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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Oct 12, 2026
Heartland Value Plus Fund Investor Class returned -8.26% net of fees in the third quarter of 2026, underperforming the Russell 2000 Value Index's -4.91% return, while bringing YTD net returns to 14.81% net of fees. Portfolio underperformance during the quarter was primarily driven by negative stock selection effects in Energy, Consumer Discretionary, and Industrials, which outweighed positive relative selection contributions from holdings in Real Estate, Financials, and Materials. The portfolio remains positioned in high-conviction, quality small caps, maintaining an active focus on companies with low debt, strong free cash flow yield, and sound capital allocation. The manager observes an evolving macroeconomic and market regime marked by persistent inflation, higher interest rates, and the unwinding of the speculative artificial intelligence momentum trade that dominated earlier periods. Concurrently, broader market participation is emerging alongside an industrial cyclical trough, supported by historical correlations between improving ISM Manufacturing PMI trends and corporate earnings breadth. Heartland highlights that fundamental valuation discipline is regaining supremacy over multiple expansion, with investors shifting attention back to balance sheet resilience, profitability, and operational efficiency. Key portfolio activities and featured holdings emphasize quality compounders with favorable capital deployment profiles. Core holdings include Quaker Houghton (2.12% weight), poised to benefit from an industrial manufacturing rebound; property and casualty insurer Hanover (2.52% weight), which continues steady premium and volume expansion; Tyler Technologies (2.14% weight), where public sector competitive moats and AI tailwinds are underappreciated; and Primo Brands (1.76% weight), where management and insider purchases affirmed confidence following transient volatility.
Disciplined investing in high-quality, attractively valued small-cap companies with strong balance sheets, competitive advantages, and prudent capital allocation generates durable long-term outperformance.
Heartland believes the current market presents a fertile environment for its strategy as market breadth improves and investors renew their focus on fundamentals, valuations, and corporate profitability. While macro risks such as rising rates and high energy costs remain, the firm anticipates that companies with durable balance sheets and reasonable multiples will deliver solid long-term returns as the manufacturing cycle rebounds.
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