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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Heartland Value Plus Fund 2026 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Heartland Value Plus Fund)

Primary Source Intelligence • Q3 2026 Letter Analysis

Heartland Value Plus Fund Quarterly Analysis

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

Fund Returns

QTD-8.26%

YTD+14.81%

Annualized+9.24%

Positioning StanceCONSTRUCTIVE

Market CapSmallCap

GeographyUS

Digest Analysis

Quick Take

"Heartland Value Plus Fund returned -8.26% net in Q3 2026, driven by negative stock selection in Energy, Consumer Discretionary, and Industrials, while maintaining exposure to fundamentally sound small caps trading at attractive multiples."

Executive Summary

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.

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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

65%

CautiousHigh

Moderate (65%)

Market Conviction

Heartland demonstrates moderate conviction (0.65) by concentrating on a disciplined portfolio of 40 to 70 small-cap stocks, backing their specific holdings with exact sizing disclosures and valuation targets. They detail active insider purchases and management buybacks across names like KWR, THG, TYL, and PRMB. The score is tempered because the portfolio remains moderately diversified and the manager articulates disciplined value parameters rather than concentrated single-stock bets.

62%

BearishBullish

Neutral (62%)

Growth Outlook

A constructive posture toward small-cap value equities while explicitly recognizing macro crosscurrents. The manager is optimistic about an unfolding manufacturing PMI recovery cycle and broadening market participation. However, persistent headwinds like high oil prices, elevated interest rates, and softening consumer confidence keep directional optimism measured.

60%

DefensiveAggressive

Balanced (60%)

Risk Appetite

Risk appetite is scored at 0.60 as the fund remains fully invested in equities without deploying leverage or holding excessive defensive cash. Heartland continues to hold cyclical industrial exposure and unloved tech, though positioning is anchored strictly in companies with low leverage, strong balance sheets, and proven free cash flow generation.

55%

De-riskingDeploying

Net Neutral (55%)

Capital Deployment

Capital deployment is rated at 0.55, representing steady-state active deployment. The commentary indicates ongoing portfolio repositioning and holding commitments rather than drastic shifts in net cash reserves, maintaining regular redeployment into undervalued small-cap businesses.

65%

CautiousExpansionary

Expansionary (65%)

Forward Guidance

Selective capital deployment and opportunistic adding into beaten-down value names. Management expresses an active commitment to capitalizing on mispriced small caps overlooked by the AI boom while maintaining flexibility. Action bias is focused on disciplined stock selection within their 10 Principles framework.

64%

BearishBullish

Balanced (64%)

Language Signal

Language signal stands at 0.64, tilted more toward constructive opportunity than warning. The commentary frequently highlights favorable conditions such as 'fertile environment,' 'improving fundamentals,' 'attractive prices,' and 're-rating,' while appropriately acknowledging macroeconomic headwinds and volatile quarterly performance.

58%

Low RiskElevated

Moderate Risk (58%)

Perceived Risk

Moderate-to-elevated acknowledgment of external risks. The manager explicitly notes persistent inflation, climbing interest rates, high oil prices, weakening consumer confidence, and potential AI disruption, though they view these as manageable through fundamental selection.

70%

ScarceAbundant

Abundant (70%)

Opportunity Density

Opportunity density is scored at 0.70, as Heartland describes the prevailing environment as a 'fertile environment for our Strategy.' They observe abundant opportunities across overlooked cyclical industries, neglected tech franchises, and small-cap value businesses benefiting from broadening market participation.

70%

Short-TermLong-Term

Decade+ (70%)

Time Horizon

Time horizon is scored at 0.70, consistent with a multi-year investment horizon typically spanning 2 to 5 years. Valuations are modeled across 2026 and 2027 earnings horizons (as in THG), and theses explicitly emphasize multi-year PMI cyclical unfoldings and compounding dividend track records.