Heartland Mid Cap Value Strategy

  • Overview
  • Materials
  • Portfolio Management Team
  • Performance
  • Commentary
  • Portfolio Composition
  • Risk Analysis

Overview

Investment Focus

Seeks long-term appreciation by investing in mid-cap, dividend paying companies

Distinguishing Characteristics

  • Invests primarily in mid-cap securities within the market cap range defined by the Russell Midcap® Index
  • Designed for investors who seek a portfolio of medium-sized, dividend paying companies
  • Benchmarked to the Russell Midcap® Value Index
  • Typically holds 30-60 stocks
  • Inception date: 1996

Investment Minimum & Standard Fee Schedule

Minimum: $1 million

Account Size Annual Rate (%)
First $5 million 1.00
Next $10 million 0.85
Above $15 million Negotiable

 

Investment Process

All stocks are evaluated based on our proprietary, consistent, and time-tested 10 Principles of Value Investing™. These criteria are central to Heartland’s value investing philosophy and provide a framework for evaluating securities.

The Investment Team applies a bottom-up research approach, combining traditional fundamental analysis and meetings with more than 1,000 company management teams in a typical year. The 10 Principles™ are designed to help the Team assess a company's valuation, but also focus on metrics associated with financial soundness, management team strength, and future outlook.

Learn more about our process

Portfolio Management Team

Heartland Advisors Mid Cap Value Strategy Portfolio Management Team

30 years of industry experience
20 years of experience at Heartland

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Will Nasgovitz

Nasgovitz is CEO and Portfolio Manager of the Select Value and Mid Cap Value Funds and their corresponding separately managed account strategies. He also is CEO of Heartland Funds. He has 16 years of industry experience, 13 at Heartland.

Colin McWey

McWey, CFA, is Vice President and Portfolio Manager of the Select Value and Mid Cap Value Funds and their corresponding separately managed account strategies. He has 14 years of industry experience, 7 at Heartland.

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Investing Perspectives

Heartland in the News
2/22/17
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Leveraging our Disciplined Approach

Sure a rising tide can lift all boats, but we’re ‘creating our own luck,' explains Portfolio Manager Colin McWey, CFA.

PM Perspective
2/17
Heartland Advisors value investing portfolio manager Will Nasgovitz

What’s in Your Index?

A look at how passive investing may be adding unwanted risk to your portfolio.

Water & Wells
2/7/17
Heartland Advisors Value Investing Portfolio Manager Will Nasgovitz

Corporate America’s Doping Problem

History has been unforgiving for companies that bulk up on debt.

Heartland in the News
1/16/17
Heartland Advisors Value Investing Portfolio Manager Will Nasgovitz

At the Intersection of Art & Science

A look at how both influence our quest for value.

Heartland in the News
1/7/17
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Trends in Big Pharma

Portfolio Manager Colin McWey, CFA, discusses how Heartland's focus on fundamentals has helped uncover two companies we believe have growth potential despite challenges in the sector.

Water & Wells
12/14/16
Heartland Advisors Value Investing Portfolio Manager Will Nasgovitz

Will High-Yielding Companies Get Lost on the Hike?

A look at how the latest Fed rate hike may play out for dividend paying stocks.

Heartland in the News
11/12/16
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Barron's Highlights Heartland Analysis of Dividend-Paying Stocks

Portfolio Manager Colin McWey, CFA, discusses the year-to-date disparity in performance between high-yielding stocks and the rest of the pack. Our view: investors have focused too much on absolute yield, creating opportunity for managers focused on fundamentals.

PM Perspective
10/16
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Digging Deeper to Avoid Yield Traps

Today’s income hungry world underscores the need to dig into free cash flow and payout ratios to avoid yield traps.

Heartland in the News
10/5/16
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Retail Stocks: A Mixed Bag

There are too many brands, too much competition, and not enough demand, says Portfolio Manager Colin McWey, CFA. Yet, a closer look yields a handful of names with attractive valuations and compelling catalysts.

Heartland in the News
9/17/16
Heartland Advisors Value Investing Portfolio Manager Will Nasgovitz

Rethinking 'Safe Havens'

The search for stability in pockets of the equity market usually perceived to be “safe” has driven valuations to extreme levels, with outlooks for these groups deteriorating, says CEO and Portfolio Manager Will Nasgovitz. He shares companies we believe are positioned to improve their businesses and increase dividend payments.

Water & Wells
8/30/16
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Creating a Nightmare on Wall Street?

Investor’s willingness to pay up for peace of mind may prove costly if rates rise or the economy continues to grow.

Heartland in the News
8/21/16
Heartland Advisors Value Investing Portfolio Manager Colin McWey

InvestmentNews Publishes Article by Portfolio Manager Colin McWey

The role capital cycle analysis plays in sector allocation.

Water & Wells
6/27/2016
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Will the Russell Midcap® Value Index Strike the Right Balance?

Portfolio Manager Colin McWey shares thoughts on the impacts of the annual Russell Midcap® Value Index rebalancing.

PM Perspective
4/16
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Why Catalysts and Context Matter

The difference between an unloved laggard and an attractive investment opportunity often begins with perception. Here is a look at internal catalysts and their importance in changing investors’ views and company results.

PM Perspective
4/16
Heartland Advisors value investing portfolio manager Colin McWey

Cash Flow: An Equalizing Force in Analysis

Cash flow helps us evaluate opportunities on an apples to apples basis regardless of industry or debt.

