| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.32% | 2.6% | 16% |
Heartland Value Fund gained 2.61% in Q4 2025, slightly underperforming the Russell 2000 Value Index's 3.26% return but maintaining outperformance over longer periods including since inception in 1984. The quarter marked a significant inflection for small-cap stocks, with the Russell 2000 Value outpacing the S&P 500 and small stocks nearly pulling even with large caps for 2025, their best relative performance since the pandemic. This improvement reflects strengthening fundamentals, with small company profit growth on track to surpass large caps for the first time in 13 quarters. Key return drivers include Federal Reserve rate cuts and improving regulatory backdrop, both historically favorable for smaller businesses. The fund increased positions in Integer Holdings and Columbus McKinnon following selloffs, while realizing gains from Alexander & Baldwin's takeout at a 40% premium. With four holdings taken private in the quarter and 14 over the past year, the managers see validation of their value approach. They believe the small-cap rebound is in early innings as market concentration gradually unwinds and investors recognize attractive valuations in overlooked companies.
Small-cap value stocks are experiencing a fundamental inflection point with strengthening earnings, attractive valuations, and improving market recognition, positioning the strategy for continued outperformance as investors gradually shift away from mega-cap concentration.
The managers believe they are still in the first or second inning of the small-cap rebound, with investors gradually recovering their senses and paying attention to overlooked, undervalued small stocks. They expect improving market breadth to benefit both their process and active management in general.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 12 2026 | 2025 Q4 | ALEX, CMCO, ITGR | fundamentals, rates, Russell 2000, small caps, Takeouts, value | - | Small-cap value is experiencing a fundamental inflection with strengthening earnings and improving market recognition. The Russell 2000 Value outperformed the S&P 500 in Q4 as investors gradually shift from mega-cap concentration. Fed rate cuts and regulatory improvements provide tailwinds for smaller businesses. Multiple takeouts validate attractive valuations, positioning the strategy for continued outperformance as the rebound unfolds. |
| Oct 9 2025 | 2025 Q3 | CAT, CVGW, PBPB, XRAY | earnings, Fed Cuts, Restaurants, small caps, Turnarounds, value |
PBPB CVGW XRAY |
Small cap value opportunities are improving with earnings growth accelerating and Fed cuts providing tailwinds. Heartland Value Fund gained 10.04% in Q3 through disciplined bottoms-up research, successfully exiting Potbelly at 32% premium and adding Calavo Growers. Despite mixed economic signals, the 10 Principles of Value Investing approach continues driving outperformance. |
| Jul 11 2025 | 2025 Q2 | CAT, CVGW, PBPB, XRAY | earnings, Fed, rates, Restaurants, small caps, turnaround, value |
KWR PLAB XRAY PBPB CVGW XRAY |
Small cap value opportunities are improving with Fed rate cuts and earnings rebound providing tailwinds. The fund gained 10.04% in Q3, successfully exiting Potbelly at a 32% premium while adding positions like Calavo. Despite mixed economic signals, disciplined fundamental research using the 10 Principles of Value Investing continues uncovering attractively priced companies in richly valued markets. |
| Mar 31 2025 | 2025 Q1 | CMCO, DK, NGD.TO, PCH | energy, gold, Industrial, small caps, Trade Policy, value |
CMCO PCH NGD.TO |
Heartland Value Fund outperformed during Q1 market volatility by focusing on micro-level analysis over macro uncertainty. Holdings trade at attractive 10x earnings with strong insider buying activity. Positioned to benefit from trade policy through domestic manufacturers like PotlatchDeltic while trimming overvalued positions. Extreme bearishness creates compelling opportunities for patient value investors. |
| Jan 13 2025 | 2024 Q4 | AAPL, AMZN, DK, GOOGL, HSIC, PDCO, SEE, TSLA, XRAY | active management, contrarian, materials, Refiners, small caps, value |
SEE DK PDCO XRAY |
Heartland Value Fund exploits market euphoria by investing in overlooked value opportunities while growth stocks reach bubble-like valuations. The fund's contrarian approach targets undervalued companies in Materials, Energy, and Healthcare sectors, positioning for a potential rotation to small and midcap value stocks reminiscent of the early 2000s recovery. |
| Sep 30 2024 | 2024 Q3 | ALEX, NGD, OR.TO | financials, gold, materials, Rate Cuts, real estate, small caps, value |
