| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.81% | 2.38% | -0.21% |
Jensen Quality Mid Cap Fund returned 2.38% in Q2 2026 versus 13.69% for the MSCI US Mid Cap 450 Index, underperforming primarily due to not owning highly cyclical AI infrastructure beneficiaries that drove 24% of the benchmark's return. The fund's disciplined approach focuses exclusively on companies with 15%+ ROE for ten consecutive years, durable competitive advantages, strong balance sheets, and stable earnings. Top contributors included Levi Strauss, which benefited from denim category strength and direct-to-consumer growth, United Rentals, which is benefiting from AI data center construction, and Crown Holdings, which reported solid beverage can volume growth driven by European and Asia-Pacific strength. Detractors included Motorola Solutions due to soft LMR sales and higher tariff costs, Tractor Supply facing e-commerce competition and weakening pet food sales, and Kroger experiencing same-store-sales slowdown from price reductions to compete with Walmart and Costco. The portfolio holds 36 companies with 99% equity exposure. The near-term outlook remains constructive given resilient economic activity and healthy corporate fundamentals, though risks persist from uncertain Fed policy, subdued consumer sentiment, and potential geopolitical turmoil.
Jensen Quality Mid Cap Fund invests exclusively in high-quality mid-cap companies that have generated return on equity of 15% or greater for at least ten consecutive years, indicating sustained competitive advantages and the ability to generate excess returns on capital, which is the primary driver of business value creation over full market cycles.
The near-term outlook remains constructive given resilient economic activity, healthy corporate fundamentals, and AI-related investment supporting earnings growth across multiple industries. However, important risks persist including uncertain Federal Reserve policy with inflation above target, subdued consumer sentiment, and potential geopolitical turmoil that could trigger market volatility. These macroeconomic factors may influence short-term sentiment but do not alter the investment discipline of focusing on exceptional companies with enduring competitive advantages, attractive long-term growth prospects, robust financial characteristics, and proven management teams. Market leadership will inevitably evolve, but the commitment to owning exceptional companies capable of generating attractive long-term shareholder returns remains steadfast.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jun 30 2026 | 2026 Q2 | BBY, CCK, CPRT, CTAS, G, GWW, IDXX, KEYS, KR, LEVI, MSI, SHW, TSCO, URI | AI, Consumer Staples, industrials, mid cap, Quality, ROE, value |
LEVI URI CCK MSI TSCO KR |
Jensen Quality Mid Cap Fund's 2.38% Q2 return lagged the 13.69% benchmark as the fund avoided highly cyclical AI infrastructure stocks inconsistent with its quality criteria. The disciplined approach targets companies with 15%+ ROE for ten consecutive years, durable competitive advantages, and stable earnings. Top holdings include Levi Strauss, United Rentals, and Crown Holdings. The outlook remains constructive despite Fed uncertainty and geopolitical risks. |
| Apr 29 2026 | 2026 Q1 | AON, BR, CDNS, FDS, G, HOLX, KEYS, KR, LH, LULU, ON, ROST, SHW, TTC | AI, competitive advantages, energy, mid cap, Quality, ROE, value | - | Jensen Quality Mid Cap Fund's disciplined focus on companies with 15%+ ROE for ten consecutive years faced headwinds from AI disruption fears affecting software holdings and energy sector strength the fund avoids. Despite Q1 underperformance, the team maintains conviction in high-quality businesses with sustainable competitive advantages, adding AON, Sherwin-Williams, and Cadence Design Systems while exiting FactSet due to AI threats. |
| Jan 22 2026 | 2025 Q4 | AAPL, ACN, AMZN, APH, AVGO, BRK.B, CPRT, GOOGL, JPM, KLAC, LLY, META, MMC, MSFT, MU, NVDA, STX, TSLA, WDC, WM | AI, growth, large cap, Market Concentration, Quality, semiconductors, technology |
KLAC APH LLY ACN MMC CPRT WM SYK AVGO |
Jensen Quality Growth Fund underperformed in 2025 due to market concentration in mega-cap AI stocks, but evolved its portfolio to include AI beneficiaries meeting quality criteria like Nvidia and Meta. The manager maintains discipline in quality investing while positioning for broader market leadership beyond AI concentration, expecting relative performance to improve as fundamentals reassert themselves. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI infrastructure build-out drove significant index returns during the quarter, with nine AI-related stocks contributing approximately 24% of the benchmark's 13.7% total return. The fund does not own these highly cyclical AI beneficiaries as they are inconsistent with Jensen's quality criteria. United Rentals benefits from AI infrastructure construction as its equipment is used to build data centers and power plants needed for surging electricity demand. |
Data Centers Infrastructure Spending Semiconductors |
