Value Investing

Jensen Quality Growth Fund 3Q18 Conference Call

Jensen Quality Growth Fund conference call video and slides for the third quarter ended September 30, 2018.

H/T Dataroma

Jensen Quality Growth Fund 3Q18 Conference Call Slide Deck

Jensen Quality Growth Process

Jensen Quality Growth Fund

Sell Discipline

Our sell discipline monitors the key tenets of our buy discipline: sustainable competitive advantages, growth, value creation and price.

We will sell a company if:

  • Company fundamentals deteriorate below our minimum business standard of a 15% return on equity on an annual basis, indicating a possible loss of competitive advantage
  • The market price of a business exceeds our estimate of full value
  • It is displaced by a better investment that allows an upgrade to the portfolio’s quality, growth outlook and/or valuation metrics

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Q3 hedge fund letters, conference, scoops etc

Investment Performance

average annual returns as of 9/30/18

Jensen Quality Growth Fund

Performance Attribution

by sector in 3Q18

Jensen Quality Growth Fund

Microsoft Corp

Jensen Quality Growth Fund

Investment Thesis

  • Strong competitive advantages
    • Network effect
    • Scale
    • High switching costs
  • Compelling growth prospects
    • Dominates enterprise cloud market
  • Strong senior leadership and board

Oracle

Jensen Quality Growth Fund

Investment Thesis

  • Solid competitive advantages
    • Scale
    • Technological leadership
    • Broad product portfolio
    • High switching costs
    • Strong financials
  • Growth ongoing despite slowdown in core markets

Omnicom Group

Jensen Quality Growth Fund

Investment Thesis

  • Strong competitive advantages
    • ‘One-stop-shop’ due to wide breadth of offerings
    • Strong creative reputation
    • Global infrastructure
  • Revenue diversification across geographies and customers
  • Holding company structure allows for nimble strategic execution

Cognizant Technology Systems

Jensen Quality Growth Fund

Investment Thesis

  • Global delivery model
    • Vertical integration
    • Processes built from the ground up advantageous over traditional IT services providers
  • Strong revenue, earnings and cash flow growth
  • Ongoing expansion of service offerings and solutions

Performance Attribution

by quality in 3Q18

Jensen Quality Growth Fund

Outlook

  • Expectations heading into 4Q 2018 and beyond
  • Economic and Market Dynamics
  • Opportunities and Risks