ALEX NGD |
Heartland Value Fund delivered solid Q3 returns while maintaining YTD outperformance through disciplined security selection. The managers remain confident in small value opportunities despite near-term headwinds, positioning for Fed easing benefits while actively managing portfolio composition through strategic additions like Alexander & Baldwin REIT and rotation within gold holdings from Osisko to New Gold. |
| Jun 30 2022 | 2024 Q2 | ARAY, CCS, HXL, SBCF | active management, aerospace, Homebuilders, Outperformance, Regional Banks, small caps, undervalued, value |
HXL SBCF CCS |
Heartland Value Fund leverages significant valuation discounts in small-cap value stocks, trading at 10.5x 2025 earnings versus 19.9x for the S&P 500. Recent takeover activity validates their approach of identifying undervalued, well-managed businesses. New positions in aerospace and regional banking capitalize on sector-specific opportunities while maintaining discipline through sector allocation guardrails. |
| Apr 15 2024 | 2024 Q1 | BWXT, GTLS, PRGO | Buybacks, healthcare, industrials, LNG, small caps, value |
GTLS PRGO |
Heartland Value outperformed in Q1 despite small cap headwinds, maintaining conviction in historic value opportunity. Small caps trade at deepest discounts to large caps since 2000. Portfolio positioned at attractive 12X earnings with new LNG exposure via Chart Industries. Expects Fed rate cuts and increased buyback activity to drive small cap recovery. |
| Oct 1 2024 | 2023 Q4 | CGAU, UGI, WOW | energy, gold, Mining, small caps, Utilities, value |
UGI CGAU |
Small cap value fund outperformed in 2023 with 17.1% return, capitalizing on severe valuation discount to large caps. Portfolio trades at compelling 12X forward earnings as small caps emerge from Magnificent 7 shadows. Recent Fed pivot and institutional demand support mean reversion thesis for undervalued small cap universe. |
| Sep 30 2023 | 2023 Q3 | FAF, FNF, MHK, NFG, STC | consumer discretionary, Discipline, energy, financials, Patience, small caps, Utilities, value |
MHK NFG ASTC |
Heartland Value Fund outperformed in Q3 despite challenging small-cap conditions, adding positions in undervalued companies like Mohawk, National Fuel Gas, and Stewart Information Services. The managers maintain disciplined value investing principles, viewing current large-cap versus small-cap disparity as creating future opportunities when market dynamics normalize and patient capital is rewarded. |
| Oct 17 2022 | 2022 Q3 | NOV, PDCO, TCBI | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Small CapsSmall-cap stocks are experiencing strengthening fundamentals with profit growth on track to surpass large caps for the first time in 13 quarters. The Russell 2000 Value Index outperformed the S&P 500 in Q4, marking the best relative performance since the pandemic. The managers believe this is just the beginning of a small-cap rebound. |
Russell 2000 Value Outperformance Fundamentals |
ValueAttractively priced businesses have been overlooked while trillions poured into giant tech stocks. Four portfolio holdings were taken private in the quarter, bringing the total to 14 takeouts over the past year, demonstrating that other investors are recognizing undervalued opportunities. The managers see compelling valuations across small stocks. |
Valuations Takeouts Undervalued Private | |
AITrillions of dollars have poured into giant tech stocks in search of AI's promise, while well-run, profitable, and attractively priced businesses have been ignored. The managers view this as part of a momentum party that won't last forever, referencing Charles Mackay's observations about investment manias unwinding gradually. |
Tech Stocks Momentum Bubble Mania | |
| 2025 Q3 |
Small CapsSmall cap stocks rebounded smartly in the quarter with earnings growth gaining momentum. The fund focuses on small value investing with the Russell 2000 Value Index as benchmark, emphasizing bottoms-up research and the 10 Principles of Value Investing. |
Russell 2000 Value investing Earnings growth Small business optimism |
ValueThe fund employs value investing principles in a richly priced equity market, uncovering solid businesses at attractive valuations. They establish four price targets for every company and rely on the 10 Principles of Value Investing emphasizing attractively priced, well-run companies. |
Value investing Attractive valuations Price targets Margin of safety | |
RestaurantsPortfolio includes restaurant investments like Potbelly, which was acquired at a 32% premium after successful turnaround under new management. The team focuses on restaurant companies with strong management teams and operational improvements. |
