Harbor Mid Cap Value Fund

Investor Summary

Dr. Josef Lakonishok serves as the primary portfolio manager and is CEO, CIO, and founding partner of LSV Asset Management, which has subadvised the fund since September 30, 2004. LSV Asset Management was founded in 1994 and manages approximately $112 billion in assets. Dr. Lakonishok is a renowned academic and practitioner in behavioral finance and value investing. The investment team includes Menno Vermeulen, who has co-managed the fund since 2004 as Portfolio Manager and Partner of LSV Asset Management, along with team members Greg Sleight, Guy Lakonishok, and Puneet Mansharamani.

Fund Strategy

Harbor Mid Cap Value Fund seeks long-term total return by investing at least 80% of its net assets in equity securities, principally common stocks of mid-cap companies which are undervalued in the marketplace at the time of purchase but have potential for appreciation. The fund employs LSV Asset Management's systematic quantitative approach that exploits judgmental biases and behavioral weaknesses that influence investor decisions. The investment strategy uses a bottom-up, contrarian value approach targeting the 1,000 largest publicly traded U.S. companies, focusing on per-share growth rates across six key metrics and preferring stocks in cheaper valuation deciles where low valuations provide an advantageous starting point.

ANNUALIZED SINCE INCEPTION	QUARTERLY	YTD
9.62%	13.89%	19.18%

Executive Summary

Harbor Mid Cap Value Fund returned 13.99% in Q2 2026, outperforming the Russell Midcap Value Index's 13.40% return through strong stock selection despite value stocks lagging growth across all market-cap ranges. The quarter saw dramatic market broadening as small caps outpaced large caps and leadership within Information Technology shifted from software to hardware, driven by AI infrastructure buildout. Top contributors included semiconductor and AI infrastructure suppliers TD Synnex, Arrow Electronics, and Hewlett Packard Enterprise, which surged 50-90% on surging demand. Garrett Motion and State Street also contributed significantly. Detractors included Kroger, pressured by competition and inflation, and energy holdings Matador Resources as natural gas prices fell. The manager initiated Fortune Brands Innovations and added to Regeneron Pharmaceuticals based on attractive quantitative rankings, while trimming State Street and Cummins after strong runs. The Fund maintains significant overweights to Consumer Discretionary and Financials, with the portfolio trading at 10.6x forward earnings versus 16x for the benchmark. Despite ongoing macro uncertainty, the manager remains committed to the disciplined value approach.

Core Thesis

LSV Asset Management employs a disciplined quantitative value approach to mid-cap investing, systematically identifying undervalued companies based on fundamental metrics including low price-to-cash flow and price-to-earnings ratios, while controlling incremental risk relative to the benchmark.

Forward Outlook

The manager notes that while mid- and smaller-cap stocks have performed well in 2026, the largest U.S. companies remain expensive while small- and mid-cap stocks remain relatively attractive. The Fund is attractively priced relative to the benchmark at 10.6x forward earnings compared to more than 16x for the value benchmark. Despite ongoing uncertainty surrounding economic growth, monetary and fiscal policy, and geopolitical tension, the investment philosophy remains unchanged with continued commitment to the disciplined value investment approach. Market leadership has evolved to reward businesses benefiting from the broader AI investment cycle beyond just the largest platform companies.

