Importing Opportunity from Abroad


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Michael Jolin

Jolin, CFA, is Vice President and Portfolio Manager for the Heartland International Value Fund. He has 14 years of industry experience, 8 at Heartland.

Robert C. Sharpe

Sharpe is Vice President and Portfolio Manager of the International Value Fund. He has 34 years of industry experience, 4 at Heartland.


Robert C. Sharpe: Over the last 20 years, the U.S. market and international have traded off who has performed the best. And it’s been at least 5 years of outperformance by one market or the other.

Michael Jolin, CFA: If you take a look at the chart, it shows the U.S. has significantly outperformed the rest of the globe over the last 6 years, and even over the last 20 years.

U.S. Market Has Outperformed

Heartland Advisors Value Investing Market Insight US vs International Chart

Source: Bloomberg L.P., Russell®, and Heartland Advisors, Inc., 7/31/1996 to 1/31/2017. Past performance does not guarantee future results.

Sharpe: I think over the next 5 years that is likely to close in favor of international markets.

Here at Heartland we employ the 10 Principles of Value Investing™. We can find stocks that are ranking 8 of 10, 9 out of 10.

Jolin: Right now it feels like we’re fishing in a stocked pond.

If you think about it, crisis is opportunity.

And if you take a look at our positioning in the U.K., a couple of years ago we really didn’t own anything in the U.K., as the stocks from a bottom-up perspective looked expensive.

Crisis Creates Opportunity

Heartland International Value Fund Allocation to the UK Chart

Source: FactSet Research Systems Inc. and Russell®, 12/31/2014 to 12/31/2016
International Value Fund reflects percentage of equity investments. Foreign country classifications are generally determined by referencing country of domicile sourced from FactSet Research Systems Inc. Portfolio allocations are subject to change without notice.

Sharpe: Generally they were trading way above 2x price to book.

Obviously, with the Brexit, the market has come in.

And the other thing that’s happened is when a company has disappointed the market, it’s been hurt the usual percentage of its shortfall. But it’s gotten additionally hammered. And I think that’s due to the uncertainty around Brexit.

Jolin: In Brazil, we’re realizing a big tailwind there from a macro perspective, with interest rates and inflation both coming down at the same time. This is going to help stabilize the currency and provide a macro tailwind for a number of our holdings as well as, from a micro perspective, from a bottoms-up valuation, these stocks are trading at incredible values and paying really nice dividends.

Sharpe: Nirvana for me is if you can find a company that’s trading at the bottom of its cycle, its earnings are depressed, sentiment towards it is terrible, and the valuation on those low earnings is low. So that if you’ve done your homework and there’s nothing wrong with that company and the industry is still fine, you can win many ways. You pick the right stock, you know, boom—it takes off.

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Past performance does not guarantee future results.

An investor should consider the Funds’ investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information may be found in the prospectus (pdf). To obtain a print prospectus, call 800-432-7856. Please read the prospectus carefully before investing.

In the prospectus (pdf) dated 5/1/2017, the Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement for the investor and institutional classes of the International Value Fund are 1.25% and 0.99%, respectively. The Advisor has contractually agreed to waive its management fees and/or reimburse expenses of the Fund to ensure that Total Annual Fund Operating Expenses for the Fund do not exceed 1.25% of the Fund’s average net assets for the investor class shares and 0.99% for the institutional class shares, through at least 5/1/2019, and subject thereafter to annual reapproval of the agreement by the Board of Directors. Without such waiver and/or reimbursements, the total annual fund operating expenses would be 1.89% for the investor class shares and 1.63% for the institutional class shares.

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

The statements and opinions expressed in the articles or appearances are those of the presenter. Any discussion of investments and investment strategies represents the presenters' views as of the date created and are subject to change without notice. The opinions expressed are for general information only and are not intended to provide specific advice or recommendations for any individual. Any forecasts may not prove to be true.

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

Dividends are not guaranteed, and a company's future abilities to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time.

The reference to stocks ranking 8 of 10 or 9 of 10 refers to a company’s total score when all 10 Principles™ are considered. Each of the 10 Principles™ is worth a total of “1” so that a company satisfying all 10 Principles™ would have a total of 10 of 10.

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

The Heartland Funds are distributed by ALPS Distributors, Inc.

The above individuals are registered representatives of ALPS Distributors, Inc.