In this series of brief videos, Nick Niziolek, Co-CIO, Head of International and Global Strategies and Senior Co-Portfolio Manager, explains how his team explores a broad global opportunity set, pursuing long-term possibilities in global markets.
Starting with a Broader Opportunity Set
Niziolek’s team follows an investment process “focused on identifying what we think are the companies with the best growth characteristics.”
He describes a process that starts with more than 11,000 companies that are screened using proprietary valuation and quantitative tools to identify and rank opportunities.
“This wider lens that we start with makes us less focused on whether it’s growth or value,” says Niziolek. “Ultimately, we’re trying to find the best opportunity set of companies.”
The Retail Space Offers Both Growth and Value
The growth versus value distinction just scratches the surface. “In our view,” says Niziolek, “[typical] valuation metrics do not incorporate things that are very important to us, like competitive moats [and the] disruption that’s happening in industries.”
Niziolek points to the retail space as an example of “valuations [that] could prove to be quite attractive compared to the future opportunities.” Retail includes both internet retail companies, which are trading at much higher multiples that reflect their growth potential, and traditional brick-and-mortar companies, which are in the value indices.
The team’s focus extends beyond binary valuation metrics and includes attention paid to secular themes.
Going Beyond the Benchmark Helps Discover Opportunities Early
Rather than making security selections based on strict market cap guidelines, Niziolek and team look for “growth companies that are disrupting and benefiting from secular tailwinds.”
When market cap is not a significant factor, the team can make decisions based on “the fundamentals of the business we’re investing in [and] the future opportunity that these companies are going to grow into.”
A Non-Consensus Overweight in China
“When we look across our peers, China’s actually a pretty consistent underweight,” says Niziolek, “This only reinforces our view that [China] is a significant opportunity on the horizon.”
Seeing the emergence of many innovative and successful companies in China, Niziolek anticipates strong possibilities to take advantage of secular tailwinds that could help drive growth.
Risk, Volatility—and Opportunity with China, the Second Superpower
“Our base case is that we do see a resolution to the current trade negotiations,” says Niziolek. The likelihood is that the U.S. will “find some wins” and that China is “willing to provide those wins.”
Niziolek cautions, however, that “our biggest concern near term is that the two negotiating parties are dealing with much different timelines.”
Japan Leads in Robotics and Automation
In many of the technology and industrial sectors Niziolek and team have been evaluating over the past few years, Japan continues to be a standout for two key reasons.
The first is better relative value versus opportunities in Europe and the U.S., and the second is the emergence of secular themes and the tailwinds they create for these businesses’ prospects going forward.
This is especially true in the robotics and automation industry, which reflects a multi-year theme the fund has been invested in. With over 60% of the automation and robotics companies located in Japan, Niziolek sees opportunity for those companies to benefit from strong demand from both developed market countries and emerging countries who seek to retool their manufacturing sectors.
Financial advisors, for more information about Calamos Global/International opportunities, talk to a Calamos Investment Consultant at 888-571-2567 or email firstname.lastname@example.org.