Date	Letter	Tickers	Keywords	Pitches	Quick Takes
Aug 10 2026	2026 Q2	ARW, CMI, FBHS, FLEX, GLW, GTX, HPE, KR, MTDR, REGN, SNX, STT, WDC	AI Infrastructure, financials, Homebuilders, mid cap, quantitative, semiconductors, stock selection, value	-	Harbor Mid Cap Value outperformed in Q2 2026 through disciplined stock selection despite value lagging growth. AI infrastructure holdings TD Synnex, Arrow Electronics, and Hewlett Packard Enterprise surged 50-90% on semiconductor and data center demand. The Fund trades at 10.6x forward earnings versus 16x for the benchmark, maintaining overweights to Financials and Consumer Discretionary while adhering to its quantitative value discipline.
Apr 21 2026	2026 Q1	ANGI, APA, CF, CMC, DINO, EXPE, FLEX, FOXA, HAL, JBL, MTDR, SFD, UPWK, WDC	AI, energy, mid cap, quantitative, Rotation, small caps, value	-	Harbor Mid Cap Value outperformed during Q1's market turbulence, benefiting from AI storage demand (Sandisk), energy surge from Iran conflict (Matador, APA), and ongoing rotation toward value stocks. Fund trades at attractive 10x forward earnings versus 16x benchmark, with management excited about mid-cap value opportunities as largest companies remain expensive.
Jan 21 2026	2025 Q4	AMKR, BK, CFG, COIN, EA, ENS, EXPE, FOXA, GM, GTX, HIW, HLF, HOG, HOOD, HPQ, JAZZ, KR, NEU, OC, PHM, PLAB, PVH, SNDK, STT, TXT, WBD, WDC	Buybacks, consumer discretionary, dividends, financials, mid cap, technology, value	GTX ENS EA AMKR	Harbor Mid Cap Value Fund outperformed its benchmark by 265 basis points in Q4, driven by strong stock selection in AI-beneficiary Sandisk, record truck sales at General Motors, and positive clinical results at Jazz Pharmaceuticals. The fund continues finding attractive opportunities in mid-cap value stocks despite broader market strength in AI-related names.
Oct 17 2025	2025 Q3	AL, AMAT, ANSS, ARW, CBRE, CHX, COLD, CTRA, DRI, GPN, HP, ICE, MAS, MUR, RGA, RJF, RSG, SF, SMG, ST, SWKS, ULTA, WWD	aerospace, AI, Commercial real estate, fundamentals, mid cap, Quality, Trade Policy, value	WWD US	Harbor Mid Cap Fund's fundamentals-based approach faced momentum trading headwinds in Q2 2025, underperforming despite benefiting from sector overweights in Industrials and Technology. Trade policy volatility created opportunities in quality businesses trading below intrinsic value. Strong aerospace and electronics performance offset commercial real estate weakness. Management maintains disciplined approach targeting companies with durable competitive advantages.
Jul 22 2025	2025 Q2	ADT, BK, CNHI, FLEX, FOXA, HIG, HPQ, JAZZ, JBL, KR, MCK, NRG, ORI, PHM, SNX, STT, SYF, TAP, TXT, WDC	earnings, energy, financials, mid cap, technology, value	ADT MCK	Harbor Mid Cap Value Fund underperformed in Q2 2025 as value stocks lagged the technology-driven market rally. Despite headwinds from deeper value discipline and smaller cap bias, the fund benefits from attractive valuations trading at 10x forward earnings. Strong contributors included AI beneficiary NRG Energy and technology stocks, while the outlook remains compelling for patient value investors.
Mar 31 2025	2025 Q1	AIG, ALSN, AMKR, ATKR, BK, DOX, EBAY, FOXA, HIG, HPQ, KR, NFG, NRG, ORI, PHM, PVH, STT, TOL, UAL, UGI	consumer discretionary, financials, mid cap, Trade Policy, Utilities, value	-	Harbor Mid Cap Value Fund underperformed in Q1 2025 due to trade policy uncertainty impacting smaller-cap stocks despite value outperforming growth. Strong Financials and Utilities performance was offset by weakness in Technology and Industrials. The fund maintains deep value discipline with historically wide valuation spreads creating opportunities in mid-cap segments.

Date

Letter

Tickers

Keywords

Pitches

Quick Takes

Aug 10 2026

2026 Q2

ARW, CMI, FBHS, FLEX, GLW, GTX, HPE, KR, MTDR, REGN, SNX, STT, WDC

AI Infrastructure, financials, Homebuilders, mid cap, quantitative, semiconductors, stock selection, value

Harbor Mid Cap Value outperformed in Q2 2026 through disciplined stock selection despite value lagging growth. AI infrastructure holdings TD Synnex, Arrow Electronics, and Hewlett Packard Enterprise surged 50-90% on semiconductor and data center demand. The Fund trades at 10.6x forward earnings versus 16x for the benchmark, maintaining overweights to Financials and Consumer Discretionary while adhering to its quantitative value discipline.

Apr 21 2026

2026 Q1

ANGI, APA, CF, CMC, DINO, EXPE, FLEX, FOXA, HAL, JBL, MTDR, SFD, UPWK, WDC

AI, energy, mid cap, quantitative, Rotation, small caps, value

Harbor Mid Cap Value outperformed during Q1's market turbulence, benefiting from AI storage demand (Sandisk), energy surge from Iran conflict (Matador, APA), and ongoing rotation toward value stocks. Fund trades at attractive 10x forward earnings versus 16x benchmark, with management excited about mid-cap value opportunities as largest companies remain expensive.

Jan 21 2026

2025 Q4

AMKR, BK, CFG, COIN, EA, ENS, EXPE, FOXA, GM, GTX, HIW, HLF, HOG, HOOD, HPQ, JAZZ, KR, NEU, OC, PHM, PLAB, PVH, SNDK, STT, TXT, WBD, WDC

Buybacks, consumer discretionary, dividends, financials, mid cap, technology, value

GTX
ENS
EA
AMKR

Harbor Mid Cap Value Fund outperformed its benchmark by 265 basis points in Q4, driven by strong stock selection in AI-beneficiary Sandisk, record truck sales at General Motors, and positive clinical results at Jazz Pharmaceuticals. The fund continues finding attractive opportunities in mid-cap value stocks despite broader market strength in AI-related names.

