PM Commentary
The Select Value Fund seeks to capture long-term capital appreciation through dynamic pursuit of value irrespective of market capitalization, making it compelling as a core holding.
The Value Plus Fund seeks to capture long-term capital appreciation of small-cap stock, while potentially mitigating volatility by focusing on dividend-paying companies. The Value Plus Fund seeks long-term capital appreciation and modest current income.
The Value Fund seeks to capture long-term capital appreciation by investing in small companies.
Small Cap Stocks as defined by Furey Research Partners include Ibbotson CRSP 6th to 8th deciles data by market capitalization (CRSP measures all equity securities listed on NYSE, Amex, NASDAQ and NYSE Arca that existed during the time period and with 1 being the largest market capitalization decile and 10 being the smallest.) for all periods before 12/31/78 and Russell 2000 data for all periods after 12/31/78.
Sector classifications are generally determined by referencing the Global Industry Classification Standard (GICS) Codes developed by Standard & Poor’s and Morgan Stanley Capital International. Sector classifications are subject to change.
Heartland Advisors, Inc. considers large-cap companies to be larger than $10 billion in market cap, mid-cap companies to be between $2 billion and $10 billion, small cap companies to be between $300 million and $2 billion, and micro-cap companies to be less than $300 million. The above breakdown does not include short-term investments. Portfolio holdings are subject to change without notice.
Data sourced from Kenneth R. French© is Derived based on data from the US Stock Database ©2011 Center for Research in Security Prices (CRSP), the University of Chicago Booth School of Business. Large Cap, Mid Cap and Small Cap are defined as all equity securities listed on NYSE, Amex, NASDAQ and NYSE Arca that existed during the time period and were in the market capitalization deciles 1 through 2, 3 through 5 and 6 though 8, respectively with 1 being the largest and 10 being the smallest.
Ned Davis determines stock dividend policy by their indicated annual dividend. A stock is classified as a dividend-paying stock if the company indicates that it is going to be paying a dividend within the year. A stock is classified as a non-payer if the stock’s indicated annual dividend is zero. Each dividend-paying stock is further classified into one of the three categories based on changes to their dividend policy over the previous 12 months. Dividend Growers and Initiators include stocks that increased their dividend anytime in the last 12 months. Once an increase occurs, it remains classified as a grower for 12 months or until another change in dividend policy. No-Change stocks are those that maintained their existing indicated annual dividend for the last 12 months (i.e., companies that have a static, non-zero dividend). Dividend Cutters and Eliminators are companies that have lowered or eliminated their dividend anytime in the last 12 months. Once a decrease occurs, it remains classified as a cutter for 12 months or until another change in dividend policy.
As of March 31, 2012 Intel Corporation and Ensco represented 2.01% and 2.27% of the Select Value Fund’s holdings, respectively. As of March 31, 2012 Olin Corporation and Patterson-UTI Energy, Inc. represented 2.60% and 2.05% of the Value Plus Fund’s holdings, respectively. As of March 31, 2012 Trinity Biotech represented 1.22% of the Value Fund’s holdings. Portfolio holdings are subject to change.
Accuray, Inc. represented 1.86% of the Value Fund’s holdings as of December 31, 2011, and 2.88% as of March 31, 2012. PharMerica Corporation represented 1.30% of the Value Plus Fund’s holdings as of December 31, 2011, and 1.23% as of March 31, 2012. Omnicare, Inc. represented 3.11% of the Value Plus Fund’s holdings as of December 31, 2011, and 2.81% as of March 31, 2012. URS Corporation represented 1.81% of the Select Value Fund’s holding as of December 31, 2011, and 2.01% as of March 31, 2012. Benchmark Electronics represented 2.26% of the Select Value Fund’s holdings as of December 31, 2011, and 2.22% as of March 31, 2012.
Patterson-UTI Energy, Inc. represented 2.35% of the Value Plus Fund’s holdings as of September 30, 2011, and 2.05% as of March 31, 2012. FedEx Corp was not held in the Value Plus Fund as of September 30, 2011 or as of March 31, 2012. AuRico Gold, Inc. represented 5.37% of the Value Fund's holdings, as of September 30, 2011, and 4.37% as of March 31, 2012. Energold Drilling Corp represented 0.33% of the Value Fund’s holdings as of September 30, 2011, and 0.43% as of March 31, 2012. Black Hills Corp represented 2.66% of the Select Value Fund’s holdings as of September 30, 2011, and 2.47% as of March 31, 2012.
Portfolio holdings are subject to change. Current and future holdings are subject to risk.
Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. As of the latest reconstitution, the average market capitalization was approximately $4.8 billion; the median market capitalization was approximately $944.7 million. The index had a total market capitalization range of approximately $386.9 billion to $182.6 million. Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. Russell Microcap Index is a capitalization weighted index of 2,000 small-cap and micro-cap stocks that captures the smallest 1,000 companies in the Russell 2000, plus 1,000 smaller U.S.-based listed stocks. S&P 500 Index is an index of 500 U.S. stocks chosen for market size, liquidity and industry group representation and is a widely used U.S. equity benchmark. All indices are unmanaged. It is not possible to invest directly in an index. S&P SmallCap 600 Index is a group of 600 U.S. stocks chosen for their market size, liquidity and industry group representation. All indices are unmanaged. It is not possible to invest directly in an index. Consumer Confidence Index measures how optimistic or pessimistic consumers are with respect to the economy in the near future. Industrial Production Index measures real output of manufacturing, mining, and electric and gas utilities and is expressed as a percentage of real output in a base year, currently 2007. US Nonfarm Manufacturing Payrolls Index represents the average weekly hours of production or nonsupervisory workers on private non-farm payrolls.
