was that there’s not a huge institutional money manager industry here in Cincinnati. There are some firms, though – probably more than maybe some people would appreciate. Second, it’s hard to become a research analyst at 22, coming out of undergrad. Those were two lessons I learned pretty quickly, but I made the decision. I wanted to get my foot in the door, and I didn’t care how.
There was a firm called Renaissance Investment Management in Cincinnati. I started out in operations. I wasn’t in an analyst position, but I don’t think I would have traded that experience for anything in the world. I got to learn the business from the bottom up. I was doing things like calculating performance for the various funds and accounts, doing reporting for clients, and calculating trades from the trade desk. It was anything and everything. I got to learn a lot.
I expressed interest to some of the PMs there. I told them I would love to move into research one day, and they would give me little projects. They encouraged me to take the CFA exams, and I took two of the three while I was there. Unfortunately, it was a smaller firm – mainly quantitative with some qualitative overlay. I wanted to explore more of the qualitative nature of the business. I ended up going to US Bank, working in the private client group for a couple years. I thought, “I can get a bit of a change of pace. Maybe I could do some more stock industry work, learn some new skills.” However, I always had the desire to move into a true research analyst role.
Fortunately, after about a couple of years at US Bank, there was an opportunity for an industrial analyst at Opus Capital, which was a Cincinnati-based institutional money manager. I was lucky enough; I interviewed for the job and got it. About five or six years later, after getting out of undergrad, I finally got that research position and got to quench my thirst for doing fundamental stock research.
That’s it in a nutshell. Maybe it wasn’t the most traditional path, but I worked my way up from the bottom, if you will.
John: Now that you’ve been at WCM for a while, you’ve obviously had an opportunity to shape the process there and be part of that value team. Tell us about how you and the team approach value investing because it’s kind of a big tent, and I’d love to hear about what kinds of opportunities you focus on, the valuation discipline you apply, and all the rest.
Anthony: While at Opus, I was a PM on the quality value strategies along with my colleagues Jon Detter and Pat McGee, whom I met there. Long story short, the three of us love qualitative research. Opus used a quantitative screen on the front end to present potential stocks to look at for qualitative research. The three of us were always drawn more to the qualitative side.
We came up with what was called “focus small cap.” We thought, “What if we didn’t look at a screen anymore? What if we had a go-anywhere approach to building a portfolio and do it in a concentrated manner with low turnover and get to know these businesses well?” We ran that on the side for a couple of years. It wasn’t the primary small-cap product at Opus. That was a more diversified, 60- to 70-name portfolio. We used a front-end screen to narrow down stocks to look at and with a fundamental overlay, but we wanted to isolate just the fundamental qualitative aspect.
We did that, and then we got to thinking maybe we should try to do this with another partner or on our own because it wasn’t in Opus’ DNA. The company was gracious enough to let us explore opportunities elsewhere. That’s how we got to WCM. We started with small-cap quality value. Today, we have small-cap quality value, SMID-cap quality value, mid-cap quality value, and an international quality value strategy as well.
What does that mean? Simply, a quality value approach is putting the business analysis and the business quality first; doing the due diligence there, making sure we have a company with a durable competitive advantage and a stakeholder-friendly management. It’s the marriage of those two things. That is what a quality business means to us. Only after you determine that you’ve found a quality business do you go on to valuation.
It differs from traditional value managers where you’re looking for cheap stocks. You don’t care where they come from – you want low price to book, low PE, low multiples. Sometimes, you can find good stocks there, but oftentimes, it leads you down to the same areas, the same businesses.
We thought, “If we’re going to run a concentrated portfolio, let’s look for the best. Let’s not be beholden to any kind of screen.” That’s what it means to us – business quality first, valuation second. When it comes to valuation, we’re not Excel or model jockeys. We don’t try to get amortization estimates right in the third year of the forecast. Honestly, we think that’s largely a waste of time. For us, the real value lies in the qualitative attributes of the business. What are the durable competitive advantages? What kind of culture do management foster? Do they make good capital allocation decisions?