Potbelly Restaurant turnaround Same-store growth Franchise growth | |
| 2025 Q2 |
Small CapsSmall cap stocks rebounded smartly in the quarter with earnings growth gaining momentum. The Federal Reserve's interest rate cuts and improving earnings for S&P 600 companies provide historical tailwinds for small stocks, though mixed economic signals create uncertainty. |
Russell 2000 Value Earnings Fed Rates |
ValueAs value investors in a richly priced equity market dominated by passivity and AI enthusiasm, the fund continues to uncover solid businesses at attractive valuations. The focus remains on the 10 Principles of Value Investing which emphasize attractively priced, well-run companies with strong balance sheets. |
Valuation Fundamentals Margin of Safety Balance Sheet Undervalued | |
RestaurantsPotbelly was acquired by RaceTrac at a 32% premium after successful turnaround efforts by new management. The transformation from mismanaged restaurant company to fast-growing franchise demonstrated the value creation potential in the sector through operational improvements and growth initiatives. |
Franchise Same Store Sales Turnaround Operations Growth | |
| 2025 Q1 |
ValueHoldings trading at just 10 times earnings for next 12 months, representing 10% earnings yield. Focus on attractively priced, well-managed businesses with sound finances using 10 Principles of Value Investing. Uncertainty creates fear and lower stock prices, providing opportunities for patient, disciplined value investors. |
Value Investing Earnings Yield Undervalued Bottoms-up Fundamentals |
Small CapsRussell 2000 Index down 9.5% in first quarter compared to 4.3% decline for S&P 500. Flight to safety hit small stocks harder during policy uncertainty. Fund focuses on small companies selected on value basis, which are generally more volatile and less liquid than larger companies. |
Russell 2000 Small Companies Volatility Liquidity Outperformance | |
GoldGold closed quarter at record high around $3,150 per ounce while silver and copper advanced around 20%. In dollar-debasing environment, owning physical gold receiving increased interest from central banks and wide range of investors. Supportive of holding hard asset producers such as well-financed, profitable miners. |
Gold Miners Precious Metals Hard Assets Dollar Debasement Central Banks | |
Trade PolicyTrump administration established tariffs on Canadian timber products totaling over 50%. PotlatchDeltic positioned to benefit as only American wood products company manufacturing entirely in US. Policy uncertainty affecting industrial demand and manufacturing activity across portfolio companies. |
Tariffs Canadian Lumber Domestic Manufacturing Policy Uncertainty Industrial Demand | |
| 2024 Q4 |
ValueThe fund focuses on attractively priced, well-managed businesses guided by their 10 Principles of Value Investing. They seek companies with earnings yields approaching 8% or more based on low price/earnings ratios. The manager believes value investing will outperform in the current environment where valuation is being ignored. |
Value Earnings Yield Undervalued Contrarian Price Targets |
MaterialsMaterials stocks were down 11.73% in the quarter despite Industrials rising 13.8%, creating a disconnect the fund is exploiting. They are paying particular attention to packaging stocks within materials, anticipating renewed interest. The fund initiated a position in Sealed Air Corporation, viewing it as mispriced and selling below intrinsic worth. |
Materials Packaging Industrials Disconnect Sealed Air | |
RefinersThe fund holds Delek US Holdings despite the stock being cut nearly in half since April due to weakening diesel demand and tighter refining margins. They expect a recovery for trucking in spring or summer 2025 which should boost refiners. Management is creating value through asset sales and share repurchases. |
Refiners Diesel Trucking Recovery Share Repurchase | |
| 2024 Q3 |
Small CapsSmall value stocks should benefit from further rate cuts but may take time. The economic concerns that drove the Federal Reserve to act may continue to pressure emerging businesses in the short term. Small caps have performed poorly over the past three years, setting a low bar for the group. |
Small Value Russell 2000 Rate Cuts Underperformance Opportunity |
ValueThe fund follows 10 Principles of Value Investing to identify companies with strong financials and healthy free cash flow without overpaying. History tells us that value stocks will eventually come back into favor, though additional patience may be required as growth doesn't typically relinquish its advantage until midway into an easing cycle. |
