Heartland Mid Cap Value Fund

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

HRMDX, HNMDX

Overview

Investment Focus

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

Distinguishing Characteristics

  • Invests 80% of its assets in mid-cap securities with 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: 2014

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

  • Basics
  • Minimums
  • Fees
  • Expenses

12/31/2017

Benchmark: Russell Midcap® Value Index

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Investor Class Institutional Class
Ticker HRMDXHNMDX
CUSIP 422352815422352799
Inception Date 10/31/201410/31/2014
Assets $5 million$3 million

Investor
Class ($)
Institutional
Class ($)
Initial Investment1,000500,000
IRA Initial Investment500500,000
Subsequent Investments100100

Shareholder Fees

Paid directly from total investment

  Investor
Class (%)
Institutional
Class (%)
Load 0 0
Sales Charge 0 0
Exchange Fee 0 0
Redemption Fee* 2 2


*If shares are redeemed or exchanged within 10 days of purchase

Annual Fund Operating Expenses

Paid annually as a percentage of total investment value*

  Investor
Class (%)
Institutional
Class (%)
Management Fee 0.75 0.75
12b-1 Distribution Fee 0.25 0.00
Other Expenses 2.22 2.71
Total Annual Fund Operating Expenses 3.22 3.46
Fee Waiver and/or Expense Reimbursement -1.97 -2.47
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement 1.25 0.99


*As stated in the prospectus (pdf) dated 5/1/2017

Overall Morningstar Rating™ in Mid-Cap Value Category

  • Investor Class
  • Institutional Class
3Overall Morningstar Rating™ as of 1/31/2018, out of 361 Mid-Cap Value funds, based on risk-adjusted performance for investor class shares
3Overall Morningstar Rating™ as of 1/31/2018, out of 361 Mid-Cap Value funds, based on risk-adjusted performance for institutional class shares

 

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Video
4/17 - 2:39

A Look at Our Mid Cap Value Strategy

The Portfolio Management Team provides an overview.

Portfolio Management Team

Heartland Mid Cap Value Fund Portfolio Management Team

32 years of industry experience
22 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 17 years of industry experience, 14 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 15 years of industry experience, 8 at Heartland.

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Investing Perspectives

Water & Wells
2/6/18
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Normal is Dead, Long Live Normal!

The return of volatility could provide opportunities for active investors going forward.

Heartland in the News
1/25/18
Heartland Advisors Value Investing CEO and Portfolio Manager Will Nasgovitz

Heartland CEO: Record Market Highs Haven’t Dried the River of Value

Will Nasgovitz was interviewed about the current environment for value investors.

Water & Wells
1/23/18
Heartland Advisors Value Investing Portfolio Manager Will Nasgovitz

Value—it’s the Real Thing

Why the value versus growth debate is about more than the investment flavor of the day.

PM Perspective
11/17
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
11/7/17
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Bloomberg Radio Interviews Heartland Mid Cap Manager

Colin McWey, CFA, discusses the need for intellectual honesty and a focus on balance sheets when navigating the deep value landscape.

Heartland in the News
11/3/17
Heartland Advisors Value Investing Portfolio Manager Colin McWey

Sticking to Fundamentals in a Teflon Market

Portfolio Manager Colin McWey, CFA, reiterates our commitment to attractive valuations and financial soundness—cornerstones of a long-term philosophy.

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Press Release
10/31/17

Heartland Mid Cap Value Fund Reaches Three-Year Milestone

With market volatility near historic-low levels—and the Russell Midcap® Value Index climbing steadily higher—market dynamics seem to suggest little has changed during 2017. In this Q&A, Portfolio Manager Colin McWey, CFA, digs below the surface.

Heartland in the News
9/20/17

Taking the Inflation Bull by the Horns

When inflation heats up, will Industrials follow? Portfolio Manager Colin McWey, CFA, shares his perspective with MarketWatch.

Water & Wells
8/29/17

Oops! Did They Do it Again?

The meteoric rise of a handful of stocks may have investors forgetting lessons learned from the tech bubble of the late 1990s.

Video
7/17 - 4:03

Here's What's Missing in the Energy Debate

Why the current slump in Energy requires a fresh perspective.

Water & Wells
5/23/17

No More Earnings on the Cheap?

Why companies may no longer be able to rely on reduced capital expenditures to boost profit margins.

PM Perspective
5/17

Cash Flow: An Equalizing Force in Analysis

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

Video
5/17 - 3:55

Trends in Insider Activity

What insider activity is telling us about today's market.

PM Perspective
4/17

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.

Heartland in the News
4/25/17

Why Backing Winners Could be a Losing Formula

Portfolio Manager Colin McWey, CFA, talks with MarketWatch about potential pitfalls in today’s crowded trades.

