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Holdings Update

Jensen Investment Team Sells Position in Cognizant Technology Solutions

December 2022

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.

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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