QualityJensen's investment process focuses exclusively on companies generating 15%+ ROE for at least ten consecutive years, indicating sustained competitive advantages. The fund seeks businesses with durable competitive advantages, persistently high returns on capital, strong balance sheets, and relatively stable earnings and cash flow. This quality-focused approach led to underperformance during the quarter as lower-quality, cyclical AI stocks dominated returns. |
ROE Competitive Advantages Balance Sheets | |
Consumer StaplesKroger experienced same-store-sales growth slowdown due to price reductions taken to attract budget-conscious shoppers and compete against low-cost rivals like Walmart and Costco. These price reductions also pressured net income. Tractor Supply faced sluggish sales growth driven by weakening dog ownership trends, consumer shifts from dry kibble to fresh pet food, and increased e-commerce competition from retailers like Chewy. |
Grocers Trade Down E-commerce | |
IndustrialsUnited Rentals posted solid revenue and earnings growth and raised fiscal 2026 guidance, benefiting from AI infrastructure build-out. Crown Holdings reported solid beverage can volume growth driven by strength in European and Asia-Pacific operations, with continued shift from plastic and glass to environmentally friendly aluminum cans. Motorola Solutions experienced soft LMR sales growth and higher tariff and memory chip costs, though order and backlog growth remained strong. |
Construction Equipment Packaging Defense Electronics | |
Energy TransitionCrown Holdings is positioned to benefit over time from the continued shift from plastic and glass containers into more environmentally friendly aluminum cans. This secular trend supports the company's long-term revenue, earnings, and cash flow growth as consumers and regulators increasingly favor sustainable packaging solutions. |
Packaging Recycling Sustainability | |
| 2026 Q1 |
AIAI investments continued to meaningfully impact mid-cap performance with seven of the top twenty returning stocks being AI infrastructure beneficiaries. However, many software and business services stocks performed poorly due to concerns about AI disruption of their business models, affecting several portfolio holdings. |
Infrastructure Disruption Software Business Services Technology |
QualityThe fund maintains its time-tested investment process focusing on companies with ROE of 15% or more for at least ten consecutive years, indicating sustained competitive advantages. The team believes higher-quality businesses will outperform over full market cycles despite shorter-term performance differences. |
ROE Competitive Advantages Investment Process Business Quality | |
EnergyEnergy stocks rallied significantly due to oil price spikes from the Iran War, contributing meaningfully to index performance despite low sector weighting. The fund avoids Energy sector stocks due to their capital-intensive business models and volatile earnings that rarely meet the strict ROE requirements. |
Oil Prices Iran War Volatility Capital Intensive | |
| 2025 Q4 |
AIAI infrastructure plays dominated 2025 returns, with 65% of Russell 2000's return coming from AI infrastructure. The manager questions whether this singular bet on five companies' data center CAPEX spending will persist, noting the market's extreme concentration around this theme. |
Infrastructure Data Centers CAPEX |
Small CapsSmall caps continued to underperform large caps in 2025's narrow market. The manager notes that small cap index exposure increasingly means exposure to both AI CAPEX and unprofitable companies, creating concentration risk in a historically narrow market. |
Russell 2000 Underperformance Concentration | |
QualityQuality businesses trade at historically cheap multiples despite extreme valuation disparities between winners and losers reaching historic extremes. The manager sees this as creating opportunities for active management in identifying undervalued quality companies. |
Valuation Multiples Undervalued |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jun 30, 2026 | Fund Letters | Jensen Investment | LEVI | Levi Strauss & Co. | Other | Apparel, Accessories & Luxury Goods | Bull | - | Apparel, Brand, Consumer Discretionary, Denim, direct-to-consumer, market share, Value | Login |
| Jun 30, 2026 | Fund Letters | Jensen Investment | URI | United Rentals, Inc. | Other | Trading Companies & Distributors | Bull | - | AI infrastructure, construction, data centers, economies of scale, Equipment Rental, Industrials, market share, Value | Login |
| Jun 30, 2026 | Fund Letters | Jensen Investment | CCK | Crown Holdings, Inc. | Other | Metal & Glass Containers | Bull | - | Aluminum cans, Asia-Pacific, Beverage, Entry barriers, Europe, materials, Packaging, Sustainability | Login |
| Jun 30, 2026 | Fund Letters | Jensen Investment | MSI | Motorola Solutions, Inc. | Other | Communications Equipment | Bull | - | Communications Equipment, defensive, Government, Mission-Critical, Public safety, recurring revenue, switching costs, Value | Login |
| Jun 30, 2026 | Fund Letters | Jensen Investment | TSCO | Tractor Supply Company | Other | Specialty Stores | Bull | - | agriculture, Brand, Consumer Discretionary, e-commerce competition, niche market, pet supplies, Rural Lifestyle, Specialty retail | Login |
