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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Heartland Value Plus outperformed in Q2 with a 19.25% return, driven by semiconductor and electrical component holdings benefitting from AI data center buildout and overlooked value opportunities in consumer finance and homebuilding. The fund's disciplined approach identified high-quality businesses with strong capital allocation trading at attractive valuations, participating in the rally while managing risk through its 10 Principles of Value Investing framework."
The Heartland Value Plus Fund returned 19.25% in the second quarter, outperforming the Russell 2000 Value Index return of 17.19%. Small stocks outpaced large caps as the Russell 2000 gained 21.49% versus 15.20% for the S&P 500. Five of the six biggest contributors were semiconductor or electrical component manufacturers benefitting from AI infrastructure buildout, many held for several years before AI materialized. Companies like Littelfuse now derive 20% of revenue from data centers, up from immaterial levels, with bookings up over 20% year over year. The fund also found opportunities outside AI, including FirstCash, the world's largest pawn operator benefitting from high gold prices with pawn fees up 39% year over year, and Century Communities, a homebuilder trading at 0.81X book value despite recent sector M&A at higher multiples. Management emphasizes these holdings demonstrate strong fundamentals including attractive valuations, healthy balance sheets, and prudent capital allocation through rising dividends and buybacks. The strengthening economic environment provides a promising tailwind for small cap value participation across multiple sectors.
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