Value Investing Intrinsic Worth Free Cash Flow Patience Undervalued | |
GoldThe fund made changes in gold holdings, exiting Osisko Gold Royalties due to production difficulties at key mines and deteriorating grid scores, while adding New Gold which has met guidance for eight consecutive quarters and is forecast to increase production 42% by 2026. |
Gold Miners Production Cash Flow Mining Royalties | |
Commercial Real EstateThe fund added Alexander & Baldwin, a pure-play REIT with retail, industrial, and office properties exclusively in Hawaii. The company divested its non-core road construction business, making it a cleaner investment case with a 4.6% dividend yield and strong fundamentals in Hawaii's stable economy. |
REIT Hawaii Dividend Yield Real Estate Pure Play | |
| 2024 Q2 |
ValueThe fund focuses on well-managed, undervalued businesses with resilient balance sheets trading at attractive valuations. The typical stock trades at just 10.5 times 2025 estimated earnings versus 19.9 for the S&P 500. The managers believe this valuation discount creates opportunities for outperformance and potential takeover activity. |
Value Investing Undervalued Earnings Multiple Takeover Target Valuation Discount |
Small CapsThe fund invests in small-cap value stocks through the Russell 2000 Value Index benchmark. The managers believe small value stocks offer better opportunities than mega-cap tech stocks which continue to trade at historically frothy prices. Active management helps identify opportunities in smaller companies that could outperform once mega-caps' dominance loosens. |
Small Cap Russell 2000 Active Management Outperformance Mega Cap | |
HomebuildersThe fund holds Century Communities, a homebuilder positioned to benefit from a massive housing shortage in America. Since 2012, 7.2 million more households have been formed than single-family homes constructed, creating an attractive supply-demand dynamic especially for entry-level buyers where 94% of Century's sales are made. |
Housing Shortage Entry Level Supply Demand Millennials Affordability | |
Regional BanksThe fund added Seacoast Banking Corp of Florida, a regional bank positioned in one of the highest growth regions for financial services. The bank trades at just 1.5 times tangible book value and could be a takeout target as one of the few remaining pure-play regional banks in Florida. |
Regional Banks Florida Tangible Book Takeout Target Net Interest Margin | |
AerospaceThe fund initiated a new position in Hexcel Corp, an aerospace & defense company in the 3rd inning of a long-term recovery. The company is diversifying into defense production where its composites are critical for stealth platforms, while the sweet spot remains wide-body aircraft that help airlines lower unit costs. |
Aerospace Defense Composites Wide Body Aircraft Recovery Defense Production | |
| 2024 Q1 |
Small CapsSmall caps are trading at historic discounts to large stocks, with the Russell 2000 Value Index at its lowest relative valuation levels since 2000. The fund believes this represents a classic value investor's market with significant opportunity. |
Value Russell 2000 Discounts Historic Opportunity |
ValueThe fund employs classic Ben Graham value investing principles, focusing on low price-to-earnings ratios and strong fundamentals. The portfolio trades at 12X estimated profits for an 8% earnings yield, attractive compared to the S&P 500's 22X multiple. |
Graham Earnings Yield P/E Ratio Fundamentals Margin of Safety | |
LNGChart Industries represents an opportunity in LNG equipment manufacturing, with robust backlogs despite the Biden Administration's pause on new export permits. The company should benefit as global LNG development accelerates outside the US. |
Export Equipment Global Backlogs Energy | |
BuybacksSmall companies are increasingly instituting share buybacks in response to attractive valuations and low investor interest. This represents a catalyst for value recognition as management teams step up to repurchase shares. |
Share Repurchase Management Catalyst Valuations Capital Allocation | |
| 2023 Q4 |
Small CapsSmall caps are trading at a 21% discount to large caps, representing only the third time since 1980 that this universe has been this severely on sale. The fund focuses on the cheapest part of the US market with median market cap of $1.2 billion. Small caps emerged from the shadows of the Magnificent 7 late in Q4 with Russell 2000 Value surging 24.6% since October 27. |
