Jensen Investment Management, an asset management company based in the US, released its first-quarter 2025 investor letter for the “Jensen Quality Mid Cap Fund”. A copy of the letter is available to download here. The Jensen Quality Mid Cap Fund aims for long-term growth. The Fund returned -2.53% in Q1 2026, lagging the 0.60% return for the MSCI US Mid Cap 450 Index. Mid-cap stocks were flat in the quarter due to inflation, war, high energy prices, and cautious consumer spending. Rapid AI investment growth impacted the Index, boosting some stocks but hurting others, especially software and business services stocks facing AI disruption concerns. Energy stocks surged after the Iran War, challenging performance. The fund’s process focuses on high-quality companies with a 15%+ ROE for ten years, indicating sustained advantages. Quarterly performance benefited from underweights in the Financials and Communications Services and higher exposure to the Industrials sector, while underweight exposure in the Energy and Utilities sectors and overweight in Consumer Discretionary hurt performance. Please review the Fund’s top five holdings to gain insights into their key selections for 2026.
In its first-quarter 2026 investor letter, Jensen Quality Mid Cap Fund highlighted stocks such as Cadence Design Systems, Inc. (NASDAQ:CDNS). Cadence Design Systems, Inc. (NASDAQ:CDNS) is a global provider of AI-driven software, hardware, and silicon intellectual property products and solutions used for designing semiconductors. The one-month return of Cadence Design Systems, Inc. (NASDAQ:CDNS) was 24.57%, and its shares gained 14.29% of their value over the last 52 weeks. On May 11, Cadence Design Systems, Inc. (NASDAQ:CDNS) stock closed at $364.20 per share, with a market capitalization of $100.45 billion.
Jensen Quality Mid Cap Fund stated the following regarding Cadence Design Systems, Inc. (NASDAQ:CDNS) in its Q1 2026 investor letter:
“During the quarter, the Quality Mid Cap Investment Team initiated positions in AON PLC (AON), The Sherwin-Williams Company (SHW), and Cadence Design Systems, Inc. (NASDAQ:CDNS). CDNS is a developer of software used to design semiconductors. The company was added to the Portfolio due to its contracted revenues, high contract renewal rates, strong balance sheet, and deep patent portfolio, which makes it difficult for potential competitors to enter its markets. We also believe CDNS’s stock was attractively valued at the time of purchase.”
Cadence Design Systems, Inc. (NASDAQ:CDNS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 65 hedge fund portfolios held Cadence Design Systems, Inc. (NASDAQ:CDNS) at the end of the fourth quarter, compared to 69 in the previous quarter. In Q1 2026, Cadence Design Systems, Inc. (NASDAQ:CDNS) generated revenue of $1.474 billion, up 19% year over year. While we acknowledge the risk and potential of Cadence Design Systems, Inc. (NASDAQ:CDNS) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Cadence Design Systems, Inc. (NASDAQ:CDNS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Cadence Design Systems, Inc. (NASDAQ:CDNS) and shared the list of best QQQ stocks to buy. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