Oct 17 2025

2025 Q3

AL, AMAT, ANSS, ARW, CBRE, CHX, COLD, CTRA, DRI, GPN, HP, ICE, MAS, MUR, RGA, RJF, RSG, SF, SMG, ST, SWKS, ULTA, WWD

aerospace, AI, Commercial real estate, fundamentals, mid cap, Quality, Trade Policy, value

WWD US

Harbor Mid Cap Fund's fundamentals-based approach faced momentum trading headwinds in Q2 2025, underperforming despite benefiting from sector overweights in Industrials and Technology. Trade policy volatility created opportunities in quality businesses trading below intrinsic value. Strong aerospace and electronics performance offset commercial real estate weakness. Management maintains disciplined approach targeting companies with durable competitive advantages.

Jul 22 2025

2025 Q2

ADT, BK, CNHI, FLEX, FOXA, HIG, HPQ, JAZZ, JBL, KR, MCK, NRG, ORI, PHM, SNX, STT, SYF, TAP, TXT, WDC

earnings, energy, financials, mid cap, technology, value

ADT
MCK

Harbor Mid Cap Value Fund underperformed in Q2 2025 as value stocks lagged the technology-driven market rally. Despite headwinds from deeper value discipline and smaller cap bias, the fund benefits from attractive valuations trading at 10x forward earnings. Strong contributors included AI beneficiary NRG Energy and technology stocks, while the outlook remains compelling for patient value investors.

Mar 31 2025

2025 Q1

AIG, ALSN, AMKR, ATKR, BK, DOX, EBAY, FOXA, HIG, HPQ, KR, NFG, NRG, ORI, PHM, PVH, STT, TOL, UAL, UGI

consumer discretionary, financials, mid cap, Trade Policy, Utilities, value

Harbor Mid Cap Value Fund underperformed in Q1 2025 due to trade policy uncertainty impacting smaller-cap stocks despite value outperforming growth. Strong Financials and Utilities performance was offset by weakness in Technology and Industrials. The fund maintains deep value discipline with historically wide valuation spreads creating opportunities in mid-cap segments.