Value Discount Russell 2000 Market Cap Valuations |
ValueThe fund employs value investing principles, betting on mean reversion as the disparity between small and large cap valuations closes. Portfolio trades at just 12X 2024 earnings with robust free cash flows and 10% earnings yields possible. Management follows 10 Principles of Value Investing demanding low prices relative to earnings, cash flow, and intrinsic value. |
Mean Reversion Earnings Cash Flow Intrinsic Value Margin of Safety | |
EnergyInitiated position in UGI Corporation, an energy holding company operating natural gas pipelines and regulated utilities while distributing propane. Stock traded close to book value at 7.5X earnings for 13.3% earnings yield, compared to pipelines at 16X and utilities at 20X. Dividend yield over 6% compensates for volatility versus traditional regulated utilities. |
Natural Gas Pipelines Utilities Propane Dividends | |
GoldHighlighted Centerra Gold as an underappreciated hard asset given Federal Reserve's pivot to easy money policy. Company continues increasing production while lowering costs, remains debt free with $492 million cash, and trades below book value at 60% of NAV and less than 3X EV/EBITDA. Management focused on optimizing diverse portfolio including molybdenum business strategy. |
Hard Assets Production Cash Flow NAV Mining | |
| 2023 Q3 |
ValueThe fund follows value investing principles, seeking companies trading below intrinsic value with compelling risk/reward characteristics. The managers emphasize patience and discipline, waiting for attractive entry points rather than chasing momentum. They focus on identifying well-managed, financially strong companies with resilient balance sheets at compelling valuations. |
Intrinsic Value Patience Discipline Valuations Risk/Reward |
Small CapsThe fund invests in small-cap value stocks, which have underperformed relative to large caps. The managers view this disparity as creating opportunities and expect it to be corrected over time. They note the ongoing underperformance suggests more volatility with opportunities on the horizon. |
Russell 2000 Underperformance Opportunities Volatility Disparity | |
Natural GasThe fund added to National Fuel Gas during the quarter as natural gas prices declined. They expect prices to rebound as supply issues are addressed and demand improves starting in 2025 with increased U.S. LNG exports. The company trades at a discount to historical valuations despite its regulated utility assets and consistent dividend growth. |
LNG Supply Demand Exports Utilities |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2023 | Fund Letters | Heartland Value Fund | MHK | Mohawk Industries Inc | Consumer Discretionary | Home Improvement Retail | Bull | NYSE | Consumer Discretionary, Cyclical, Equity, Flooring, home improvement, manufacturing, turnaround, Value | Login |
| Sep 30, 2023 | Fund Letters | Heartland Value Fund | NFG | National Fuel Gas Company | Utilities | Gas Utilities | Bull | NYSE | Dividend Growth, energy, Equity, LNG, natural gas, pipeline, regulated utility, utilities | Login |
| Sep 30, 2023 | Fund Letters | Heartland Value Fund | ASTC | Stewart Information Services Corporation | Financials | Insurance Brokers | Bull | NYSE | Cyclical Recovery, Equity, financials, Housing, oligopoly, Real Estate, title insurance | Login |
| Oct 9, 2025 | Fund Letters | Will Nasgovitz | PBPB | Potbelly Corporation | Consumer Discretionary | Restaurants | Bull | NASDAQ | acquisition, Franchising, leadership, Margins, Operations, same-store sales, turnaround | Login |
| Oct 9, 2025 | Fund Letters | Will Nasgovitz | CVGW | Calavo Growers, Inc. | Consumer Staples | Packaged Foods & Meats | Bull | NASDAQ | buyout, growth, Margins, net cash, Prepared foods, rerating, turnaround | Login |
| Oct 9, 2025 | Fund Letters | Will Nasgovitz | XRAY | Dentsply Sirona Inc. | Health Care | Health Care Supplies | Bull | NASDAQ | Dental, Execution, Free Cash Flow, leadership, Margins, turnaround, valuation | Login |
| Sep 30, 2025 | Fund Letters | Heartland Value Fund | PBPB | Potbelly Corporation | Consumer Discretionary | Restaurants | Bull | NASDAQ | acquisition target, COVID-19 recovery, franchise, Management Transition, Operational Improvement, Restaurants, same-store sales growth, turnaround | Login |
| Sep 30, 2025 | Fund Letters | Heartland Value Fund | CVGW | Calavo Growers, Inc. | Consumer Staples | Food Products | Bull | NASDAQ | acquisition interest, Avocados, balance sheet strength, Food Products, Guacamole, Management alignment, margin expansion, turnaround, Value Added | Login |
