Heartland Small Cap Value Strategy

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

Overview

Investment Focus

Pursues long-term capital appreciation by investing in micro- and small-cap companies

Distinguishing Characteristics

  • Invests in stocks with a market capitalization of less than $2 billion and can have a significant allocation to micro-cap names
  • Designed for investors who seek a portfolio with micro-cap exposure and additional liquidity provided by small-cap stocks
  • Benchmarked to the Russell 2000® Value Index
  • Typically holds 30-50 stocks
  • Inception date: 1988

Investment Minimum & Standard Fee Schedule

Minimum: $1 million

Account SizeAnnual Rate (%)
First $5 million1.00
Next $10 million0.85
Above $15 millionNegotiable

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 Small Cap Value Strategy Portfolio Management Team

71 years of industry experience
47 years of experience at Heartland

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Bill Nasgovitz

Nasgovitz is Chairman and CIO, and Portfolio Manager of the Value Fund and its corresponding separately managed account strategy. He also is President and Director of Heartland Funds. He has 48 years of industry experience, 34 at Heartland.

Eric Miller

Miller is Vice President and Portfolio Manager of the Heartland Value Fund and its corresponding separately managed account strategy. He has 23 years of industry experience, 13 at Heartland.

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Investing Perspectives

Water & Wells
6/27/16
Heartland Advisors Value Investing Portfolio Manager Bill Nasgovitz

An Active Approach to Finding Value

Should investors look to the Russell 2000® Value rebalance for insights into compelling opportunities? Portfolio Manager Bill Nasgovitz doesn’t think so.

Heartland in the News
4/18/16
Heartland Advisors Value Investing Portfolio Manager Bill Nasgovitz

The Unattractiveness of Low Valuations Based on Financial Engineering

Debt-financed share buybacks may be a short-sighted tactic, says Portfolio Manager Bill Nasgovitz. He explains why we believe businesses with low debt and the ability to improve earnings through sales growth will be poised to outperform in the years ahead.

PM Perspective
3/16
Heartland Value Fund Portfolio Manager Bill Nasgovitz

How Micro-Caps Add Value to a Small-Cap Value Strategy

Micro-caps can be an overlooked source of opportunities in a small-cap strategy. Portfolio Manager Bill Nasgovitz explores the advantages and our approach to the group.

PM Perspective
2/16
Heartland Advisors Value Investing Portfolio Manager Bill Nasgovitz

Investing in a 3-D World

Demographics, debt, and the fear of deflation are posing challenges for investors, but we believe some areas of the market are better insulated from the headwinds than others.

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 (%)
Small Cap Value Composite (Net of Advisory Fees)**11.872.013.62-2.1511.4711.474.19
Small Cap Value Composite (Net of Bundled Fees)10.081.032.73-2.9011.1511.154.12
Russell 2000® Value10.996.2615.078.3131.7431.7414.07


2016 (%)

2015 (%)

2014 (%)

2013 (%)

2012 (%)

2011 (%)

2010 (%)

2009 (%)

2008 (%)

2007 (%)

2006 (%)

2005 (%)

Small Cap Value Composite (Net of Advisory Fees)**

11.47

-13.41

-2.96

19.72

6.51

-4.32

23.56

73.03

-44.18

-10.54

20.09

1.99

Small Cap Value Composite (Net of Bundled Fees)

11.15-14.27

-3.92

18.54

5.45

-5.24

22.34

71.27

-44.72

-11.78

17.74

-0.01

Russell 2000® Value

31.74-7.47

4.22

34.52

18.05

-5.50

24.50

20.58

-28.92

-9.78

23.48

4.71

*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 10/1/1988.
**Shown as supplemental information.

Commentary

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

Heartland Small Cap Value Strategy 4Q16 Portfolio Manager Commentary

A surprise outcome in the presidential election unleashed a wave of optimism that pushed markets to new highs.

Portfolio Composition

Characteristics
12/31/2016

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Weighted Average Market Cap ($)Median Market Cap ($)Trailing 1-Year Turnover (%)
Small Cap Value Composite840 million376 million62.1
Russell 2000® Value2.0 billion714 million-

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, Inc.
*Weighted average

Heartland Advisors Small Cap Value Strategy Valuation Analysis Charts 1Heartland Advisors Small 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 Small Cap Value Strategy Sector Charts 1Heartland Advisors Small Cap Value Strategy Sector Charts 2

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

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TickerHolding% of AccountIndustry
CUICUI Global5.61Electronic Equipment & Instruments
LINCLincoln Educational Services Corp.5.11Diversified Consumer Services
ACTGAcacia Research Corporation4.87Communications Equipment
TRIBTrinity Biotech PLC (ADR)4.73Health Care Equipment & Supplies
RDNRadian Group Inc.4.36Thrifts & Mortgage Finance
IAGIAMGOLD Corp3.95Metals & Mining
SYRGSynergy Resources Corporation3.87Oil Gas & Consumable Fuels
RSYSRadisys Corp3.79Electronic Equipment & Instruments
LNDCLandec3.77Food Products
ARAYAccuray, Inc.3.54Health Care Equipment & Supplies
% of Total Net Assets43.60

Security Level 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
Small Cap Value Composite (Net of Advisory Fees)-9.7116.871.00-1.250.2180.15136.5770.4298.41
Russell 2000® Value0.0014.101.000.001.06100.00100.00100.000.00

*Annualized
Source: FactSet Research Systems Inc., Russell Investment Group
Alpha, beta, and information ratio are versus the Russell 2000® 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 Small Cap Value Strategy is 10/1/1988.

The Small Cap Value Strategy invests in small companies selected on a value basis. Such 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.

There is no guarantee that a particular investment strategy will be successful.

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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