Then we try to do our best on valuation, recognizing that you’re going to get the most exact wrong number almost with any kind of valuation you do. We try to look at it in ranges. We use a simple five-year DCF. We use some multiples. We try to triangulate the best we can. We always speak in terms of ranges of intrinsic value. That’s quality value in a nutshell.
John: Maybe we could illustrate it with an example, if you don’t mind – either a case study or a current idea of yours.
Anthony: I can give you two stocks in the same industry – Trex and AZEK. They do composite deck boards. Here in the States, decks are very popular, and 75% to 80% of them are made out of wood. A wood deck is a lot of work. It requires a lot of upkeep. You have got to seal it and stain it. You can get algae growth on it. You can get bug issues. It can warp. It’s a mess.
Trex was the first mover in this industry. It came up with a board made of 95% recycled plastic grocery bags and other types of low- and high-density plastic products. Throw in a little sawdust and, in a very cool process, Trex can extrude these boards to look pretty much like wood. They are stain-resistant, warp-resistant, and insect-resistant. You don’t have to do anything. You put them there, and there’s no upkeep. It’s a lower total cost of ownership. It’s slightly more expensive to install, but you’re not going to be spending all the money and time on upkeep going forward.
Trex doesn’t screen as a traditional value stock, but if you look at cash earnings, the competitive entrenchment it has, and the competitive advantages, it does exemplify the type of quality stocks we look for. Trex is like the Kleenex of composite deck boards. If people see fake wood decks, they’re like, “Is that Trex?” It’s a household name. Being the first mover, the company can spend a lot of marketing dollars to get the name out there. It’s done this over 20 or 30 years.
Concurrent with that, Trex is a low-cost manufacturer. It has totally nailed the secret sauce of using a lot of diverse recycled inputs to make this board cheaply. The company has had some pretty big gross margins, and it can recycle that gross margin into marketing dollars. It’s getting the manufacturing scale and feeding it into the marketing scale to develop brand awareness and awareness with contractors, who are the real influencers. When people go to do these decks, the contractors typically only want to do business with one primary deck board company, like Trex or AZEK.
Trex has taken the efficiencies, the fat margins in manufacturing, and put them in marketing, and it’s like a flywheel. Everything stems from low-cost manufacturing. That is a competitive advantage we love to see because it gives you a permanent advantage versus new entrants. It’s hard to match that. If you can’t get those gross margins high enough, you don’t have enough to spend on marketing and influencing contractors down the line.
In total, decking is about a $10 billion industry. Probably $3 billion or $4 billion is composite decking. Composite is taking share from wood. That is the real competitor. The other company I mentioned, AZEK, is in our small-cap portfolio. We hold Trex in our mid-cap portfolio. AZEK was the number-two guy. It didn’t have quite the manufacturing advantage of Trex although it’s starting to narrow that a little and to incorporate more recycled material in its board, so it’s able to spend more on marketing.
It’s an advantageous industry where you can support two or three of these players in composite board. Together with Fiberon, a third-tier board manufacturer owned by Fortune Brands, they have about 80% of the composite market in the US. It’s a great industry that allows your economies of scale in production to flourish. Then, you can invest that into customer captivity in terms of brand recognition, advertising, and loyalty programs for contractors.
John: You invest for the long term. With these two companies, when you track them, what are some of the key data points you look at over time?
Anthony: It’s funny. You’d think that these companies compete against each other, but they don’t. They compete against wood. Wood is a commodity though it’s cheaper than the composite.
One thing we want to look at is what the price of wood is doing. How is that influencing purchasing decisions by consumers and contractors? We’re not too concerned about quarterly gyrations in these two stocks – or any of our stocks, for that matter. We just want to see composite boards take share from wood every year. Consistently, they’ve done that as an industry – composite is growing its share against wood every year by 1% to 2%. That’s one thing we look at.
Also, there are different tiers of composite decking. Both Trex and AZEK have an offering on the lower end to compete better with wood buyers, and they also have a high-end for bigger-dollar value decks. At least right now, that seems to be holding up pretty well.
