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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Jensen Investment 2026 Q2 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q2 2026 Letter Analysis

Jensen Investment Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Jensen Investment. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+2.38%

YTD-0.21%

Annualized+10.03%

Positioning StanceConstructive

Market CapMid Cap

Digest Analysis

Quick Take

"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."

Executive Summary

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.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

The fund holds 36 positions with named, sized holdings in the top 10 (ranging from 3.46% to 4.89%). The manager provides specific thesis summaries for each discussed position, uses language like 'core holding' repeatedly, and explains why positions are held through volatility (e.g., Kroger, Tractor Supply despite underperformance). The investment process is highly disciplined with clear, falsifiable criteria (15%+ ROE for 10 consecutive years). However, the diversified 36-position portfolio and hedged language on some holdings ('appears to be,' 'we believe') prevent this from reaching high conviction territory. This scores in the 0.65-0.75 range for moderate-high conviction with clear theses but meaningful diversification.

Growth Outlook

45%

BearishBullish

Neutral (45%)

The manager describes the near-term outlook as 'constructive' citing resilient economic activity, healthy corporate fundamentals, and AI-related investment supporting earnings growth. However, this optimism is tempered by acknowledgment of 'important risks' including uncertain Fed policy with inflation above target, subdued consumer sentiment, and potential geopolitical turmoil. The language is mildly positive but balanced with meaningful risk discussion, placing this in the +0.40 to +0.50 range.

Risk Appetite

35%

DefensiveAggressive

Defensive (35%)

The portfolio maintains 99% equity exposure with 36 holdings, indicating a fully invested posture. However, the fund explicitly avoids highly cyclical AI infrastructure stocks despite their strong performance, demonstrating selectivity and discipline rather than maximum risk-on positioning. The benchmark-agnostic approach with intentional sector underweights (Energy, Utilities, Communications) and overweights (Consumer Staples, Materials) reflects a quality-focused tilt rather than aggressive risk appetite. This scores in the +0.30 to +0.40 range for selectively long with quality constraints.

Capital Deployment

5%

De-riskingDeploying

De-risking (5%)

Portfolio changes were minimal during the quarter: one new position initiated (Cintas), one position liquidated (Best Buy), one position trimmed for valuation (Keysight), and one position increased (IDEXX). Cash remained at 1.27% versus 0.95% equity exposure, essentially unchanged. The manager describes this as 'driven by valuation and fundamental analysis' rather than a directional deployment view. This represents rotation and rebalancing rather than net deployment or de-risking, scoring near 0.00 to +0.10 for neutral activity.

Forward Guidance

20%

CautiousExpansionary

Cautious (20%)

The manager states 'these macroeconomic factors may influence short-term sentiment but do not alter the investment discipline' and emphasizes 'our commitment to owning exceptional companies...remains steadfast.' There is no indication of active deployment or scaling of positions. Portfolio changes were modest (one initiation, one liquidation, two adjustments) and driven by valuation and fundamentals rather than a directional view. The language suggests monitoring and maintaining discipline rather than active deployment, scoring in the +0.15 to +0.25 range.

Language Signal

30%

BearishBullish

Bearish (30%)

Bullish language includes 'constructive outlook,' 'resilient economic activity,' 'healthy corporate fundamentals,' 'strong corporate earnings,' and positive commentary on specific holdings ('core holding,' 'attractively valued,' 'solid market position'). Bearish/cautious language includes 'important risks persist,' 'uncertain Federal Reserve policy,' 'subdued consumer sentiment,' 'potential geopolitical turmoil,' 'heightened market volatility,' and discussion of competitive pressures on several holdings. The balance tilts mildly positive but with meaningful risk acknowledgment, scoring around +0.30.

Perceived Risk

52%

Low RiskElevated

Moderate Risk (52%)

The manager identifies three specific macro risks: uncertain Fed policy with inflation above target, subdued consumer sentiment, and potential geopolitical turmoil that could cause 'heightened market volatility.' These risks are discussed in a dedicated paragraph but are not central to the letter's narrative. The language is cautious ('important risks persist') but not alarmed. Stock-specific risks are also discussed (competition for Tractor Supply and Best Buy, tariff costs for Motorola, AI disruption concerns for Genpact). This represents moderate risk acknowledgment with named concerns but not systemic warnings, scoring in the 0.50-0.60 range.

Opportunity Density

55%

ScarceAbundant

Selective (55%)

The manager describes a selective opportunity set. The fund initiated only one new position (Cintas) during the quarter and liquidated one (Best Buy due to increasing competition). The commentary emphasizes that many high-performing stocks 'are not consistent with our strategy,' indicating a constrained opportunity set within the quality criteria. However, the manager does identify attractive valuations on several holdings (Levi Strauss, United Rentals, Kroger, Motorola, Copart, Cintas, IDEXX) and increased one position. This suggests selective opportunities in defined areas rather than abundance, scoring in the 0.50-0.60 range.

Time Horizon

72%

Short-TermLong-Term

Decade+ (72%)

The manager emphasizes 'long-term capital appreciation' as the objective and states 'we believe that over a full market cycle, the shares of these higher-quality businesses will outperform.' The letter discusses 'compounding shareholder capital and value creation over time' and notes that 'over shorter time periods, relative performance differences are to be expected.' The 10-year ROE requirement and focus on 'enduring competitive advantages' and 'attractive long-term growth prospects' indicate a multi-year horizon. However, the manager also discusses quarterly results, near-term catalysts (LMR order growth for Motorola), and makes tactical adjustments (trimming Keysight for valuation), preventing this from reaching the 0.85+ permanent capital range. This scores around 0.70-0.75 for a clear multi-year thesis with some attention to near-term developments.