Jensen Investment Team Sells Position in 3M
The investment team decided to sell long-term holding 3M (MMM) from the Jensen Quality Growth Strategy due to concerns about the deterioration of business fundamentals. 3M is a diversified industrial conglomerate that manufactures products based on core material science, process technologies, and manufacturing expertise. Their products have applications in safety, industrial, transportation, healthcare, and consumer products.
We have been monitoring the negative cash flow implications arising from mounting product liability and environmental claims, and this has influenced our decision to exit the position. The company also announced in the fall that it intends to spin out its highly profitable healthcare business, which we believe to be one of its best segments. Lastly, we have questions about the viability of 3M’s historical competitive advantages—scale, innovation, and brand strength—due to an ongoing pattern of growth below our expectations.
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