As disciplined value investors, we believe successful investing requires patience, and we are willing to wait for the right opportunities to present themselves. Sometimes, we’ll observe a company from afar for years, waiting for its fundamentals to improve and meet the criteria of our 10 Principles of Value Investing™, before adding it to our portfolio. However, improving fundamentals require a “Catalyst for Recognition” to intrigue other investors.
Catalysts can also help confirm our decision-making process. It’s often said that investors should never mistake an investment that’s down in price for one that is a bargain. The latter is a value stock; the former is a value trap. By demanding a spark that will drive the stock higher sooner rather than later, we are determining which bucket our holding falls into.
The question is, where can we find these catalysts?
A good place to start is within the companies themselves. There are a host of things businesses can do like selling off less-profitable units, paying down debt, or boosting dividend payments, to help investors appreciate the company’s true intrinsic value. We favor “self-help” catalysts, which are steps management can take to improve their operational efficiency, profitability, or competitive advantage. These catalysts don’t solely require a strong economic or market backdrop to gain traction.
A good example is Knife River Corporation (KNF). The self-help in this case didn’t involve a dramatic new business strategy or product launch. Instead, when the executive who oversaw KNF’s most profitable region became CEO, he applied the same pricing, supply-chain, and cost-saving initiatives he implemented in one region to the rest of the organization. It was a simple but effective move.
We believe the margin enhancement created by management’s efforts will continue to drive higher valuations for the business. This demonstrates another potential advantage of self-help. Not only can it provide a catalyst, but it also showcases a management team’s capabilities, which is another one of our 10 Principles of Value Investing™.
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Past performance does not guarantee future results.
Investing involves risk, including the potential loss of principal.
The Value Fund primarily invests in micro- and small-cap companies selected on a value basis. Such securities generally are more volatile and less liquid than those of larger companies.
As of 7/15/2026 the Heartland Value Fund held approximately 0.11% of the total shares outstanding of Knife River Corp (KNF).
There is no guarantee that a particular investment strategy will be successful.
This is not a recommendation to buy or sell.
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.
Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.
An investor should consider the Funds’ investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information can be found in the Funds’ prospectus. To obtain a prospectus, please call 800-432-7856 or visit heartlandadvisors.com. Please read the prospectus carefully before investing.
Heartland’s investing glossary provides definitions for several terms used on this page.
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