This is no surprise to anybody. At least in the States, people greatly value outdoor living. COVID pulled forward a lot of demand. You’re left with a renormalization right now, where the lower end is retrenching a little, although sequentially, it’s starting to claw back, but the high end has held in pretty well. It’s looking to see what percentage of AZEK’s and Trex’s sales would go to these high-end deck consumers.
There’s also the matter of capital allocation. They have factories making this board. You want to make sure you’re not getting whipsawed by demand and adding capacity at exactly the wrong time. Both companies have done a great job of balancing building ahead so they’re not being caught flat-footed in demand spikes. They’ve done a good job of matching their manufacturing capacity to demand.
Those are a few of the things we look at.
John: What are roughly the market shares of composite decking versus wood decking these days?
Anthony: I think wood is roughly 70%. It still dominates, but it has ceded a lot of its share. It used to be 100% 20 to 25 years ago. As a group, composite has got a 25% to 30% share. That’s another reason we like both of these businesses – there is a long, visible runway to converting people from wood into the lower maintenance lifestyle that a composite board can give you.
John: Yes, it definitely sounds like a pretty long runway. In terms of the cost of ownership, I would assume composite wins there over time. What about the initial cost of putting it in?
Anthony: That’s where Trex has done a good job. It has a great lower-end entry board that – depending on where wood is at – can be 15% to 20% more expensive than wood. It also has boards that are maybe two, three, or four times the cost of wood.
That allows Trex to get lower-end buyers interested. Oftentimes, it can upsell them, too. It can be like, “For a few more cents per board – 50 cents, 75 cents, or a dollar – you could upgrade to this middle-tier board.” Both companies have been highly successful with that.
On average, the material, the fasteners, and the deck frame underneath are all largely the same, whether you’re building wood or composite. However, composite could be anywhere from 15% to 20% to double the price of wood. It depends on what kind of aesthetics and other attributes you’re looking to achieve with your deck.
It’s a one-time purchase. You put that board in and you’re not touching it. It’s not rotting away or fading. You don’t stain it. With a wood deck, you’re doing that every two years at a minimum, if not every year. You’re doing something to it to make sure the wood’s not fading or rotting. Over a 20-year life span, it’s not even close. If you’re in a low-end board or even a high-end board, you’re still making that back with the lack of paying for labor, doing it yourself with stains and materials, or replacing boards as they go bad. It is a true total cost of ownership story that’s pretty stark mathematically when you look at it.
John: What about cyclicality in this segment? Is it related to the housing industry?
Anthony: It is. It’s mostly renovation and remodel. New builds in the US sometimes have decks; sometimes, they don’t. Oftentimes, when they do have decks, the contractors want to do the cheapest option, which will be wood. If that homeowner isn’t educated on the drawbacks of wood and the benefits of composite, they’ll say, “That’s fine.”
It’s the existing houses that have wood decks. I bought a house about 2.5 years ago, and it has a wood deck. I can’t wait to tear that thing out and put in some sort of composite.
It’s that renovation or remodel. It goes in cycles. COVID created a huge spike for both companies. People wanted to be outside. It pulled forward a lot of demand, then it whipsawed. 2023 was rough. 2024 was coming out, but in a normalized environment, that should be able to grow 8%, 10%, 12%.
Yes, there is some cyclicality there, but it’s a huge installed base of wood decks in the US. These things do eventually need to be replaced – not only for aesthetics but for safety. The boards do degrade over time, whereas composite does not. There’s a cyclical attribute to it, but there’s also this secular theme of getting rid of wood and putting in a better material.
John: How are these products sold? You mentioned contractors, but can a consumer also walk into a Home Depot and shop there?
Anthony: Yes, they can. The lowest percentage of each company’s revenue probably comes from the home centers. Oftentimes, it’ll be low, mid-end board that DIYers can do. I think that’s been used a lot to create market awareness – having the advertisements in-store, having the signage and all the benefits, and being able to see and touch it. What that does is lead to where the bulk of the businesses is – in the pro channel. These are your contractors.