QUARTER	THEMES	TAGS
2026 Q2	AI AI infrastructure buildout drove Information Technology sector returns of roughly 33% in Q2 2026, contributing more than 10% to the S&P 500's quarterly return. The Fund benefited from holdings in AI infrastructure suppliers including TD Synnex, Arrow Electronics, and Hewlett Packard Enterprise, which surged on demand for AI servers, semiconductors, memory, and data center hardware. Market leadership evolved within Information Technology as hardware decisively displaced software as the engine of returns.	AI Infrastructure Data Centers Semiconductors Cloud
	Semiconductor Cycle Semiconductor-related holdings were top contributors in Q2 2026, with TD Synnex up more than 50% and Arrow Electronics up nearly 50%, both benefiting from surging demand for AI infrastructure and cloud computing. Western Digital was sold after its valuation became less attractive despite benefiting from hard disk drive demand for AI buildout. The sector broadened toward semiconductors, memory, and data center hardware during the quarter.	Memory Semi Equipment Data Centers
	Homebuilders The Fund maintains overweight positions in homebuilders within the Consumer Discretionary sector, with Toll Brothers and PulteGroup among the top 10 holdings. Fortune Brands Innovations, a manufacturer of home and security products, was added during the quarter based on attractive cash flow measures and improving price momentum.	Homebuilders Building Products Consumer Discretionary
	Regional Banks The Fund is overweight regional banks within Financials, with Citizens Financial Group and State Street Corporation among top holdings. State Street advanced due to strong earnings highlighting increases in fee-based revenues, expanding assets under management, and continued share buybacks. Stock selection in Financials added significant value during the quarter.	Regional Banks Asset Managers Financials
	Buybacks Share repurchases are viewed positively by the manager as a quality indicator. Garrett Motion generated good cash flow and bought back stock aggressively. State Street continued to buy back shares. Arrow Electronics announced a sizeable new share repurchase program totaling nearly 10% of outstanding shares. The Fund's holdings are described as quality, profitable companies that generate cash, pay dividends, and repurchase shares.	Capital Allocation Shareholder Returns
	Value The Fund employs a disciplined value investment approach using quantitative models to evaluate companies based on fundamental undervaluation including low price-to-cash flow and price-to-earnings ratios. Value stocks lagged growth across all market-cap ranges in Q2 2026, and stocks that were cheap on cash flow and earnings lagged significantly. Despite this headwind, the Fund outperformed through strong stock selection. The Fund trades at 10.6x forward earnings compared to more than 16x for the value benchmark.	Valuation Quality Quantitative
	Energy Energy was the lone detractor in the S&P 500 during Q2 2026, falling roughly 13% as crude oil retreated sharply following de-escalation of the Iran conflict. Matador Resources fell 20% as natural gas prices fell and costs increased, squeezing margins. The Fund maintains a modest position in Energy with holdings underperforming during the quarter.	Oil Natural Gas Shale Producers
	Biotechnology The Fund added to its position in Regeneron Pharmaceuticals during the quarter based on high rankings on multiple cash flow and forecasted earnings measures. The stock ranks in the top 10% in the manager's stock-ranking universe. Regeneron has been buying back stock, which the manager views positively, and shows improving operating margins and sales growth.	Pharmaceuticals Biotechnology Health Care
2026 Q1	AI AI concerns disrupted technology shares in January as new capabilities threatened the Software-as-a-Service business model. The fund benefited from AI-driven demand for storage through holdings like Sandisk, while also noting potential AI disruption risks in sectors like online travel.	Software Storage Disruption Technology SaaS
	Oil Energy sector surged 38% as crude oil prices soared above $100 per barrel following the US-Israeli military operation against Iran and closure of the Strait of Hormuz. Energy holdings including Matador Resources, APA Corp, and Halliburton were significant contributors to performance.	Energy Geopolitical Iran Strait of Hormuz Exploration
	Value Notable rotation away from mega-cap technology toward smaller, more value-oriented stocks persisted throughout the quarter. Mid-cap value stocks outperformed large-cap, with the fund trading at 10x forward earnings compared to 16x for the value benchmark.	Rotation Mega-cap Valuation Outperformance Earnings
	Small Caps Small- and mid-cap stocks fared better than large-cap during the turbulent quarter, with Russell 2000 gaining 0.9% while Russell 1000 declined 4.2%. Manager finds small-cap and mid-cap stocks remain relatively attractive while largest companies are expensive.	Outperformance Attractive Expensive Large-cap Russell
2025 Q4	AI AI remains transformative but markets are shifting from hype to show-me phase. The industry has spent over $400 billion on capex while producing roughly $50 billion in revenues. Physical constraints like power shortages and build delays are challenging assumptions of frictionless scaling.	Artificial Intelligence Technology Capex Infrastructure Valuations
	Private Credit Private markets are finally offering opportunity as supply and demand balance has shifted. Traditional institutions are over-allocated, distributions have dried up, and scarcity of capital gives patient liquidity providers leverage on price and terms. Firm is launching a private markets fund in Q1 2026.	Private Markets Illiquid Strategies Secondaries Real Estate Credit
	Commercial Real Estate Real estate is where price and replacement cost have meaningfully diverged. Valuations have fallen approximately 20% since 2022 while construction costs have risen 20-30%. This gap creates a powerful setup for patient capital to buy high-quality assets below replacement cost.	Real Estate Valuations Construction Costs Refinancing Patient Capital
2025 Q3	Trade Policy Trade tensions dominated headlines with Liberation Day tariffs affecting imports from China, Europe, and Canada causing significant market volatility. Markets initially dropped 19% following tariff announcements before recovering as policy reversals and bilateral negotiations helped stabilize conditions. Long-term implications of trade policy changes remain uncertain for supply chains and corporate profitability.	Tariffs China Supply Chain Inflation Retaliation
	AI Investment in AI infrastructure remained a key driver of performance, bolstering demand for semiconductor, cloud, industrial, and technology equipment companies. Information Technology led all sectors with 21.99% gains in the quarter, driven by continued AI infrastructure investment themes.	Infrastructure Semiconductors Cloud Technology Equipment
	Commercial Real Estate CBRE Group, the world's largest commercial real estate services company, faced headwinds as tariff uncertainty caused customers to delay decisions on new leases, property purchases, and management opportunities. Despite challenges, the broader return to office trend is expected to continue supporting the sector.	Office Leasing Property Management Return to Office Services
	Aerospace Woodward demonstrated strong performance in aerospace with better-than-consensus earnings driven by strong demand for new defense equipment and higher commercial aftermarket activity. The company showed continued share gains and margin expansion through transformation from component to systems supplier in commercial aircraft engines.	Defense Commercial Aviation Aftermarket Systems Manufacturing
2025 Q2	Value Value stocks were left behind in the market rally and continue to trade at significant discounts to their growth counterparts, enhancing the potential for outperformance if valuations between growth and value stocks revert to a more normal, historical average. The Fund trades at just over 10x forward earnings and 7x cash flow, which are significant discounts to the core and value benchmark.	Value Discount Valuation Growth P/E
	AI NRG Energy continues to benefit from rising electricity demand needed to fuel the AI revolution. The rally was powered primarily by large-cap technology stocks, with the Information Technology sector gaining 24% and contributing more than half of the S&P 500's quarterly gains.	AI Electricity Technology Demand
	Earnings Supporting factors included strong second quarter corporate earnings, particularly in Information Technology. Jabil handily beat analysts' estimates for revenue, earnings, and operating income. Flex reported solid earnings and raised its guidance going forward.	Earnings Revenue Guidance Estimates
2025 Q1	Value The fund maintains a deep value discipline with stretched valuation spreads remaining historically wide. The portfolio continues to trade at discounts relative to the benchmark, focusing on high-quality, profitable companies that generate strong cash flow, pay dividends, and actively buy back shares.	Valuation Discount Quality Cash Flow Dividends
	Trade Policy Uncertainty created by tariffs and evolving global trade policies significantly impacted smaller-cap companies during the quarter. Despite potential long-term benefits from onshoring of production, trade policy uncertainty drove market turbulence and sentiment swings throughout March.	Tariffs Onshoring Uncertainty Global Trade
	Small Caps Small- and mid-cap value stocks lagged large-cap counterparts during the quarter, with the smaller-cap bias detracting from performance. The underperformance further expanded the valuation gap between small and large companies, creating compelling opportunities within mid- and smaller-cap segments.	Mid Cap Valuation Gap Opportunities Underperformance

