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

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

Q3 hedge fund letters, conference, scoops etc

Investment Performance

average annual returns as of 9/30/18

Performance Attribution

by sector in 3Q18

Microsoft Corp

Investment Thesis

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

Oracle

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

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

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

Outlook

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