| Jun 30, 2026 | Fund Letters | Jensen Investment | KR | Kroger Co | Other | Food Retail | Bull | - | consumer staples, defensive, Food Retail, market share, Real Estate, scale, supermarkets, Value | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | KLAC | KLA Corporation | Information Technology | Semiconductor Materials & Equipment | Bull | NASDAQ | AI, Inspection, Metrology, Pricing power, process control, Wafer fab | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | APH | Amphenol Corporation | Information Technology | Electronic Components | Bull | New York Stock Exchange | AI, Connectors, datacenter, Interconnect, Sensors, valuation | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | LLY | Eli Lilly and Company | Health Care | Pharmaceuticals | Bull | New York Stock Exchange | Diabetes, GLP-1, innovation, Obesity, pipeline, Reimbursement | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | ACN | Accenture plc | Information Technology | IT Consulting & Other Services | Bear | New York Stock Exchange | Automation, cloud, Consulting, Cyber security, disruption, Outsourcing | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | MMC | Marsh & McLennan Companies, Inc. | Financials | Insurance Brokers | Bull | New York Stock Exchange | Brokerage, cashflow, Consulting, Insurance, Retention, valuation | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | CPRT | Copart, Inc. | Industrials | Diversified Support Services | Bull | NASDAQ | Auctions, cashflow, duopoly, Real Estate, Remarketing, Salvage | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | WM | Waste Management, Inc. | Industrials | Environmental & Facilities Services | Bull | New York Stock Exchange | Automation, Landfills, Pricing power, Recycling, RNG, waste | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | SYK | Stryker Corporation | Health Care | Health Care Equipment | Bull | New York Stock Exchange | Ambulatory, Demographics, International, Medtech, Orthopedics, robotics | Login |
| Jan 22, 2026 | Fund Letters | Allen T. Bond | AVGO | Broadcom Inc. | Information Technology | Semiconductors | Bull | NASDAQ | Asic, Concentration, datacenter, Networking, semiconductors, Volatility | Login |
| TICKER | COMMENTARY |
|---|---|
| LEVI | Levi Strauss & Co. (LEVI), the well-known producer of denim jeans, jackets, and accessories, was the largest individual contributor to portfolio performance during the quarter. We believe LEVI outperformed due to strength in the overall denim category, continued growth in the company's direct-to-consumer operations, and favorable market share performance. LEVI remains a core holding in the portfolio due to the strength of its brand name and its market leading position in the denim category. We also believe the company's stock is attractively valued. |
| URI | United Rentals, Inc. (URI) was the second largest individual contributor to portfolio performance during the quarter. URI is the world's largest equipment rental company, serving a variety of customers in the construction, oil and gas, chemical, mining, and utility sectors. During its most recent quarter, URI posted solid revenue and earnings growth and raised financial expectations for the remainder of fiscal year 2026. The company appears to be benefiting from the build-out of AI infrastructure as its equipment is used to construct data centers and the power plants needed to meet the surge in electricity demand from those new data centers. URI is a core portfolio holding due to its solid market share, economies of scale versus smaller competitors, favorable business economics, and attractive stock valuation. |
| CCK | Crown Holdings, Inc. (CCK), was the portfolio's third largest individual contributor to performance during the quarter. CCK is one of the largest aluminum beverage manufacturers in the world, selling its products to customers such as Anheuser-Busch InBev, Pepsi-Cola, Molson-Coors, and Keurig Dr. Pepper, among others. During its most recent quarter, the company reported solid beverage can volume growth driven, in part, by strength in its European and Asia-Pacific operations. CCK remains a core holding in the portfolio due to the stability of aluminum can demand and the industry's solid entry barriers, which stem from contracted revenue streams, strong customer renewal rates, and the high cost of constructing new beverage can production lines. In addition, we believe CCK's revenues, earnings, and cash flows will benefit over time from the continued shift from plastic and glass containers into more environmentally friendly aluminum cans. |
| SHW | The Sherwin-Williams Company (SHW) is a leading manufacturer, distributor, and seller of paints and coatings and is one of the portfolio's largest holdings due to its strong brand name, dominant market position, and economies of scale versus smaller competitors. |
| GWW | W.W. Grainger, Inc. (GWW) distributes maintenance, repair, and operating supplies, selling millions of products directly to businesses, governments, and institutions. The company is a core portfolio holding due to its strong market share, diversified customer base, significant purchasing economies of scale, and solid balance sheet. |