Heartland in the News
4/21/17

Circling the Wagon: What Colin McWey, Buffett & Others See in Wells Fargo

MarketWatch asks Portfolio Manager Colin McWey, CFA, for his take on a Warren Buffett* favorite stock.

Heartland in the News
4/6/17

‘There’s More Bull To Be Had’

Portfolio Manager Colin McWey, CFA, weighs in on whether the bull market has more room to run despite inflated stock prices.​

Heartland in the News
2/22/17

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

What’s in Your Index?

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

Water & Wells
2/7/17

Corporate America’s Doping Problem

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

Performance

Average Annual Total Returns
  • Month-End
  • Quarter-End
  • Annual
1/31/2018

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Since Inception (%)20-Year (%)15-Year (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD* (%)QTD* (%)
Mid Cap Value
Investor Class
9.98----11.4612.163.753.75
Mid Cap Value
Institutional Class
10.25----11.7512.443.753.75
Russell Midcap® Value9.89----10.3614.032.302.30
*Not annualized
12/31/2017

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Since Inception (%)20-Year (%)15-Year (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD* (%)QTD* (%)
Mid Cap Value
Investor Class
8.99----8.938.118.116.75
Mid Cap Value
Institutional Class
9.26----9.188.378.376.74
Russell Midcap® Value9.37----9.0013.3413.345.50
*Not annualized
  2017 (%) 2016 (%) 2015 (%) 2014* (%)
Mid Cap Value Investor Class 8.11 28.67 -7.08 1.61
Mid Cap Value Institutional Class 8.37 28.97 -6.89 1.73
Russell Midcap® Value 13.34 20.00 -4.78 2.54

*Performance is from 10/31/2014 to 12/31/2014 and is not annualized

Growth of a Hypothetical $10,000 Investment

12/31/2017

Since inception of the investor class, 10/31/2014 to 12/31/2017
Chart represents a hypothetical example of an investment in the Mid Cap Value Fund representing historical returns

Heartland Mid Cap Value Fund Growth of 10000 Chart

Morningstar Ratings™ in Mid-Cap Value Category
  • Investor Class
  • Institutional Class
Morningstar Ratings TM
1/31/2018
RatingTotal Funds
Overall3361
10-Year--
5-Year--
3-Year3361
Morningstar Ratings TM
1/31/2018
RatingTotal Funds
Overall3361
10-Year--
5-Year--
3-Year3361

Past performance does not guarantee future results. Performance represents past performance; current returns may be lower or higher. Performance information for institutional class shares of Funds that existed prior to their initial public offering is based on the performance of investor class shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. All returns reflect reinvested dividends and capital gains distributions, but do not reflect the deduction of taxes that an investor would pay on distributions or redemptions. Subject to certain exceptions, shares of a Fund redeemed or exchanged within 10 days (90 days for the International Value Fund) of purchase are subject to a 2% redemption fee. Performance does not reflect this fee, which if deducted would reduce an individual's return.

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 Mid Cap 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 3.22% for the investor class shares and 3.46% for the institutional class shares.

The inception date for the Mid Cap Value Fund is 10/31/2014 for the investor and institutional class.

Heartland Advisors Value Investing Team IconHistorical NAVs

Contact a Relationship Manager for historical NAVs.

Historical NAVs also are available from third party websites, such as Bloomberg, Yahoo! Finance, or Google Finance.

Commentary

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12/31/17
Heartland Mid Cap Value Fund Portfolio Manager Commentary

Heartland Mid Cap Value Fund 4Q17 Portfolio Manager Commentary

An improving energy market, progress on pro-growth tax legislation, and forecasts for a jump in business investment convinced many that the recent surge for equities had staying power.

Portfolio Composition

Characteristics

12/31/2017

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CharacteristicMid Cap ValueRussell Midcap® Value
Holdings 45-
Assets $8 million-
Assets in Dividend-Paying Companies 88.1% -
Median Market Cap $8.6 billion$7.4 billion
Weighted Average Market Cap $13.3 billion$14.2 billion
Trailing 1-Year Turnover 51.4% -

Capitalization Breakdown
12/31/2017
Cap Range% of Equities in Portfolio
>$15 billion24.6
$2-15 billion73.7
$300 million-2 billion1.7
<$300 million0.0

The above breakdown does not include short-term investments.