QUARTER

THEMES

AI

AI infrastructure buildout drove Information Technology sector returns of roughly 33% in Q2 2026, contributing more than 10% to the S&P 500's quarterly return. The Fund benefited from holdings in AI infrastructure suppliers including TD Synnex, Arrow Electronics, and Hewlett Packard Enterprise, which surged on demand for AI servers, semiconductors, memory, and data center hardware. Market leadership evolved within Information Technology as hardware decisively displaced software as the engine of returns.

AI Infrastructure Data Centers Semiconductors Cloud

Semiconductor Cycle

Semiconductor-related holdings were top contributors in Q2 2026, with TD Synnex up more than 50% and Arrow Electronics up nearly 50%, both benefiting from surging demand for AI infrastructure and cloud computing. Western Digital was sold after its valuation became less attractive despite benefiting from hard disk drive demand for AI buildout. The sector broadened toward semiconductors, memory, and data center hardware during the quarter.

Memory Semi Equipment Data Centers

Homebuilders

The Fund maintains overweight positions in homebuilders within the Consumer Discretionary sector, with Toll Brothers and PulteGroup among the top 10 holdings. Fortune Brands Innovations, a manufacturer of home and security products, was added during the quarter based on attractive cash flow measures and improving price momentum.

Homebuilders Building Products Consumer Discretionary

Regional Banks

The Fund is overweight regional banks within Financials, with Citizens Financial Group and State Street Corporation among top holdings. State Street advanced due to strong earnings highlighting increases in fee-based revenues, expanding assets under management, and continued share buybacks. Stock selection in Financials added significant value during the quarter.

Regional Banks Asset Managers Financials

Buybacks

Share repurchases are viewed positively by the manager as a quality indicator. Garrett Motion generated good cash flow and bought back stock aggressively. State Street continued to buy back shares. Arrow Electronics announced a sizeable new share repurchase program totaling nearly 10% of outstanding shares. The Fund's holdings are described as quality, profitable companies that generate cash, pay dividends, and repurchase shares.

Capital Allocation Shareholder Returns

Value

The Fund employs a disciplined value investment approach using quantitative models to evaluate companies based on fundamental undervaluation including low price-to-cash flow and price-to-earnings ratios. Value stocks lagged growth across all market-cap ranges in Q2 2026, and stocks that were cheap on cash flow and earnings lagged significantly. Despite this headwind, the Fund outperformed through strong stock selection. The Fund trades at 10.6x forward earnings compared to more than 16x for the value benchmark.

Valuation Quality Quantitative

Energy

Energy was the lone detractor in the S&P 500 during Q2 2026, falling roughly 13% as crude oil retreated sharply following de-escalation of the Iran conflict. Matador Resources fell 20% as natural gas prices fell and costs increased, squeezing margins. The Fund maintains a modest position in Energy with holdings underperforming during the quarter.

Oil Natural Gas Shale Producers

Biotechnology

The Fund added to its position in Regeneron Pharmaceuticals during the quarter based on high rankings on multiple cash flow and forecasted earnings measures. The stock ranks in the top 10% in the manager's stock-ranking universe. Regeneron has been buying back stock, which the manager views positively, and shows improving operating margins and sales growth.

Pharmaceuticals Biotechnology Health Care

2026 Q1

AI

AI concerns disrupted technology shares in January as new capabilities threatened the Software-as-a-Service business model. The fund benefited from AI-driven demand for storage through holdings like Sandisk, while also noting potential AI disruption risks in sectors like online travel.

Software Storage Disruption Technology SaaS

Oil

Energy sector surged 38% as crude oil prices soared above $100 per barrel following the US-Israeli military operation against Iran and closure of the Strait of Hormuz. Energy holdings including Matador Resources, APA Corp, and Halliburton were significant contributors to performance.

Energy Geopolitical Iran Strait of Hormuz Exploration

Value

Notable rotation away from mega-cap technology toward smaller, more value-oriented stocks persisted throughout the quarter. Mid-cap value stocks outperformed large-cap, with the fund trading at 10x forward earnings compared to 16x for the value benchmark.

Rotation Mega-cap Valuation Outperformance Earnings

Small Caps

Small- and mid-cap stocks fared better than large-cap during the turbulent quarter, with Russell 2000 gaining 0.9% while Russell 1000 declined 4.2%. Manager finds small-cap and mid-cap stocks remain relatively attractive while largest companies are expensive.