| Sep 30, 2025 | Fund Letters | Heartland Value Fund | XRAY | Dentsply Sirona Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | Dental Equipment, healthcare, Management Transition, margin expansion, Medical devices, Sales improvement, turnaround, valuation discount | Login |
| Jul 11, 2025 | Fund Letters | Will Nasgovitz | KWR | Quaker Chemical Corp. | Materials | Specialty Chemicals | Bull | New York Stock Exchange | cashflow, Chemicals, Industrialcycle, Pricingpower, valuation | Login |
| Jul 11, 2025 | Fund Letters | Will Nasgovitz | PLAB | Photronics, Inc. | Information Technology | Semiconductor Equipment | Bull | NASDAQ | AI, buybacks, Photomasks, semiconductors, valuation | Login |
| Jul 11, 2025 | Fund Letters | Will Nasgovitz | XRAY | Dentsply Sirona, Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | cloud, Dental, Margins, turnaround, valuation | Login |
| Mar 31, 2025 | Fund Letters | Heartland Value Fund | CMCO | Columbus McKinnon Corp. | Industrials | Industrial Machinery | Bull | NASDAQ | acquisition, industrial machinery, insider buying, Leverage reduction, manufacturing, margin expansion, Materials Handling, turnaround | Login |
| Mar 31, 2025 | Fund Letters | Heartland Value Fund | PCH | PotlatchDeltic Corporation | Real Estate | Specialized REITs | Bull | NASDAQ | Domestic Manufacturing, Housing supply, Lumber, Southern Yellow Pine, Tariff Beneficiary, Timber REIT, trade policy, Wood Products | Login |
| Mar 31, 2025 | Fund Letters | Heartland Value Fund | NGD.TO | New Gold Inc. | Materials | Gold | Neutral | TSX | Canadian Miner, Copper-Gold, Cost Reduction, Free Cash Flow, gold mining, Hard assets, profit-taking, Valuation Discipline | Login |
| Dec 31, 2024 | Fund Letters | Heartland Value Fund | SEE | Sealed Air Corporation | Materials | Paper Packaging | Bull | NYSE | cash flow, materials, Packaging, private equity, takeover target, undervalued, Value | Login |
| Dec 31, 2024 | Fund Letters | Heartland Value Fund | DK | Delek US Holdings, Inc. | Energy | Oil & Gas Refining & Marketing | Bull | NYSE | Cyclical Recovery, energy, insider buying, refining, Share Buyback, Sum-of-parts, Trucking, Value | Login |
| Dec 31, 2024 | Fund Letters | Heartland Value Fund | PDCO | Patterson Companies, Inc. | Health Care | Health Care Distributors | Bull | NASDAQ | acquisition, Animal Health, Dental, Healthcare Distribution, private equity, Sum-of-parts, Value | Login |
| Dec 31, 2024 | Fund Letters | Heartland Value Fund | XRAY | Dentsply Sirona Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | contrarian, cost savings, Dental Equipment, healthcare, Management Change, turnaround, undervalued | Login |
| Sep 30, 2024 | Fund Letters | Heartland Value Fund | ALEX | Alexander & Baldwin, Inc. | Real Estate | Retail REITs | Bull | NYSE | dividend yield, Hawaii, industrial properties, office properties, Real Estate, REIT, retail properties, Value | Login |
| Sep 30, 2024 | Fund Letters | Heartland Value Fund | NGD | New Gold Inc. | Materials | Gold | Bull | TSX | Canadian, Copper, Cost Reduction, Free Cash Flow, Gold, Mining, production growth, turnaround, Value | Login |
| Jun 30, 2024 | Fund Letters | Heartland Value Fund | HXL | Hexcel Corp. | Industrials | Aerospace & Defense | Bull | NYSE | Aerospace, cash flow, Composites, Defense, insider buying, M&A Target, recovery, Stealth Platforms, Wide-body Aircraft | Login |
| Jun 30, 2024 | Fund Letters | Heartland Value Fund | SBCF | Seacoast Banking Corp. of Florida | Financials | Regional Banks | Bull | NASDAQ | Cost Reduction, Florida, M&A Target, net interest margin, operating leverage, Population growth, regional bank, tangible book value | Login |
| Jun 30, 2024 | Fund Letters | Heartland Value Fund | CCS | Century Communities | Consumer Discretionary | Homebuilding | Bull | NYSE | Affordability Crisis, Book Value, Entry-level Buyers, homebuilder, Household Formation, Housing shortage, Millennials, Supply-Demand Imbalance | Login |
| Mar 31, 2024 | Fund Letters | Heartland Value Fund | GTLS | Chart Industries, Inc. | Industrials | Industrial Machinery | Bull | NASDAQ | carbon capture, Cyclical, energy infrastructure, Heat Transfer Systems, Hydrogen, industrial machinery, International, LNG Equipment, Value | Login |
| Mar 31, 2024 | Fund Letters | Heartland Value Fund | PRGO | Perrigo Company plc | Consumer Staples | Personal Products | Bull | NYSE | Brand Transformation, Consumer-health, FDA Compliance, Infant Formula, insider buying, margin expansion, portfolio optimization, Private-label, turnaround, Value | Login |
| Dec 31, 2023 | Fund Letters | Heartland Value Fund | UGI | UGI Corporation | Utilities | Gas Utilities | Bull | NYSE | dividend, energy, natural gas, Pipelines, Propane, strategic review, turnaround, undervalued, utilities, Value | Login |
