Earlier this week, Barron’s ran a profile of Sensata Technologies, focusing on our thesis for why the stock is a good investment. In the article, our chief investment officer Sean Stannard-Stockton, explained the attraction of the business and why the recent decline in the share price has created an opportunity.

From the article:

“Sean Stannard-Stockton, chief investment officer of Ensemble Capital, says that despite near-term softness in the global auto market, more Sensata products keep finding their way inside vehicles. Sensata is a top 10 holding for Ensemble, and the money-management firm has been adding shares in the downdraft.

Stannard-Stockton says the average Honda might contain about $40 worth of Sensata products, while a BMW could have about $100 worth. Both numbers will grow, partly from consumer demand and partly due to regulatory mandates on safety and efficiency, he argues. In China, tire-pressure sensing will be required in cars by the end of 2020, for example.

Many of Sensata’s sensors are “mission critical,” the Ensemble CIO adds. Some cut engine power once the car has reached cruising speed, for efficiency, and others are connected to energy-regenerating systems in the auto.

Sensata is essentially a tech stock, he says, but auto-related macroeconomic concerns are scaring people away. Unlike typical auto-parts companies—businesses centered around stamping metal—Sensata is capital light, and its costs decline when revenue falls, according to Stannard-Stockton.”

You can learn more about Sensata in this blog post profile we published previously on the company.

As of the date of the post, clients invested in Ensemble Capital Management’s core equity strategy own shares of Sensata Technologies (ST). This company represent only a percentage of the full strategy. As a result of client-specific circumstances, individual clients may hold positions that are not part of Ensemble Capital’s core equity strategy. Ensemble is a fully discretionary advisor and may exit a portfolio position at any time without notice, in its own discretion.

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