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 Ross Stores, Inc. (NASDAQ:ROST) as one of its leading contributors. Ross Stores, Inc. (NASDAQ:ROST) is a US-based off-price retail apparel and home fashion store operator. On May 11, 2026, Ross Stores, Inc. (NASDAQ:ROST) stock closed at $214.55 per share. One-month return of Ross Stores, Inc. (NASDAQ:ROST) was -3.91%, and its shares gained 43.68% over the past 52 weeks. Ross Stores, Inc. (NASDAQ:ROST) has a market capitalization of $69.39 billion.
Jensen Quality Mid Cap Fund stated the following regarding Ross Stores, Inc. (NASDAQ:ROST) in its Q1 2026 investor letter:
“Ross Stores, Inc. (NASDAQ:ROST) was the second largest contributor to Portfolio performance during the quarter. With a market share of approximately 30 percent, ROST is the second largest off-price retailer of apparel and home accessories in the U.S. Off-price retailers exploit manufacturing and purchasing inefficiencies between traditional retailers and their suppliers, enabling them to purchase inventory at low prices. Attractive purchase prices allow ROST to sell merchandise at significant discounts compared to traditional retailers. We believe ROST outperformed as it reported strong same store sales growth and better than expected earnings for the fourth quarter. In our opinion, ROST’s sales and earnings benefit from tighter consumer budgets, which are driving more value-seeking shoppers to the company’s stores. ROST remains a core Portfolio holding due to its solid market position, economies of scale versus smaller retailers, strong product sourcing capabilities, and the counter-cyclical nature of its off-price retail model.”
Ross Stores, Inc. (NASDAQ:ROST) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 71 hedge fund portfolios held Ross Stores, Inc. (NASDAQ:ROST) at the end of the fourth quarter, up from 58 in the previous quarter. While we acknowledge the risk and potential of Ross Stores, Inc. (NASDAQ:ROST) 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 Ross Stores, Inc. (NASDAQ:ROST) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Ross Stores, Inc. (NASDAQ:ROST) and shared the list of stocks Jim Cramer discussed. 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.
