Jensen Investment Management trims Clorox stake to manage risk amid mid-cap stagnation
Jensen Quality Mid Cap Fund reduces holdings in The Clorox Company and Donaldson Company as inflation, energy costs and cautious spending dampen mid-cap performance.
Jensen Investment Management has reduced its position in The Clorox Company within its Jensen Quality Mid Cap Fund during the first quarter of 2026. The asset manager stated the move was designed to improve the portfolio’s overall risk-return profile, citing a challenging macroeconomic environment for mid-cap equities.
The fund reported a return of minus 2.53 per cent for the quarter, underperforming the MSCI US Mid Cap 450 Index, which returned 0.60 per cent. Jensen attributed the stagnation in mid-cap stocks to persistent inflation, geopolitical conflict, elevated energy prices and cautious consumer spending.
Clorox shares have faced significant downward pressure, falling 14.88 per cent over the preceding month and 34.79 per cent over the past 52 weeks. The stock closed at $88.90 on May 11, 2026, with a market capitalisation of $10.75 billion. The consumer goods manufacturer, known for products including bleach, wipes and household cleaners, saw its weighting lowered to mitigate downside exposure.
In addition to Clorox, the fund trimmed its position in Donaldson Company during the same period. Jensen noted that while Clorox remains a well-known producer of consumer products, the firm believes certain artificial intelligence stocks offer greater upside potential with less downside risk in the current climate.
The broader mid-cap index was impacted by rapid investment in artificial intelligence, which boosted some stocks while negatively affecting software and business services sectors facing disruption concerns. Energy stocks also surged following the Iran War, further challenging index performance.
Despite the fund’s underperformance, Jensen highlighted that quarterly results were supported by underweights in Financials and Communications Services, alongside higher exposure to Industrials. Conversely, underweights in Energy and Utilities and an overweight in Consumer Discretionary detracted from performance.
At the end of the fourth quarter, the number of hedge fund portfolios holding Clorox increased to 48, up from 37 in the previous quarter. Jensen’s fund continues to target long-term growth by focusing on high-quality companies with a return on equity of 15 per cent or higher for ten consecutive years.
