Jensen Investment


Investment Blog Post
04/08/2020 - Investment Blog Post

Holdings Update – Sell Ecolab (ECL)

The Jensen Investment Committee recently completed the sale of Ecolab (ticker: ECL) shares from the Quality Growth Strategy due to elevated stock price valuation relative to other investment opportunities.

First added to the Strategy in 2005 Ecolab is a global leader in the development and production of cleaning and sanitation chemicals.  The company serves a broad range of industry verticals including food and beverage manufacturing, restaurants, lodging, and energy production.  Across all its businesses, Ecolab generates a high degree of recurring revenue and benefits from scale advantages relative to competitors.  At present, there is a high level of near-term uncertainty due to potential weakness across several end markets impacted by COVID-19 mitigation efforts.  However, this is not the primary reason for our sale decision as we retain a favorable long-term outlook on the company.

We began reducing the Strategy’s stake in Ecolab shares early in 2019 when the stock price became elevated relative to multiple valuation metrics.  At the time of the first sale, Ecolab was a top-five portfolio holding but has recently hovered near the bottom of the portfolio due to heightened valuation.  We intend to closely monitor Ecolab and may consider re-adding it to the portfolio should we see improvement in the combination of business fundamentals and stock price valuation.

Fund holdings are subject to change and should not be considered recommendations to buy or sell any security. For a listing of the funds current holdings, please click here.