How WCM thrives in times of change
July 28, 2026
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7 min
Every week something new seems to rock financial markets. For some investors these seismic changes are stressful and detrimental to returns. Others seem to take change in their stride. For WCM, times of change are often when their best ideas and best investments, take place. In this Q&A we talk to Sanjay Ayer, Portfolio Manager at WCM Investment Management, about how the team are adapting to a challenging macro-economic environment, what they learned during Covid and how they find their ideas.
Q: There is a high amount of volatility and change in markets right now and the macro-economic environment is difficult for investors to navigate, how are you adapting to this?
Sanjay: The beauty is we don’t have to change. Our investment philosophy of moat trajectory and culture is purpose-built for forward-looking flexibility. So, we just have to point that compass towards where we see the next winds of change.
Take AI. We haven’t gotten it perfect yet, but we feel we’ve navigated the AI landscape quite well. We made two choices initially.
- One was, let’s buy the “picks and shovels” players, because we expected there was going to be this wealth shift from the hyperscalers or the big spenders to the capex providers.
- And then, within that, let’s exploit the trap of the specialist.
Meaning, if you’re an industrial analyst covering an HVAC company or a say Comfort Systems (which is one of the largest employers of electricians in the world) for example, you’ve been living in that vacuum for 20 years, talking to like-minded CEOs and analysts. How could you possibly appreciate what a $300 billion investment over the next four years in data centres means for your company? We saw some of those nuances and jumped in.
So, I think that’s where we found a lot of pockets of opportunity, especially early on – companies like Siemens Energy, companies like Comfort Systems, HVAC companies, like Modine, within AI. And then you take that construct and you keep looking forward and say, “What’s the next underappreciated bottleneck?”
We bought networking companies, like Celestica, which was the first bottleneck, to power companies, like Siemens Energy which was the next bottleneck.
But then, as we have very good relationships with the management teams at the companies we buy, we ask Siemens Energy and GE Vernova, which are the two big suppliers of gas turbines, “What’s your biggest bottleneck?” And both those companies said, “Our biggest bottleneck is there’s no one out there building the gas turbines.” The turbines themselves are the inputs that are bottlenecked.
So, we took that nugget and said: “Okay, how can we capitalise on that?” It turns out a billion-dollar company called Argan, ticker AGX, does build gas turbines and almost no one on Wall Street covers it. But you take this insight, and you’re just curious, you keep peeling the onion. And so, you’ve gone from semiconductors, to the data centre builders, to the networking companies, to the power companies, to gas turbine builders, to gas turbine factory builders. And it just keeps on going, like a fractal.
Q: Covid was a big point of change for markets and investing, can you give us some examples of how the team navigated this change?
Sanjay: I think through that long bull market, from GFC to Covid, investors learned some rules. They conflated tailwinds with quality, and they labelled certain industries as good and certain industries as bad. And those turned from observations to assumptions over time. So what happened is you started to get these pockets of extreme overvaluation and undervaluation.
The luxury goods sector is a poster-child example of this. For 25 years, the rule in luxury goods was simple – buy luxury goods stocks; they would go up year after year after year. And then within that, just buy the premium-end brands – LVMH, Ferrari, Hermès, Kering to some extent. Post-COVID, that rule broke. The market doesn’t know what to do, right? If your rule’s been “buy luxury goods stocks,” you’ve never had to look at it more critically.
And so, price vacuums opened up. All of a sudden, you have one of the biggest price gap in history between premium luxury and affordable luxury brands like Coach, which is going through a cultural turnaround. Coach is owned by Tapestry, which we own in Select Global Growth. And so now these rules you had for 20 years are breaking in the post-Covid era; that’s where we see a lot of opportunity.
A second example would be IT services. So, labour services can be a great business when you’re on the right side of a supply-demand imbalance, and that’s what it looked like for IT for 15 years, right? Buy Accenture, buy the Indian IT outsourcers, buy some of these mid-cap companies like EPAM and Globant. They’re in growth indices. But what if supply and demand shift? What if AI erodes the value of the worker? And what if India produces way too much engineering talent? And if both those things happen at the same time, those rules could break.
And what we did was to take that core insight that labour services businesses can be good, but only if the supply-demand balance is favourable. And we took that framework and applied it to blue-collar labour companies that employ electricians or HVAC technicians, because that post-Covid is where we see the tightest supply-demand imbalance.
Q: Your portfolio is very different from most other active managers, how do you find your ideas?
Sanjay: Everyone wants the fancy process slides with the funnel charts and lots of structure, as if that’s the holy grail to finding ideas. That’s just not how it works in practice. How you find great ideas is just to be relentlessly curious. We call it “be a curious imposter.” Go into an industry and ask all the dumb questions. No one’s going to look down upon you for asking dumb questions, and you’ll be surprised what you learn when you’re unfettered by 20 years of how things were.
In the end, what topples money managers is they develop blind spots. Things emerge and they feel uncomfortable to look at, and it’s much more comfortable to stay in your zone, in your lane. And the sad thing is, these blind spots don’t come out of nowhere. You know about them, they’re fuzzy, they’re right in your peripheral vision, and you choose not to look.
And that gets to our culture a lot. We like each other, and we love to go in teams and tackle, for example, the Canadian mining industry. None of us knew much about it five years ago. It seemed daunting to go and meet the CEO of one of these companies. But if you do this as a group, and you have fun doing it, it’s actually a pretty enriching experience.
I think you get caught in this notion of trying to show that you’re smart instead of trying to get better. And all we’re trying to do every day is to get a little bit better. I think that mindset, that curiosity of just peeling the onion, looking for the next great idea, being paranoid about blind spots, and having the culture to support it, that’s really what drives us at WCM.
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