Jensen Investment Team Sells Position in Cognizant Technology Solutions
The investment team decided to sell long-term holding Cognizant Technology Solutions (CTSH) from the Jensen Quality Growth Strategy due to concerns about the deterioration of business fundamentals. Cognizant Technology Solutions is a provider of IT consulting and technology outsourcing services. The company operates globally, but the majority of its employees are based in India.
Cognizant has been in the process of updating its suite of services to be more competitive and to tap into faster-growing markets. We’ve been monitoring its progress in transitioning the business and previously reduced the position to reflect execution risk. Unfortunately, this transition has taken place in a challenging technology employment environment where the talent they’ve sought has been difficult to recruit due to high demand. The result has been persistently high employee turnover and an inability to book new work due to a lack of workers. In our opinion, this lack of progress represents a degradation in what had been a fundamental competitive advantage. This ultimately prompted us to exit the position in favor of opportunities where we have a higher degree of confidence, such as Accenture, a global leader in IT services and one of our core positions due to the strength of its fundamentals and attractive valuation.
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