Outperformance Attractive Expensive Large-cap Russell

2025 Q4

AI

AI remains transformative but markets are shifting from hype to show-me phase. The industry has spent over $400 billion on capex while producing roughly $50 billion in revenues. Physical constraints like power shortages and build delays are challenging assumptions of frictionless scaling.

Artificial Intelligence Technology Capex Infrastructure Valuations

Private Credit

Private markets are finally offering opportunity as supply and demand balance has shifted. Traditional institutions are over-allocated, distributions have dried up, and scarcity of capital gives patient liquidity providers leverage on price and terms. Firm is launching a private markets fund in Q1 2026.

Private Markets Illiquid Strategies Secondaries Real Estate Credit

Commercial Real Estate

Real estate is where price and replacement cost have meaningfully diverged. Valuations have fallen approximately 20% since 2022 while construction costs have risen 20-30%. This gap creates a powerful setup for patient capital to buy high-quality assets below replacement cost.

Real Estate Valuations Construction Costs Refinancing Patient Capital

2025 Q3

Trade Policy

Trade tensions dominated headlines with Liberation Day tariffs affecting imports from China, Europe, and Canada causing significant market volatility. Markets initially dropped 19% following tariff announcements before recovering as policy reversals and bilateral negotiations helped stabilize conditions. Long-term implications of trade policy changes remain uncertain for supply chains and corporate profitability.

Tariffs China Supply Chain Inflation Retaliation

AI

Investment in AI infrastructure remained a key driver of performance, bolstering demand for semiconductor, cloud, industrial, and technology equipment companies. Information Technology led all sectors with 21.99% gains in the quarter, driven by continued AI infrastructure investment themes.

Infrastructure Semiconductors Cloud Technology Equipment

Commercial Real Estate

CBRE Group, the world's largest commercial real estate services company, faced headwinds as tariff uncertainty caused customers to delay decisions on new leases, property purchases, and management opportunities. Despite challenges, the broader return to office trend is expected to continue supporting the sector.

Office Leasing Property Management Return to Office Services

Aerospace

Woodward demonstrated strong performance in aerospace with better-than-consensus earnings driven by strong demand for new defense equipment and higher commercial aftermarket activity. The company showed continued share gains and margin expansion through transformation from component to systems supplier in commercial aircraft engines.

Defense Commercial Aviation Aftermarket Systems Manufacturing

2025 Q2

Value

Value stocks were left behind in the market rally and continue to trade at significant discounts to their growth counterparts, enhancing the potential for outperformance if valuations between growth and value stocks revert to a more normal, historical average. The Fund trades at just over 10x forward earnings and 7x cash flow, which are significant discounts to the core and value benchmark.

Value Discount Valuation Growth P/E

AI

NRG Energy continues to benefit from rising electricity demand needed to fuel the AI revolution. The rally was powered primarily by large-cap technology stocks, with the Information Technology sector gaining 24% and contributing more than half of the S&P 500's quarterly gains.

AI Electricity Technology Demand

Earnings

Supporting factors included strong second quarter corporate earnings, particularly in Information Technology. Jabil handily beat analysts' estimates for revenue, earnings, and operating income. Flex reported solid earnings and raised its guidance going forward.

Earnings Revenue Guidance Estimates

2025 Q1

Value

The fund maintains a deep value discipline with stretched valuation spreads remaining historically wide. The portfolio continues to trade at discounts relative to the benchmark, focusing on high-quality, profitable companies that generate strong cash flow, pay dividends, and actively buy back shares.

Valuation Discount Quality Cash Flow Dividends

Trade Policy

Uncertainty created by tariffs and evolving global trade policies significantly impacted smaller-cap companies during the quarter. Despite potential long-term benefits from onshoring of production, trade policy uncertainty drove market turbulence and sentiment swings throughout March.

Tariffs Onshoring Uncertainty Global Trade

Small Caps

Small- and mid-cap value stocks lagged large-cap counterparts during the quarter, with the smaller-cap bias detracting from performance. The underperformance further expanded the valuation gap between small and large companies, creating compelling opportunities within mid- and smaller-cap segments.