On the contractor or the pro side, it is a two-step distribution. First, Trex ships it to a big distributor. These are big warehouses. You’re dealing with tons of boards stacked up. Contractors don’t want to carry this. From the distributors, it goes on to lumber yards and dealers – smaller facilities where contractors go pick up their board for the day and go install it. That’s where the bulk of the business runs through. That’s the best margin because it’s usually going to skew more mid-tier to high-end board.
John: How do you think about the return to investors going forward – the total annual return? What are the components there? How do you model that?
Anthony: To tie it back to how we look at valuation, when we look at companies, we speak in terms of cents on the dollar. We come up with an intrinsic value range. We typically like to initiate around 75 cents on the dollar.
Now, it depends on quality. We think it comes on a spectrum. There could still be a quality business we like, but maybe it’s on the lower end of that spectrum. We might want more of a margin of safety. Call it maybe 65 or 70 cents on the dollar.
Conversely, there are some businesses of super high quality. That’s where I would place AZEK and Trex. We don’t think we need as much of a margin of safety there. They’re in a highly advantageous industry. They’re competitively entrenched and have great management teams. Maybe we need 80 to 85 cents on the dollar. We require less of a margin of safety.
It was around those ranges when we bought both of these names, but right now, you’re probably looking at around par, 100 cents on the dollar. Importantly, even at fair value, these companies can continue to compound because they continue to produce free cash flow, growing operating earnings, buying shares, and reinvesting in the business. That is probably the highest-return project they have – to reinvest in the business – because revenue growth should be pretty good over a long period of time.
AZEK probably gets a higher multiple than Trex because it is a little lower on the learning curve of incorporating recycled materials into its board. As it does that, it will lower its cost of manufacturing, which should bring its margins closer to where Trex is at. I think investors award a higher multiple on this future earnings growth that should derive from having cheaper cost of goods.
Over a long period of time, we think these things can compound at 8%, 10%, 12%. It’s not going to be linear. There are cycles with these companies, but that’s where we have the advantage of being a long-term investor. We can sit there, let it compound, and be patient with it.
John: Where does the moat come from for these companies? Is it on the product side, with new products coming out, or more in the way they distribute and the network they’ve built?
Anthony: With Trex, I would say it is on the manufacturing side. For any of its boards, 95% is recycled materials. For AZEK right now, anywhere from 50% to 80% is recycled. Trex has cheaper production, but AZEK will get there. AZEK is still great at this. It’s just lower on the curve.
Also, the marketing and contractor relationships. The contractors are the sales people for you. Both companies have valuable contractor networks all over the US as well as loyalty programs. It’s almost like frequent flyer miles. You’re incented to do more business with a single OEM. That keeps the contractors married to you.
Those relationships are where the moat stems from for both companies, and also having that mindshare, that awareness out in the industry that they’re going to go and say, “I want an AZEK deck” or “I want a Trex deck,” and you’re going to find the contractors that can do that. I would say manufacturing definitely for Trex. AZEK is getting there. Also, the marketing and the relationships on the contractor side. It’s very hard to dislodge the number one and two guys in composite decking.
There’s a lumber company called UFP whose brand Deckorators is a third-tier competitor to Trex and AZEK. You have Fiberon at Fortune Brands. However, those guys have a hard time getting traction with contractors because everyone knows Trex and AZEK. That’s who you want to concentrate your spend with. That’s what you know how to install, too – once you learn it, you don’t want to deviate. All those things are the source of the moat for Trex and AZEK.
John: Are these founder-led companies? Can you talk about the management teams and their incentives?
Anthony: If I recall correctly, Exxon used to own this kind of technology 30 or 40 years ago, and then it got spun off. The CEO, Jim Cline, brought Trex to where it is today. I remember meeting him at a conference. He was a super down-to-earth guy, great at delegating stuff. He had a good team around him. He liked to use his team and not micromanage.
He retired, and Bryan Fairbanks came on. He’s very numbers-oriented and finance-oriented. You could tell Trex got its durable competitive advantage from the production side because it’s strongly focused on gross margins. That’s a big thing with a quality value company. You can have the competitive advantage, but you’ve got to have the management team that recognizes it and has the behaviors and actions to nurture that competitive advantage. Bryan Fairbanks – the current CEO of Trex – has done a great job. Management are incentivized by total stock return, EBIT, and those types of things.
