Sean Stannard-Stockton of Ensemble Capital Management presented his in-depth investment thesis on Sensata Technologies (US: ST) at Best Ideas 2019.

Thesis Summary:

Sensata Technologies provides sensors to essentially all of the world’s automakers to make cars safer, more fuel-efficient, and less damaging to the environment.

While global auto sales will likely grow at a low single-digit rate over the long term, the amount of sensor content per car is growing at a mid-to-high single digit rate, and Sean expects this to continue for a long time. Importantly, Sensata is well positioned to thrive as the world moves towards electrification with their content per electric vehicle higher than their content per gas powered vehicle.

The company’s business model is highly cash generative and the management team are effective capital allocators, deploying FCF using opportunistic stock buy backs and acquiring complementary sensor businesses that generate strong returns for shareholders.

Replay this LIVE session:

slide presentation audio recording

About the instructor:

Sean Stannard-Stockton, CFA is the president and chief investment officer of Ensemble Capital Management, and portfolio manager of the Ensemble Fund. In addition to advising the Ensemble Fund, Ensemble Capital manages $800+ million in separate accounts on behalf of families and charitable institutions. Prior to working at Ensemble Capital, Sean worked at Scudder Investments. He holds a BA in Economics from the University of California, Davis and the Chartered Financial Analyst designation.