Mid Cap Valuation Gap Opportunities Underperformance

Date	Pitch Type	Author	Ticker	Company	Industry	Sub Industry	Bull / Bear	Exchange	Keywords	Action
Jan 21, 2026	Fund Letters	Josef Lakonishok	GTX	Garrett Motion Inc.	Consumer Discretionary	Auto Parts	Bull	NASDAQ	Auto parts, buybacks, cashflow, Momentum, Turbochargers	Login
Jan 21, 2026	Fund Letters	Josef Lakonishok	ENS	EnerSys	Industrials	Electrical Components & Equipment	Bull	New York Stock Exchange	Batteries, buybacks, cashflow, Energy systems, Margins	Login
Jan 21, 2026	Fund Letters	Josef Lakonishok	EA	Electronic Arts Inc.	Communication Services	Interactive Home Entertainment	Bull	NASDAQ	acquisition, Exits, Takeout, valuation, Video games	Login
Jan 21, 2026	Fund Letters	Josef Lakonishok	AMKR	Amkor Technology, Inc.	Information Technology	Semiconductor Assembly & Testing Services	Bear	NASDAQ	AI, cashflow, Momentum, semiconductors, valuation	Login
Oct 17, 2025	Fund Letters	Josef Lakonishok	WWD US	Woodward, Inc.	Industrials	Aerospace & Defense	Bull	NASDAQ	Aerospace, aftermarket, Defense, growth, Margins, recovery, valuation	Login
Jun 30, 2025	Fund Letters	Harbor Mid Cap Value Fund	ADT	ADT Inc	Consumer Discretionary	Household Durables	Bull	NYSE	Consumer Discretionary, dividend, Quantitative Screening, Residential Services, security services, Smart home, Value	Login
Jun 30, 2025	Fund Letters	Harbor Mid Cap Value Fund	MCK	McKesson Corporation	Health Care	Health Care Distributors	Bear	NYSE	Distribution, exit strategy, Health Care, pharmaceuticals, Price momentum, Share Buybacks, valuation	Login

Date

Pitch Type

Author

Ticker

Company

Industry

Sub Industry

Bull / Bear

Exchange

Keywords

Action

Jan 21, 2026

Fund Letters

Josef Lakonishok

GTX

Garrett Motion Inc.

Consumer Discretionary

Auto Parts

Bull

NASDAQ

Auto parts, buybacks, cashflow, Momentum, Turbochargers

Jan 21, 2026

Fund Letters

Josef Lakonishok

ENS

EnerSys

Industrials

Electrical Components & Equipment

Bull

New York Stock Exchange

Batteries, buybacks, cashflow, Energy systems, Margins

Jan 21, 2026

Fund Letters

Josef Lakonishok

Electronic Arts Inc.

Communication Services

Interactive Home Entertainment

Bull

NASDAQ

acquisition, Exits, Takeout, valuation, Video games

Jan 21, 2026

Fund Letters

Josef Lakonishok

AMKR

Amkor Technology, Inc.

Information Technology

Semiconductor Assembly & Testing Services

Bear

NASDAQ

AI, cashflow, Momentum, semiconductors, valuation

Oct 17, 2025

Fund Letters

Josef Lakonishok

WWD US

Woodward, Inc.

Industrials

Aerospace & Defense

Bull

NASDAQ

Aerospace, aftermarket, Defense, growth, Margins, recovery, valuation

Jun 30, 2025

Fund Letters

Harbor Mid Cap Value Fund

ADT

ADT Inc

Consumer Discretionary

Household Durables

Bull

NYSE

Consumer Discretionary, dividend, Quantitative Screening, Residential Services, security services, Smart home, Value

Jun 30, 2025

Fund Letters

Harbor Mid Cap Value Fund

MCK

McKesson Corporation

Health Care

Health Care Distributors

Bear

NYSE

Distribution, exit strategy, Health Care, pharmaceuticals, Price momentum, Share Buybacks, valuation

TICKER	COMMENTARY
STT	State Street advanced due to a strong earnings report highlighting increases in fee-based revenues, expanding assets under management and assets under custody/administration. The company increased its dividend and continued to buy back shares, which pleased investors. We trimmed our exposure.
GTX	Garrett Motion was up nearly 100% after a strong first quarter earnings report significantly exceeded analysts' expectations and provided improved guidance going forward. The company has continued to generate good cash flow and buys back stock aggressively.
SNX	TD Synnex was up more than 50%, benefiting from surging demand for AI infrastructure and cloud computing. The company reported strong earnings and easily beat analysts' consensus. Management also came out with increased guidance for the coming quarters.
ARW	Arrow Electronics was also up nearly 50% in the quarter, benefiting from the buildout of AI infrastructure. Arrow reported first quarter earnings well in excess of expectations and announced a sizeable new share repurchase program totaling nearly 10% of outstanding shares.
HPE	Hewlett Packard Enterprise was up nearly 90% due to surging AI server demand and a successful integration of its Juniper Networks acquisition. The company reported record revenue with earnings per share significantly beating estimates.
WDC	Western Digital has been one of the stock market darlings over the past year, as the company has benefited from the surging demand for hard disk drives to support the AI buildout. While positive momentum kept the stock in our hold range for some time, the earnings and cash flow did not keep pace with the stock price, and the stock became less attractive from a valuation perspective. The overall rank fell out of the hold range in the second quarter and the stock was sold.
GLW	The top detractors included three Information Technology names that we either did not hold or were underweight that rallied during the quarter — Western Digital, Corning, and Flex. All benefited from the demand for AI infrastructure and data centers.
FLEX	The top detractors included three Information Technology names that we either did not hold or were underweight that rallied during the quarter — Western Digital, Corning, and Flex. All benefited from the demand for AI infrastructure and data centers. Flex was sold in the first quarter.
KR	Kroger was down more than 20% as slowing same-store sales and inflation weighed on the stock. Competition from lower cost providers has forced Kroger to reduce prices to maintain market share.
MTDR	Matador Resources fell 20%. Analysts downgraded the stock during the quarter as natural gas prices fell and costs increased, squeezing margins.
FBHS	We initiated a position in Fortune Brands Innovations, a manufacturer of home and security products in the Industrials sector. The company ranks high on many cash flow measures, particularly on free cash flow indicators and pays a dividend of just over 2%, which is near median in the universe. Past performance has been relatively weak, which is a positive indicator in our model, and recent price momentum has been improving, particularly over the past three months. Several indicators of operating momentum are also attractive, particularly increases in gross margins.
REGN	We added to our position in Regeneron Pharmaceuticals, a biotech company in the Health Care sector. The stock ranks high on multiple cash flow and forecasted earnings measures — two of our most important measures of valuation. While the company pays a below-average dividend, Regeneron has been buying back stock, which we view positively. Price momentum over the past 12 months has been strong. In addition, several indicators of operating momentum also are attractive with improving operating margins and growth in sales. Overall, the stock ranks in the top 10% in our stock-ranking universe, which led to the second quarter purchase.
CMI	We trimmed our position in Cummins in the Industrials sector. Cummins has done well in recent years and has been a top performer in the Industrials sector. While we continue to hold the stock, the ranking has deteriorated as earnings and cash flow have not kept pace with price increases. However, strong momentum scores have helped keep the stock in the hold range even though valuation scores have deteriorated. Given the stock's run-up, we trimmed our position in the second quarter.

