Value Investing

Jensen Quality Growth Fund Holdings Update – Sell DuPont

Jensen Quality Growth Fund Holdings Update – Sell DuPont

H/T Dataroma

The Jensen Investment Committee recently sold DuPont from the Jensen Quality Growth Fund. The company announced a merger with Dow Chemical on 12/11/2015 which would create a $130 billion dollar market cap company called DowDupont. Assuming the company passes regulatory scrutiny, it intends to separate into three market leading companies post-merger: agriculture, materials science, and specialty chemicals. The merger is expected to be completed by the second half of 2016. The breakup is supposed to occur shortly after the merger, however, it is highly uncertain as to when it will take place. While we applaud the company for assertively navigating the current consolidation in the chemicals and agriculture industries, we believe this path is too uncertain as a long term investor and not consistent with our focus on quality. Additionally, due to consolidation and speculation in its markets, DuPont’s stock has enjoyed big gains in recent months. Therefore, we believe it is in the best interest of our investors to eliminate the risk and capture the gain. We will continue to monitor the company and re-evaluate our investment thesis as the outcome becomes clearer.

Fund holdings and sector allocations are subject to change and should not be considered recommendations to buy or sell any security.