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QV

Jensen Quality Value Strategy

Process

We evaluate opportunities for the Jensen Quality Value Strategy using fundamental research and various valuation tools. The Quality Value Strategy’s targeted end result is approximately 50-80 companies that have persistently high business returns and are undervalued relative to their business performance.

Step 1

The Jensen Quality Universe™ + Market Cap

Our selection process pares down 4,000 publicly-traded U.S. companies, creating a focused universe of approximately 175 to perform further screening.

  • ROE greater than 15% for each of the last ten years as determined by the Investment Team
  • Market capitalization above $100 million
  • Primarily companies with market capitalizations less than the largest capitalization company included in the Russell Midcap® Index at the time of the strategy’s investment, although, to a limited extent, may include companies with higher market capitalizations
Step 2

Quality + Value Screen

Identification of each company’s value relative to its business performance.

  • Criteria based on company-specific fundamentals and valuation are applied to the universe
  • Companies with strong fundamental businesses and attractive valuation are identified and monitored
Step 3

Portfolio Construction

A portfolio of 50-80 companies which we believe are undervalued relative to their business performance.

  • Emphasizes approximately one-third of the universe based on our own internal research and valuation
  • Position sizes vary based on analysis of potential return and risk characteristics

Sell Discipline

A company will be sold from the Jensen Quality Value Strategy if:

  • It no longer meets one or more of the criteria of the investment process
  • Its fundamentals deteriorate, lowering ROE below 15% on an annual basis, indicating a possible loss of competitive advantage
  • The Investment Team determines that another qualifying company has a better opportunity to achieve the strategy’s objective