| Dec 31, 2023 | Fund Letters | Heartland Value Fund | CGAU | Centerra Gold Inc. | Materials | Gold | Bull | TSX | cash generation, debt-free, dividend, Exploration, Gold, Hard assets, Mining, Molybdenum, NAV discount, Share Buyback, Small cap value | Login |
| TICKER | COMMENTARY |
|---|---|
| ALEX | A good illustration that true value can be realized with patience is Alexander & Baldwin (ALEX). When we originally initiated a position in this Hawaii-based real estate investment trust in the summer of 2024, we were significantly underweight in our Real Estate exposure, relative to our benchmark. In addition, the sector was the third-largest contributor to our portfolio's "active risk" at the time. So, we sought to expand our exposure to the sector but were looking to do so in a cautious way. From a risk/reward standpoint, ALEX looked favorable to most other REITs at the time. We liked how ALEX divested a non-core construction business, making this a pure-play REIT with assets strictly in Hawaii. And we were drawn to historically low industrial vacancies in the State as well as the company's strong absorption rate relative to its peers. Over the past six months, however, Alexander & Baldwin shares sold off materially over concerns of slowing tourism in Hawaii. This is despite the fact that little of ALEX's properties are on resorts or directly exposed to travel. Actual real estate fundamentals in the Aloha State remain strong with industrial vacancies hovering at just around 2%. The company also enjoyed a robust pipeline of pre-leased developments to drive earnings growth and a strong balance sheet with below-average leverage, at 3.5x net debt to EBITDA. Nevertheless, the stock was down more than 14% through the first two months of the quarter — until Dec. 8, when a group of investors agreed to take the company private at a 40% premium, which was close to our evaluation of fair value. While ALEX wasn't a huge winner, the takeout boosted the holding's performance to close out the year and demonstrated that other investors are starting to pay attention to the companies we focus on. |
| CMCO | Another position we increased was Columbus McKinnon (CMCO), which designs, manufactures, and distributes materials, handling products, and systems used in a variety of industrial applications, including lifting, automation, and precision conveyance. Early this year, CMCO reported slower-than-expected Q3 results, citing slowing industry demand driven by U.S. policy uncertainty. By itself, that would have likely triggered a mid-single-digit to high-single-digit selloff based on historic price reactions. However, management also announced a $2.7 billion acquisition of a competitor, Kito Crosby, which sent the stock plummeting more than 40% due to concerns surrounding execution and an increased leverage profile upon closing. At current prices, we believe Columbus has a compelling risk/reward profile as management seeks to reduce leverage and improve the growth and margin profile of the consolidated business. Management is targeting mid-20% EBITDA margins upon integration, up from 15.5% in FY25 pre-acquisition. In our opinion, CMCO can rerate closer to its industrial peers that trade at an average of 12x EV/EBITDA. Meanwhile, our view of the stock's attractive valuations seems to be validated by aggressive insider buying by management in the aftermath of the Q3 selloff. |
| ITGR | An example of a Health Care holding that struggled in the quarter was Integer Holdings Corporation (ITGR), which specializes in the design, development, and production of medical technologies and components. In late October, Integer's stock sank more than 30% after the company significantly lowered its outlook for growth and margin expansion in 2026, as several products experienced slower market adoption than was expected. But management expects these headwinds to be short-lived, with a robust portfolio of higher growth and margin products coming to market, which should allow the company to get back on track. The company still expects to outgrow its industry peers by 2% while growing earnings before interest and taxes (EBIT) at twice the rate of sales. Even better, the company announced a $200 million stock repurchase authorization after the selloff, increasing our conviction that the shares are materially undervalued. This confidence drove us to increase our exposure to Integer in the quarter. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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