What Does It Take to Stick to Our Knitting?

For more than four decades, our firm has remained committed to a singular focus: value investing. We believe that concentrating on one discipline, executing it well, and maintaining that commitment through changing market environments is fundamental to long-term success.

We often think of our approach in the same way one might think of a great restaurant known for a single specialty. Rather than offering an expansive menu designed to appeal to every preference, the best establishments focus on perfecting what they do best. Heartland operates with a similar philosophy. This level of focus requires alignment across the entire organization.

We are 100% employee-owned and invest our own capital alongside our clients. This ownership structure reinforces a shared purpose and aligns our long-term interests with those we serve. It also encourages financial discipline. We operate conservatively, maintain a strong balance sheet and liquidity position, and manage the business with a long-term perspective.

Equally important is conviction in our investment process. Since the firm’s founding, Heartland’s team has remained aligned around a consistent philosophy and disciplined approach.

Over the past decade, the environment for small cap value investors has been particularly challenging. Limited in-flows decreased opportunity to put money to work. In many cases, the AI frenzy and associated market opportunities sent value to the back of the line for new business.  

In response, many firms shifted away from the strategy. Some closed small-cap value funds, while others exited the business entirely. At the end of 2010, there were 103 small-cap value funds according to Morningstar. By the end of 2025, only 52 of those remained. Mid-cap value funds experienced a similar fate, the 119 funds in December 2010 only had 39 survivors. Although new firms have entered the space, many have not been around long enough to experience a full value cycle.

The sell-side research landscape has also changed. Analyst coverage of smaller companies has steadily declined. In 2008, companies with market capitalizations under $10 billion were covered by an average of 10.7 analysts; today that number is approximately 8.7, a decline of nearly 19%. At the same time, the largest companies have attracted increasing attention. Those with market capitalizations above $100 billion are now covered by an average of 27.7 analysts, compared to 19.8 in 2008.

These conditions have created meaningful challenges for small-cap value investors, but they have also reinforced the importance of discipline, patience, and organizational stability. Firms that lack a durable structure or long-term orientation can often feel pressure to abandon their investment philosophy during difficult periods.

We believe our structure positions us differently. As a fiscally responsible, 100% employee-owned firm with a strong balance sheet, we have been able to maintain our investment discipline even when the environment has been unfavorable. Heartland’s ownership model aligns our interests with those of our clients and encourages a long-term perspective rather than short-term reaction to market trends.

Market cycles inevitably shift, and periods of dislocation often create the most compelling opportunities for disciplined investors. By remaining focused on our process and managing the business conservatively, we believe we are well positioned not only to endure challenging cycles, but to emerge from them stronger and prepared to capitalize on the opportunities that follow.