Today’s Talk Your Book is brought to you by Jensen Investment Management:
See here to learn more about Jensens Quality Growth ETF
On today’s show, we discuss:
- What quality means to Jensen
- Why META is not in the Quality growth strategy
- Thoughts on AI and tech bubbles
- How Jensen thinks about valuation
- Sectors Jensen is excited about for the long-term
- How higher interest rates affected Jensen’s discounted cash flow models
- Hallmarks for great quality businesses
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Discounted Cash Flow (DCF):
Analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to valuate the potential for investment.
Return on Equity (ROE):
Is equal to a company’s after-tax earnings (excluding non-recurring items) divided by its average stockholder equity for the year.
Return on Invested Capital (ROIC):
A calculation used to assess a company’s efficiency at allocating the capital under its control to profitable investments. Return on invested capital gives a sense of how well a company is using its money to generate returns.
Initial Public Offering (IPO):
The first sale of stock by a private company to the public.
Margin of Safety:
A principle of investing in which an investor only purchases securities 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 to measure other investments that include an element of risk.
Webvan:
Webvan was a dot-com company and grocery business that filed for bankruptcy in 2001 after 3 years of operation.
Dollar-Cost Averaging:
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 a single account.
Turnover Rate:
The percentage of a mutual fund or other portfolio holdings that have been replaced in one year.