Performance*

Average Annual Total Returns
  • Quarter-End
  • Annual
12/31/2016

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Since Inception (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD (%)QTD (%)
Mid Cap Value Composite (Net of Advisory Fees)12.0210.0815.379.8728.2528.2511.35
Russell Midcap® Value10.897.5915.709.4520.0020.005.52


2016 (%)

2015 (%)

2014 (%)

2013 (%)

2012 (%)

2011 (%)

2010 (%)

2009 (%)

2008 (%)

2007 (%)

2006 (%)

2005 (%)

Mid Cap Value Composite (Net of Advisory Fees)

28.25

-6.64

10.78

39.46

10.49

-7.72

25.29

35.14

-22.19

5.13

24.10

18.41

Russell Midcap® Value

20.00

-4.78

14.75

33.46

18.51

-1.38

24.75

34.21

-38.44

-1.42

20.22

12.65

*Source: FactSet Research Systems Inc., Russell Investment Group, and Heartland Advisors, Inc. Performance data is preliminary. YTD and QTD returns are not annualized. The Strategy's inception date is 9/30/1996.

Commentary

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12/31/16
Heartland Advisors Mid Cap Value Strategy Portfolio Manager Commentary

Heartland Mid Cap Value Strategy 4Q16 Portfolio Manager Commentary

Investor confidence surged following the presidential election and drove the major indexes to new highs.

Portfolio Composition

Characteristics
12/31/2016

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Weighted Average Market Cap ($)Median Market Cap ($)Trailing 1-Year Turnover (%)
Mid Cap Value Composite11.1 billion7.3 billion70.1
Russell Midcap® Value13.2 billion6.3 billion-

Source: FactSet Research Systems Inc., Russell Investment Group, and Heartland Advisors, Inc.

Valuation Analysis
Equity securities only, weighted median unless otherwise noted

12/31/2016

Source: FactSet Research Systems Inc., Russell Investment Group, and Heartland Advisors
*Weighted average
**Weighted average, and Dun & Bradstreet is excluded from total debt/capital because its open market stock repurchases have made the company’s total equity negative, resulting in an excessively high debt ratio that is not reflective of the company's investment grade credit rating based on Heartland Advisors’ beliefs.

Heartland Advisors Mid Cap Value Strategy Valuation Analysis Charts 1Heartland Advisors Mid Cap Value Strategy Valuation Analysis Charts 2

Sector Allocation

12/31/2016

Source: FactSet Research Systems Inc., and Russell Investment Group
Composite statistics shown as percentage of equity investments

Heartland Advisors Mid Cap Value Strategy Sector Charts 1Heartland Advisors Mid Cap Value Strategy Sector Charts 2

Top 10 Holdings in a Representative Account
12/31/2016

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TickerHolding% of AccountIndustry
EQCEquity Commonwealth4.36Equity Real Estate Investment Trusts (REITs)
CACA, Inc.3.88Software
DGXQuest Diagnostics Incorporated3.86Health Care Providers & Services
BPOPPopular, Inc.3.70Commercial Banks
HESHess Corporation3.68Oil Gas & Consumable Fuels
EXCExelon Corporation3.55Electric Utilities
BENFranklin Resources, Inc.3.54Capital Markets
CNACNA Financial Corporation3.24Insurance
OLNOlin Corporation3.02Chemicals
HOGHarley Davidson Inc2.99Automobiles
% of Total Net Assets35.82

Attribution & Contribution

12/30/2016

These materials are for financial professional use only. You will be prompted to log in. Free account registration is available.

5-Year Risk Analysis

12/31/2016

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Alpha*Standard Deviation (%)*BetaInfo RatioSharpe RatioUpside Capture (%)*Downside Capture (%)*R-
Squared (%)
Active Share
Mid Cap Value Composite (Net of Advisory Fees)-1.0412.321.06-0.081.24104.76113.4488.5093.45
Russell Midcap® Value0.0010.931.000.001.43100.00100.00100.000.00

*Annualized
Source: FactSet Research Systems Inc., Russell Investment Group
Alpha, beta, and information ratio are versus the Russell MidCap® Value Index.

The above performance, portfolio composition, and risk analysis data is preliminary.

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©2017 Heartland Advisors | 789 N. Water Street, Suite 500, Milwaukee, WI 53202 | Business Office: 414-347-7777 | Financial Professionals: 888-505-5180 | Individual Investors: 800-432-7856

Past performance does not guarantee future results. Performance represents past performance, and current returns may differ.

Heartland Advisors, Inc. (the "Firm") claims compliance with the Global Investment Performance Standards (GIPS®). The Firm is a wholly owned subsidiary of Heartland Holdings, Inc., and is registered with the Securities and Exchange Commission. For a complete list and description of Heartland Advisors composites and/or a presentation that adheres to the GIPS® standards, contact the Institutional Sales Team at Heartland Advisors.

The U.S. dollar is the currency used to express performance.

The inception date for the Mid-Cap Value Strategy is 9/30/1996.

The Mid Cap Value Strategy invests in mid–sized companies on a value basis. Mid-sized securities generally are more volatile and less liquid than those of larger companies.

Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.

Portfolio holdings are subject to change without notice. Current and future portfolio holdings are subject to risk.

Sector and industry classifications as determined by Heartland Advisors may reference data from sources such as FactSet Research Systems, Inc. or the Global Industry Classification Codes (GICS) developed by Standard & Poor’s and Morgan Stanley Capital International.

Representative account chosen based on composite membership, not on performance-based criteria. Other accounts within the strategy may have different holdings.

Representative account holdings are preliminary, may not be reconciled, and may be updated when reconciled.

Certain security valuations and forward estimates are based on Heartland Advisors' calculations. Any forecasts may not prove to be true.

Economic predictions are based on estimates and are subject to change.

Heartland’s investing glossary provides definitions for several terms used on this page.

CFA is a trademark owned by CFA Institute.

Separately managed accounts and related investment advisory services are provided by Heartland Advisors, Inc., a federally registered investment advisor. ALPS Distributors, Inc., is not affiliated with Heartland Advisors, Inc.

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