Jensen Fund Bets on Abbott, Adobe

LAKE OSWEGO, Ore. (TheStreet) -- Rob McIver, co-manager of the Jensen Fund(JENSX Quote), says long-term investing success means selecting high-quality securities, such as Abbott Laboratories(ABT Quote) and Adobe(ADBE Quote).

The five-star rated Jensen Fund is up 19% this year, but perhaps more impressive is that the fund's 10-year average annual return of 3.4% was better than 94% of its peers.

Welcome to the TheStreet.com's "Fund Manager Five Spot," where America's top mutual fund managers give their best stock picks during a rapid-fire Q&A.

Are you a bull or a bear?

McIver: I'm a long-term bull. To be a successful bull, an investor really has to understand the companies they are buying -- what has made a business successful and can that success be repeated? Because a long-term bull has to avoid losing his shirt in a bear market, we invest only in high-quality companies that have demonstrated the all-weather nature of strong business models, high profitability, consistency in their earnings and healthy free cash flow.

What is your top stock pick?

McIver: We are impressed with the consistent business performance being delivered by Abbott Laboratories. Despite a less-than-perfect economic background and much negativity surrounding health care companies in general, Abbott has done a superb job of increasing its earnings and free cash flow, although you wouldn't know it by looking at the stock performance over the last year.

For the year ending December 2009, we believe the company is on track to increase its earnings in the low double digits. Shareholders enjoy a high return on equity and it has recently announced a $6.6 billion acquisition of the European pharma company Solvay in a deal that will be funded entirely by cash from Abbott's balance sheet.