Manager Spotlight: Aziz Hamzaogullari, Loomis Sayles

Aziz Hamzaogullari, CFA^®, is the Founder and Chief Investment Officer of the Growth Equity Strategies Team at Loomis, Sayles & Company. He is the portfolio manager of the Loomis Sayles Large Cap Growth, All Cap Growth, Global Growth, and International Growth long-only strategies as well as the Long/Short Growth Equity Strategy. Aziz joined Loomis Sayles in 2010 from Evergreen Investments, where he was a senior portfolio manager and managing director. He holds a BS from Bilkent University, Türkiye, and an MBA from George Washington University. 

In this podcast, Aziz discusses his investment approach and industry predictions with Louise Watson, Country Head for Natixis Investment Managers in Australia and New Zealand.

Editor’s note: This interview has been edited for clarity and brevity.

What sparked your interest in investing?

I started working in my family’s business while in middle school. The core business was textiles, and the earnings were invested in private companies. My uncle had me prepare a report and without knowing it, I did some analysis. He looked at it and said, "Son, I think your calling is investing!" Basically, from there I knew what I wanted to do.

Unlike many people who may be watching CNBC and looking at stocks as symbols, my introduction to investing was through private equity. That really appealed to me; the long-term time horizon, understanding the businesses you invest in and having a structural view to the world.
 

Why did you choose to work for Loomis Sayles?

If I were to generalize, there are two types of investment firms: investment-centric and sales-centric. When I looked at Loomis Sayles, I didn't see a fixed income or an equity shop, but rather an investment-centric organization with differentiators like a long-term time horizon and a horizontal structure rather than a hierarchy. Loomis Sayles has an investment-centric decision-making process, meaning it focuses on core competencies, rather than what is hot in the market today. Furthermore, the organization removes what I call alpha killers - any activity you participate in that doesn't generate alpha.
 

What characteristics does the Growth Equity Strategies Team at Loomis Sayles have?

There are three attributes I seek: a passion for investing, independent thought process that is different than the marketplace, and a team orientation. This has resulted in zero turnover among our investment analysts and a very stable investment team that we are fortunate to have worked with for the last 18-plus years.
 

What differentiates your team and investment philosophy?

There are several characteristics that set us apart from other teams. Primarily, we focus on six key drivers for alpha generation in the long term:

• Time horizon
• Deep understanding of the businesses we invest in 
• Always starting with quality, not the benchmark weight of the company in the index 
• Investing in sustainable secular growth businesses
• Valuation method/pay attention to the margin of safety
• Focus on active risk management
   

Do you think there is still opportunity for growth with some of the biggest names in technology?

Alphabet, Amazon, and Microsoft have been in our portfolio for 18-plus years. We’ve owned Meta since its IPO in 2012, Nvidia since 2019, and Tesla since 2022. Future growth is always dependent on where you are in terms of penetration versus market opportunity.

In the case of Alphabet and Meta, they're driven by a structural shift to online advertising. When I look at future growth prospects, the structural shift to online advertising is still very much intact. If you look at the total annual ad spending globally, it's trillions of dollars, and out of that, still only one-third or so is online spending, whereas consumers spend more than half their time in online.
 

When do you think the companies that invested in artificial intelligence (AI) will turn a profit?

The Magnificent Seven collectively account for roughly 40% of the top 1,000 research and development companies in the US. Most of these companies have been investing in AI for many years and are already monetizing. For example, Meta is already monetizing from its AI-driven video product. 

I think AI is the biggest structural shift we have seen since the internet revolution. The potential gain to productivity for all companies is tremendous, while the direct beneficiaries will be a handful of companies. This is no different than how it was for the internet revolution where only a few businesses were able to provide the products and services.

How important is management when you evaluate a company?

When you look at our portfolio, roughly half of them have founder-driven businesses. The other half is professional management, like in the case of Boeing, Starbucks, or Disney. In those cases in the last 18 years, we had situations where there was a management change.

In each one of those situations, we asked ourselves, “Fundamentally and structurally, is this still a good business or not, and if anything changed with the change in personnel?” Specifically, in a company like Boeing, it's a duopoly between Airbus and Boeing, so the change in the CEO didn't change that structurally. Disney is a great franchise with a library of movies and other important assets that would be very, very difficult to replicate by someone else.

In each one of these cases, we thought the changes were necessary, but the fundamental question we ask ourselves is whether the business structurally is still sound and good, and if we still find this business attractive or not.
 

How do you see the industry and the role of active managers evolving?

Over the years, active managers have become more passive. What I mean by that is the active share actually declined meaningfully among active managers, and like any other profession, the managers that are underperforming lose to passive investing. I think the future will be managers who really differentiate themselves and offer something unique. The fewer active managers, because it's a zero-sum game, the more opportunities there are for the remaining active managers.