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Holdings Update

Jensen Investment Team Sells Position in 3M

December 2022

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.

Please click here to view a list of the Jensen Quality Growth Strategy’s current holdings.

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

The discussion of the specific security identified in this article is solely intended to illustrate the application of our investment approach. Our views expressed herein are subject to change and should not be construed as investment advice and are not designed or intended as a basis or determination for making any investment decision for any security. This information is current as of the date of this material and is subject to change at any time, based on the market and other conditions. Past performance is no guarantee of future results.

Jensen Investment Management, Inc., is an investment adviser registered under the Investment Advisers Act of 1940. Registration with the SEC does not imply any level of skill or training.

© 2022 Jensen Investment Management

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