| MSI | The largest individual detractor from performance during the quarter was Motorola Solutions, Inc. (MSI), a manufacturer of communications and video surveillance systems and command center software for first responders, including police officers, firefighters, and paramedics. Specific products sold by MSI include two-way radios, land mobile radio (LMR) systems, integrated solutions for 911 call centers, and dispatch systems. We believe the weakness in MSI's stock was primarily related to soft sales growth in LMRs and higher tariff and memory chip costs. The slowdown in LMR sales growth appears to be temporary in light of the company's strong order and backlog growth during the quarter. MSI remains a core portfolio holding due to its solid market position, non-cyclical end markets, contracted revenue streams, and the high switching costs inherent in its business. We also believe the company's stock is attractively valued. |
| TSCO | Tractor Supply Company (TSCO) was the Portfolio's second largest individual detractor from performance during the quarter. TSCO operates rural lifestyle stores located primarily in small towns to serve the unique needs of hobby farmers, ranchers, suburban homeowners, and trade professionals. Specific products sold by TSCO include fencing and gates, livestock food, hardware tools, fertilizer, riding lawnmowers, tillers, boots, overalls, pet food, etc. We believe the stock underperformed due primarily to sluggish sales growth over the past few quarters. Weakening dog ownership trends, consumers shifting from dry kibble to higher priced fresh pet food, and increased competition from ecommerce retailers like Chewy, Inc. have all pressured TSCO's dog food and pet supply sales. To combat this weakness, the company is expanding its fresh pet food offerings from eighty to seven hundred stores and broadening its cat food offerings as cat ownership is increasing. TSCO is a core portfolio holding due to its solid balance sheet, strong customer service, well-known brand, and seemingly difficult-to-replicate business model. |
| KR | The third largest individual detractor from performance during the quarter was Kroger Co (KR), one of the largest supermarket operators in the U.S. KR operates approximately 2,700 stores under a variety of supermarket banners, including Harris Teeter, Ralphs, Fred Meyer, Fry's, etc. We believe the stock underperformed as the company's same-store-sales growth slowed in its most recent quarter due, in part, to price reductions taken to attract budget-conscious shoppers and to more effectively compete against low-cost rivals like Walmart and Costco. These price reductions also pressured the company's net income. KR remains a core portfolio holding due to its attractive stock valuation, scale, strong market share, and defensible real estate footprint. |
| G | Genpact Limited (G) provides business process outsourcing (BPO) and IT services to customers in the banking, financial services, insurance, manufacturing, and healthcare industries. We believe its stock underperformed due primarily to investor concerns about potential AI disintermediation. In our opinion, these fears are unfounded. Instead of being disrupted by AI, we believe the company is leveraging it to enhance its value proposition and deepen client relationships. The company has developed a proprietary AI-enabled platform and delivery model that is already delivering cost reductions and automation gains for its clients. |
| CPRT | Copart, Inc. (CPRT) is a global leader in online salvaged vehicle auctions. The stock's weakness appears to be driven by a slowdown in auctioned vehicle volumes brought about by share shifts among auto insurance providers and increasing insurance rates, which are causing consumers to drop comprehensive coverage, switch to discount carriers or to drop automobile insurance altogether. We continue to hold CPRT due to the company's strong market position, solid balance sheet, meaningful entry barriers, attractive stock valuation, and the expectation that its strategy of expanding into the international salvage car and the U.S. non-salvage car auction businesses may drive results going forward. |
| CTAS | During the quarter, the Quality Mid-Cap Investment Team initiated a position in Cintas Corporation (CTAS). CTAS rents and launders uniforms worn by the employees of over one million U.S. and Canadian businesses. We added CTAS to the portfolio due to its attractively valued stock, strong market position, diversified customer base, economies of scale, and high customer switching costs. |
| BBY | During the quarter, the Quality Mid-Cap Investment Team liquidated Best Buy Co., Inc. (BBY). BBY was liquidated as competition from ecommerce companies and discount retailers appears to be increasing. |
| KEYS | During the quarter, we reduced the Portfolio's position in Keysight Technologies, Inc. (KEYS), a manufacturer of instruments used in the design, simulation, manufacture, and testing of electronic systems. KEYS has benefited from the build-out of AI infrastructure and was trimmed primarily for valuation reasons. |
| IDXX | We increased the Portfolio's weighting in IDEXX Laboratories, Inc. (IDXX), a manufacturer of instruments used by veterinarians to test for various diseases, due primarily to our positive view of the company's long-term fundamentals and the stock's attractive valuation. |
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