Talk your book: Investing to increase quality

Today’s Talk Your Book is brought to you by Jensen Investment Management:

See here to learn more about Jensens Quality Growth ETF

• What quality means to Jensen
• Why META is not in the quality improvement strategy
• Thoughts on AI and tech bubbles
• How Jensen thinks about evaluation
• Sectors that Jensen is excited about in the long term
• How higher interest rates have affected Jensen’s reduced cash flow patterns
• High quality business hallmarks

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Discounted Cash Flow (DCF):

The analysis uses future free cash flow forecasts and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to assess investment potential.

Return on equity (ROE):

It is equal to a company’s after-tax earnings (excluding non-recurring items) divided by the average shareholders’ equity for the year.

Return on invested capital (ROIC):

A calculation used to assess a company’s efficiency in allocating the capital under its control to profitable investments. Return on invested capital gives an idea of ​​how well a company is using its money to generate profits.

Initial Public Offering (IPO):

The first sale of stock by a private company to the public.

Safety margin:

An investment principle in which an investor buys securities only when their market price is significantly below their intrinsic value.

Risk Free Rate (RFR):

The theoretical rate of return on an investment with zero risk. As such, it is the benchmark for measuring other investments that include an element of risk.

Webvan:

Webvan was a dot-com and food business that filed for bankruptcy in 2001 after 3 years of operation.

Average cost in dollars:

A strategy that involves a series of periodic investments on a regular schedule, such as weekly, monthly, or quarterly.

A Unified Managed Account (UMA):

A professionally managed private investment account that can include multiple types of investments, all in one account.

Turnover rate:

The percentage of a mutual fund or other portfolio holdings that have been replaced in a year.