At AZEK, Jesse Singh is the CEO. He’s great. I think he’s done a good job on the sales side. Trex was the first mover. AZEK was the second mover, so he had a bit more to do on that side, but he’s done a wonderful job as well.
These are two good companies that have parlayed production advantages into marketing advantages and locked up the industry.
John: Yes, that’s two great examples that I think illustrate your approach quite well. Let’s talk about other types of businesses you have found rewarding or types of business models where you’ve found companies that have created a lot of value over time.
Anthony: The good thing about our approach is that we can go anywhere. We can look at an analog semiconductor company. We can look at a personal care business. We can look at composite decking. It’s all across the board.
Analog semiconductor specifically is an area we started looking at a couple of years ago. It’s interesting. Regular digital semiconductors are the sexier part, so to speak. These are the chips in your iPhone, computers, AI servers, etc. However, there’s a whole other swath of semiconductors that don’t get the attention. Analog semiconductors take real-world signals and convert them into the ones and zeros that comprise a digital signal.
Right now, I’m talking into a microphone with tons of analog semiconductors that are hearing my voice, interpreting it as it comes out, and making it into ones and zeros that people will then listen to on the podcast. These are not necessarily the most cutting-edge, smallest-dimension chips out there, but they are vital, and they’re literally in anything electronic you have out there.
It’s this whole area we discovered. Obviously, it’s been around for decades, but there’s a lot of good quality value businesses there. Texas Instruments – which is far too big for us to invest in – is kind of the leader. Then you have a bunch of smaller, specialized companies. You have MACOM, which makes a lot of super high-end radio frequency-type communication chips for very exacting military and intelligence use cases, especially satellites and top-secret radios used by the military. That’s a highly specialized area that even Texas Instruments won’t play in.
You have a company like Silicon Labs, which does communication chips for internet-of-things stuff, like smart meters and continuous glucose monitoring. There are little chips in there that’ll transmit data, whether it’s to your cell phone or hooking up to the internet.
Allegro MicroSystems makes a lot of chips for the auto industry. I’m not just talking EVs; internal combustion engine-based cars use a ton of chips – everything that’s powering the screens inside your car to your ADAS systems to make sure you’re not running into other cars or don’t back up into a wall when you’re parking. Those are all powered by analog chips. Allegro MicroSystems plays in that area.
There are these pockets. We come back to these niche industries that support a lot of cool, small, SMID, and mid-cap businesses. Those are businesses on our elite list. We haven’t purchased any of them yet, but these are stocks we follow because we like that area. The reason we haven’t purchased yet is a valuation decision. I probably should have mentioned this before. We follow about 140 to 150 businesses across our small, SMID, and mid-cap portfolios that we have all done the due diligence on. We have met their management teams one-on-one and have deemed them quality businesses.
The only thing holding us back from investing is that it’s not in our valuation range yet. That’s the reason we haven’t gotten into that space in the portfolios yet, but it’s one of those things you monitor. It’s a great industry. We will own some of these companies one day because they’re excellent.
John: Let’s talk more about portfolio construction. You mentioned that you like to be concentrated. Any other insights or color you can share on how the portfolio comes about and how you manage risk?
Anthony: It truly is a bottom-up, brick-by-brick construction of the portfolios. There are certain areas we will not invest in because we don’t think that – over long periods of time – they add a whole lot of alpha. That’s probably a good place to start – what we avoid.
We don’t invest in banks. They are levered to the ultimate commodity – the dollar. They’re lending dollars out. There’s not a lot of ways to set yourself apart. Banks are highly competitive, especially here in the US. There are tons of regional banks. We just think we can get better returns elsewhere.
Utilities are another one. With utilities, your returns are capped by the state public utility commissions. They allow the companies to earn returns on equity within a very defined range. We think we can do better outside of that.
Another one is energy companies, especially on the exploration production front. You’re drilling holes and hoping you find oil and gas. That’s not what we would call a stable value business. It can look great for periods of time, but over a five-year time frame, it’s not stable value.
