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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Heartland Mid Cap Value Fund 2024 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Heartland Mid Cap Value Fund)

Primary Source Intelligence • Q2 2024 Letter Analysis

Heartland Mid Cap Value Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Heartland Mid Cap Value Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Annualized+8.21%

Digest Analysis

Quick Take

"Heartland's mid-cap value strategy underperformed in Q2 but maintains discipline by avoiding speculative AI investments while focusing on self-help stories. B."

Executive Summary

Heartland Mid Cap Value Fund declined 4.12% in Q2 2024, underperforming the Russell Midcap Value Index's 3.40% decline. The underperformance was driven by both stock selection and their avoidance of speculative AI-related investments and overvalued companies. The fund maintains its disciplined approach of investing in quality value companies trading below intrinsic value and deeply discounted companies with internal catalysts for improvement. Key portfolio activity included initiating a position in Fidelity Information Services (FIS), a financial technology company executing a successful self-help strategy after divesting Worldpay and reducing leverage. Stericycle was acquired by Waste Management for $62 per share, validating their investment thesis. J.B. Hunt declined 19% during the quarter but represents a potential beneficiary of structural market share gains despite current cyclical headwinds in trucking. The managers remain confident in their positioning and believe several holdings are approaching inflection points where self-help strategies will drive outperformance.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

The fund demonstrates moderate-high conviction through detailed analysis of specific holdings (FIS, SRCL, JBHT) with clear investment theses and valuation metrics. They maintain discipline in avoiding speculative investments and express confidence in their 10 Principles approach, though the diversified nature and some hedged language prevents a higher score.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The managers express concern about demand destruction spreading across the economy and industrial weakness, with manufacturing contracting for 19 of 20 months. However, they maintain focus on bottom-up opportunities rather than top-down forecasts.

Risk Appetite

25%

DefensiveAggressive

Defensive (25%)

The fund is selectively adding positions like FIS while avoiding speculative investments. They maintain conviction in current holdings despite underperformance, showing measured risk appetite focused on value opportunities.

Capital Deployment

15%

De-riskingDeploying

De-risking (15%)

Limited deployment activity with one new position (FIS) initiated during the quarter. No cash level changes mentioned, and the focus appears to be on monitoring existing positions rather than aggressive capital deployment.

Forward Guidance

50%

CautiousExpansionary

Neutral (50%)

Managers express confidence that several companies are approaching inflection points and believe holdings are in early innings of seeing self-help strategies rewarded. They remain willing to be patient and focused on what they can control.

Language Signal

0%

BearishBullish

Bearish (0%)

Language is balanced between acknowledging economic risks and demand destruction while highlighting opportunities in self-help stories and attractive valuations. Risk language is offset by confidence in positioning.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

Managers identify specific macro risks including demand destruction spreading across income levels, industrial weakness with 19 months of manufacturing contraction, and trucking market recession. These risks are discussed with meaningful detail and concern.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

The fund sees selective opportunities in self-help situations and value names, evidenced by the FIS initiation and confidence in existing holdings approaching inflection points. However, they emphasize selectivity and avoiding speculative areas.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The managers emphasize patience and willingness to wait for self-help strategies to play out. They explicitly state they don't measure success in quarters and are willing to be patient when warranted, indicating a multi-year investment horizon.