Market Call: High-Quality Businesses at Reasonable Prices
Portfolio Manager Allen T. Bond joins Chuck Jaffe of the Money Life Podcast to discuss Jensen’s methodology behind defining high-quality businesses and determining reasonable prices.
From the podcast:
Chuck Jaffe:
In terms of this market where we have seen so much action in so few stocks, has that made it easier for you to find quality businesses at reasonable prices?
Allen Bond:
I think the answer to that is yes and no. The market so far this year feels very similar to how we ended 2023. There’s been a really acute focus on artificial intelligence and the development of artificial intelligence, but also the longer-term implications of applications based on artificial intelligence.
And so what we saw last year was all the talk about the Magnificent Seven. The reality is the majority of the top-performing stocks last year were technology or technology-related stocks. So “Magnificent Seven Plus” is kind of the way we would look at it, and it was the market trying to grapple with these longer-term implications of artificial intelligence.
As quality managers, we think we have very good exposure to this artificial intelligence trend within our portfolio and within our opportunity set, but there are some stocks that have been really right in the epicenter of the artificial intelligence movement that don’t qualify for our universe because they haven’t demonstrated that long-term track record we look for. So, we are trying to find pockets within where we can see high-quality businesses that we think can benefit from this development in the near term and in the future.
Listen to the podcast above or read the transcript here to discover examples of high-quality businesses that qualify for inclusion in the Jensen Quality Universe.
Definitions
Margin of Safety: Buying with a “margin of safety,” a phrase popularized by Benjamin Graham and Warren Buffett, is when a security is purchased for less than its estimated value. This helps protect against permanent capital loss in the case of an unexpected event or analytical mistake. A purchase made with a margin of safety does not guarantee the security will not decline in price.
Return on Equity (ROE): Is a measure of financial performance calculated by dividing net income by shareholders’ equity.
Please click here for the top ten holdings and holdings are subject to change at any time.
Jensen Quality Growth Fund Holdings
Jensen Quality Value Fund Holdings
Jensen Global Quality Growth Fund Holdings
Past performance is not a guarantee of future results.
Mutual fund investing involves risk, and principal loss is possible. There is no assurance that the investment process will lead to successful investing or that the stated objective(s) will be met.
The Jensen Quality Growth Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. The prices of growth stocks may be sensitive to changes in current or expected earnings, may experience larger price swings and may be out of favor with investors at different periods of time.
The Jensen Quality Value Fund invests in mid and smaller capitalization companies, which involve additional risks such as limited liquidity and greater volatility.
The Jensen Global Quality Growth Fund is also non-diversified and invests in foreign securities that involve political, economic and currency risks, greater volatility, and differences in accounting methods. These risks are greater for investments in emerging markets.
Opinions expressed are those of Jensen Investment Management and are subject to change, not guaranteed and should not be considered investment advice.
The Fund’s investment objective, risks, charges and expenses must be considered carefully before investing. The statutory and summary prospectus contains this and other important information about the investment company and it may be obtained by visiting www.jenseninvestment.com or by calling 800-992-4144. Please read carefully before investing.
The Jensen Funds are distributed by Quasar Distributors, LLC.
© 2024 Jensen Investment Management. The Jensen Quality Universe is a trademark of Jensen Investment Management. All rights reserved.