Eric Shoenstein, co-portfolio manager of the Jensen Quality Growth Fund (JENSX), feels investors' pain. He understands the uncertainty in the financial markets and that people trying to grow a nest-egg are "worried that there isn't anyplace to put their money." Bonds don't have much yield, cash has no returns, and equities as an asset class are terrifying.
All that said, you have to put your money somewhere and stocks are the best of an uninspiring lot. He's not just making random bets but instead focusing on companies based in America but putting money to work in "places where the growth is actually available."
Schoenstein loves cash-rich Blue Chips with strong cash reserves, both in the U.S. and abroad. The money housed in the States, where growth opportunities seem somewhat rare at the moment, can be returned to shareholders via dividend or buybacks. It's the money "trapped overseas" due to what the fund manager calls a "policy issue" (read: the highest corporate tax rate in the world) that gets Schoenstein excited. This trapped cash almost forces a company to invest overseas, giving them a foothold in emerging markets.
It would be better for America if the money were repatriated. It's better for the shareholders if the money isn't taxed at 35% then invested in America, with our lamentable sub- 1% GDP growth. Policy issue indeed.
Schoenstein's favored sectors are Consumer Staples (XLP), Industrial (XLI) concerns involved in infrastructure build-outs, and Healthcare (XLV). In terms of specifics, he likes Pepsi (PEP), Proctor & Gamble (PG), Colgate-Palmolive (CL), Emerson (EMR), United Tech (UTX), 3M (MMM), Becton Dickinson (BDX), and Bard (BCR).
Check out the video for his quite sound reasoning and let us know how you're finding growth in this environment. Drop us a comment in the space below.