Valuation Analysis
Equity securities only, weighted median unless otherwise noted

12/31/2017

*Weighted average
**Weighted average, and Dun & Bradstreet is excluded 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 D&B’s investment grade credit rating based on Heartland Advisors’ beliefs

Heartland Mid Cap Value Fund valuation bar charts 1Heartland Mid Cap Value Fund Valuation Analysis Charts 2

Sector Allocation

12/31/2017

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

Heartland Mid Cap Value Fund Sector Charts 1Heartland Mid Cap Value Fund Sector Charts 2

Top 10 Holdings
12/31/2017

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TickerHolding% of Net AssetsIndustry
EXCExelon Corporation3.61Electric Utilities
BENFranklin Resources, Inc.3.56Capital Markets
STISunTrust Banks, Inc.3.43Commercial Banks
ESRXExpress Scripts Holding Company3.42Health Care Providers & Services
CACA, Inc.3.13Software
CNACNA Financial Corporation3.08Insurance
DGXQuest Diagnostics Incorporated3.03Health Care Providers & Services
AVTAvnet, Inc.2.90Electronic Equipment & Instruments
DFSDiscover Financial Services2.74Consumer Finance
NOVNational Oilwell Varco, Inc.2.73Energy Equipment & Services
% of Total Net Assets31.63

Sector-Level Attribution

12/31/2017

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Security-Level Attribution & Contribution

12/31/2017

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3-Year Risk Analysis

  • Investor Class
  • Institutional Class
12/31/2017

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Alpha*Standard Deviation (%)*BetaInfo RatioSharpe RatioUpside Capture (%)*Downside Capture (%)*R-
Squared (%)
Active Share
Mid Cap Value-0.5912.071.08-0.020.71109.41116.1884.9792.31
Russell Midcap® Value0.0010.321.000.000.84100.00100.00100.000.00

*Annualized
Source: FactSet Research Systems Inc., Russell Investment Group, and Standard & Poor's
Alpha, beta, and information ratio are versus the Russell Midcap® Value. Depiction is for investor class shares.

12/31/2017

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Alpha*Standard Deviation (%)*BetaInfo RatioSharpe RatioUpside Capture (%)*Downside Capture (%)*R-
Squared (%)
Active Share
Mid Cap Value-0.3512.071.080.040.73109.95114.7884.9192.31
Russell Midcap® Value0.0010.321.000.000.84100.00100.00100.000.00

*Annualized
Source: FactSet Research Systems Inc., Russell Investment Group, and Standard & Poor's
Alpha, beta, and information ratio are versus the Russell Midcap® Value. Depiction is for institutional class shares.

Distributions

  • Investor Class
  • Institutional Class
Record
Date
Payable
Date
             Ordinary Dividend
($/share)
Short-Term Capital
Gain ($/share)
Long-Term Capital
Gain ($/share)
12/27/2017 12/28/2017   0.09048 0.19499 0.50601
12/28/2016 12/29/2016   0.08174 - -
12/28/2015 12/29/2015   0.06589 0.09823 0.00205
12/29/2014 12/30/2014   0.03173 - -

 

Record
Date
Payable
Date
             Ordinary Dividend
($/share)
Short-Term Capital
Gain ($/share)
Long-Term Capital
Gain ($/share)
12/27/2017 12/28/2017   0.12172 0.19499 0.50601
12/28/2016 12/29/2016   0.08442 - -
12/28/2015 12/29/2015   0.12479 0.09823 0.00205
12/29/2014 12/30/2014   0.02329 - -

 

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©2018 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

As of 3/31/2017, Heartland Advisors on behalf of its clients held approximately 0.01% of the total shares outstanding of Wells Fargo & Co.

The Mid Cap Value Fund invests in a smaller number of stocks (generally 30 to 60) than the average mutual fund. The performance of these holdings generally will increase the volatility of the Fund’s returns. The Fund also invests in mid–sized companies on a value basis. Mid-sized securities generally are more volatile and less liquid than those of larger companies. There can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Board of Directors may determine to liquidate the Fund.

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

There is no assurance that dividend-paying stocks will mitigate volatility.

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

Portfolio holdings exclude cash, cash equivalents, options, and futures.

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

As of 1/31/2018 Morningstar Ratings™: The Heartland Mid Cap Value Fund investor class was rated against -, -, and 361 U.S.-domiciled Mid-Cap Value funds over the 10-, 5-, and 3-year periods and received -, -, and 3 stars, respectively.
As of 1/31/2018 Morningstar Ratings™: The Heartland Mid Cap Value Fund institutional class was rated against -, -, and 361 U.S.-domiciled Mid-Cap Value funds over the 10-, 5-, and 3-year periods and received -, -, and 3 stars, respectively.

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

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

Unless noted with an asterisk (*), the above individuals are registered representatives of ALPS Distributors, Inc.

CFA® is a registered trademark owned by the CFA Institute.

The Heartland Funds are distributed by ALPS Distributors, Inc.

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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