TICKER

COMMENTARY

STT

State Street advanced due to a strong earnings report highlighting increases in fee-based revenues, expanding assets under management and assets under custody/administration. The company increased its dividend and continued to buy back shares, which pleased investors. We trimmed our exposure.

GTX

Garrett Motion was up nearly 100% after a strong first quarter earnings report significantly exceeded analysts' expectations and provided improved guidance going forward. The company has continued to generate good cash flow and buys back stock aggressively.

SNX

TD Synnex was up more than 50%, benefiting from surging demand for AI infrastructure and cloud computing. The company reported strong earnings and easily beat analysts' consensus. Management also came out with increased guidance for the coming quarters.

ARW

Arrow Electronics was also up nearly 50% in the quarter, benefiting from the buildout of AI infrastructure. Arrow reported first quarter earnings well in excess of expectations and announced a sizeable new share repurchase program totaling nearly 10% of outstanding shares.

HPE

Hewlett Packard Enterprise was up nearly 90% due to surging AI server demand and a successful integration of its Juniper Networks acquisition. The company reported record revenue with earnings per share significantly beating estimates.

WDC

Western Digital has been one of the stock market darlings over the past year, as the company has benefited from the surging demand for hard disk drives to support the AI buildout. While positive momentum kept the stock in our hold range for some time, the earnings and cash flow did not keep pace with the stock price, and the stock became less attractive from a valuation perspective. The overall rank fell out of the hold range in the second quarter and the stock was sold.

GLW

The top detractors included three Information Technology names that we either did not hold or were underweight that rallied during the quarter — Western Digital, Corning, and Flex. All benefited from the demand for AI infrastructure and data centers.

FLEX

Kroger was down more than 20% as slowing same-store sales and inflation weighed on the stock. Competition from lower cost providers has forced Kroger to reduce prices to maintain market share.

MTDR

Matador Resources fell 20%. Analysts downgraded the stock during the quarter as natural gas prices fell and costs increased, squeezing margins.

FBHS

We initiated a position in Fortune Brands Innovations, a manufacturer of home and security products in the Industrials sector. The company ranks high on many cash flow measures, particularly on free cash flow indicators and pays a dividend of just over 2%, which is near median in the universe. Past performance has been relatively weak, which is a positive indicator in our model, and recent price momentum has been improving, particularly over the past three months. Several indicators of operating momentum are also attractive, particularly increases in gross margins.

REGN

We added to our position in Regeneron Pharmaceuticals, a biotech company in the Health Care sector. The stock ranks high on multiple cash flow and forecasted earnings measures — two of our most important measures of valuation. While the company pays a below-average dividend, Regeneron has been buying back stock, which we view positively. Price momentum over the past 12 months has been strong. In addition, several indicators of operating momentum also are attractive with improving operating margins and growth in sales. Overall, the stock ranks in the top 10% in our stock-ranking universe, which led to the second quarter purchase.

CMI

We trimmed our position in Cummins in the Industrials sector. Cummins has done well in recent years and has been a top performer in the Industrials sector. While we continue to hold the stock, the ranking has deteriorated as earnings and cash flow have not kept pace with price increases. However, strong momentum scores have helped keep the stock in the hold range even though valuation scores have deteriorated. Given the stock's run-up, we trimmed our position in the second quarter.

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Harbor Mid Cap Value Fund