10-Year Treasury (GT10) measures actively traded U.S. government 10 year issues include Treasury and agency bills, notes, bonds, and strips and is meant to be representative of the broader government market. Treasury Yield is the return on investment in the debt obligations of the U.S. Government.
Alpha is an annual measure of a portfolio’s return in excess of the market return, both adjusted for risk. It is a measure of the manager’s contribution to performance due to security selection. A positive annual Alpha indicates that the portfolio outperformed the market on a risk-adjusted basis, and a negative annual Alpha indicates the portfolio did worse than the market. Beta is a measure of the sensitivity of a portfolio's rates of return against those of the market. A Beta less than 1.00 indicates volatility less than that of the market. Long Term Debt/Capital Ratio represents the portfolio’s long-term debt as a proportion of the capital available in the form of long-term debt, preferred stock and common stockholder’s equity.
Basis Point (bps) is a unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument. Brent Crude is a type of petroleum classification given to oil from the North Sea and is used as a common benchmark in European oil pricing. British Thermal Unit is a standard unit of energy that is represents the amount of thermal energy necessary to raise the temperature of one pound of pure liquid water by one degree Fahrenheit. Correlation is a statistical measure of how two securities move in relation to each other. Organization of Petroleum Exporting Countries (OPEC) is an organization consisting of the world's major oil-exporting nations, and was founded in 1960 to coordinate the petroleum policies of its members, and to provide member states with technical and economic aid. Real Estate Investment Trust (REIT) is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. Value Trap is a stock that has experienced a large price depreciation and is mistaken to be a value stock. Quantitative Easing is a government monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market. Western Texas Intermediate (WTI) is a type of crude oil used as a common benchmark in U.S. oil pricing.
Basing Chart Pattern is a period in which a stock price has very little or no trend: the resulting price pattern is a flat line. Debt/Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Ratio is a measure of a company’s ability to pay off its incurred debt. Enterprise Multiple is a financial indicator used to determine the value of a company. It is equal to a company’s Enterprise Value divided by its EBITDA. EBITDA is an indicator of a company’s financial performance and can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. Earnings Yield is the reciprocal of the price to earnings ratio. Enterprise Value (EV) is the entire economic value of a company. Inside Buying Activity is the purchase of shares of stock in a corporation by someone who is employed by the company. Long Term Debt/Total Capital of a stock is calculated by dividing the long-term debt of the company by its total capital. Price/Book Ratio of a stock is calculated by dividing the market price of its stock by the company’s per-share book value. For the portfolio and indices the price/book ratio is presented as a weighted median. Price/Cash Flow Ratio represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. It shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Price/Earnings Ratio (12-month trailing) of a stock is calculated by dividing the current price of the stock by its trailing 12 months’ earnings per share. Price/Earnings Ratio (Forward) of a stock is based on actual earnings to date and future estimates made by Heartland Advisors, Inc. Securities with negative earnings or per share earnings greater than or equal to 100 are excluded from the calculation. Estimates made by Heartland Advisors, Inc. are based on factors such as management guidance, historical performance of the company and its peer group, industry growth rates, street estimates and other factors as deemed appropriate. Price/Sales Ratio is the stock price divided by the sales per share for the trailing 12-month period. Return on Invested Capital is a calculation used to determine a company’s efficiency at allocating the capital under its control to profitable investments. Risk (Standard Deviation) is a measure of volatility of returns and is computed as the square root of the average squared deviation of the returns from the mean value of the return.
Lipper does not guarantee the accuracy of this information. Lipper numeric rankings are based on total returns. As of April 30, 2012, the Select Value Fund's Lipper numeric rankings were 18 of 110, 26 of 221, 94 of 251 and 233 of 302 for the 10-, 5-, 3- and 1-year periods, respectively, and the Fund experienced a negative return for the 1-year period. As of December 31, 2011, the Fund's Lipper numeric rankings were 16 of 114, 12 of 219, 104 of 263 and 244 of 309 for the 10-, 5-, 3- and 1-year periods, respectively, and the Fund experienced a negative return for the 1-year period. As of December 31, 2010, the Fund's Lipper numeric rankings were 2 of 102, 5 of 244, 10 of 288 and 112 of 345 for the 10-, 5-, 3- and 1-year periods, respectively. As of December 31, 2009, the Fund's Lipper numeric rankings were 2 of 103, 1 of 218, 3 of 281 and 61 of 347 for the 10-, 5-, 3- and 1-year periods, respectively. The Heartland Select Value Fund had a negative average annual return for the 3-year period as of December 31, 2009. As of December 31, 2008, the Fund was ranked 2 of 98, 10 of 238, 39 of 307 and 63 of 389 for the 10-, 5-, 3- and 1-year periods, respectively. The Heartland Select Value Fund had a negative average annual return for the 3- and 1-year periods as of December 31, 2008. As of December 31, 2007, the Fund was ranked 5 of 95, 25 of 267, 33 of 332 and 106 of 441 for the 10-, 5-, 3- and 1-year periods, respectively. As of December 31, 2006, the Fund was ranked 2 of 99, 12 of 252, 25 of 340 and 278 of 443 for the 10-, 5-, 3- and 1-year periods, respectively.