REITs – we don’t do anything there that consumes a lot of capital. We think there are other ways to play real estate. We will also avoid fast-moving biotech companies with maybe one or two drugs or molecules or stuff that’s highly speculative.
You’ll ask yourself, “What do you guys invest in?” A lot of industrials; a lot of information technology; healthcare; financials, especially in specialty insurance, where we’ve been finding some opportunities; a bit of consumer discretionary, some materials. You’ll find that we’re very heavy in industrials. That’s not by design. Industrials is kind of a catch-all. You can have a uniform rental company as an industrial next to a fastener manufacturer next to a composite board manufacturer. It really is a very diverse set of companies in there.
We look for the best companies. We look beyond whatever a gig sector or industry tells you it is. We look at the individual drivers. What drives these names? Is it consumer spending? Is it home spending in terms of renovation and remodel? Is it healthcare? What in healthcare? Are they trying to lower the cost curve? That’s a theme for some of the companies we own.
It’s looking at all the individual drivers, making sure you have the quality businesses with the right management teams, and methodically building that out, making sure you’re not concentrated in too much of the same bucket. We’re less concerned with sector categorization. I don’t think that defines what drives a company.
John: In terms of your circle of competence, how does that work? Are you guys all generalists, or do you have certain competencies distributed within the team?
Anthony: We are very intentionally all generalists, and it differs. With a lot of shops, every sector gets a specialist. We have three PMs – me, Pat, and Jon. We have two great analysts – Connor Carollo and Corey Leung. We tell our analysts, “Think like a portfolio manager.” If you’re going to do that, you need to be well-versed in a bunch of different things.
I read a book called Range. It talks about how generalists do better in uncertain and ambiguous environments, and I can’t think of a more uncertain or ambiguous industry than the investing industry. We think being generalist is the best way to go about it.
John: Great point. Anthony, is there anything you want to cover or mention that we haven’t touched on yet?
Anthony: Concentration is an important aspect of what we do. We’re big believers in not diluting your returns with a super diversified portfolio. We put a lot of time in researching businesses, talking with management teams, curating a strong elite list of companies, and then putting a subset of those into our portfolios.
We’re getting judged against an index, and indexes are mostly comprised of average and below-average companies with a smattering of very high-quality companies. Our logic is, “Why not own the smattering of really high-quality companies? Don’t dilute your returns with a lot of fluff.”
Just as importantly, it takes a lot of mental bandwidth to do qualitative analysis. You don’t have room to do a lot of deep research on 70 or 80 names. You don’t want to dilute your brain power by looking at stuff that isn’t super quality.
Concentration is very important to us. We think that’s the best way to run investment portfolios.
John: That’s a great way to wrap it up. This has been very educational and insightful. Thank you so much, Anthony. I truly appreciate you taking the time to talk about your path in investing, how you guys approach investing at WCM, and also share some great insights into a couple of industries you guys have done a lot of work on.
The information presented reflects the views specific to the WCM Quality Value Team, is not applicable to all WCM investment strategies, and may be based on subjective criteria. This information is for general informational purposes only, should not be construed as investment advice, and should not be considered as a complete representation of all the firm’s investment products or services. Each investment strategy has its own unique objectives, risks, and approaches. Clients and prospective investors should carefully review the specific disclosures, offering documents, and investment objectives of any strategy prior to making investment decisions. The securities identified and described do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. Past performance is not indicative of future results, and all investments carry risk, including the potential loss of principal. WCM assumes no obligation to update any forward-looking information.
This interview was recorded on February 27, 2025.
Anthony Glickhouse is a Portfolio Manager and Business Analyst with WCM Investment Management. He joined WCM in 2016. His primary responsibilities include equity research for the firm’s fundamental value strategies. Since the start of his investment career in 2006, Anthony’s experience has included a position at Opus Capital Management, where he was a research analyst as well as a founder of and portfolio manager for a small cap fund. Previously, Anthony held positions at The Private Client Reserve of US Bank, where he conducted economic and capital market research. He graduated from Miami University (Ohio) with a BS in finance.
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