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 of purchase are subject to a 2% redemption fee. Performance does not reflect this fee, which if deducted would reduce an individual's return.
Source: Bloomberg L.P., 12/31/2015 to 12/31/2020 Raw industrials are represented by the Commodities Research Bureau BLS US Spot Index Raw Industrials Subdivision. Past performance does not guarantee future results.
Shares of Raymond James fell in the first quarter of 2020 as the market priced in a dramatic downturn in profits due to the potential impact of COVID-19. The company earns advisory and management fees based upon client asset levels, interest income from lending activity, and banking fees based upon capital markets activity. As equity and credit markets deteriorated and as interest rates fell throughout the first quarter, the stock fell more than 40% from its peak. Raymond James’s earnings, however, have proven more resilient than the market had anticipated during the first half of the year. The company posted better than expected results for the third quarter with gains driven by a steepening yield curve that benefitted the entire Financials sector, as well as a favorable investment banking environment as the capital markets shifted from frozen to highly active. The business has also acted swiftly in reducing credit risk by selling loans the management team viewed as structurally challenged in a post-COVID world. We’ve been pleased with the ability of Raymond James to maintain its high capital levels and its decision to resume its share repurchase activity, which the company’s board of directors recently voted to increase.
Longer term, we view Raymond James as attractive due to its impressive history of growing share and the opportunity it has to penetrate new markets outside of its stronghold of the Southeast. The potential for growth coupled with the company’s ability to generate returns on equity that far outpace peers should serve investors well in the years to come. While shares have bounced back since the COVID-sparked selloff of February, they remain attractive at just a 1.9x tangible book value vs. a 20-year median multiple of more than 2x.
Advance Auto Parts has posted better than expected earnings in recent quarters, however, investors have been cautious about difficult comparisons the industry will face in 2021. Given the double-digit growth in sales the company has experienced since the middle part of 2020, we recognize that comparable sales growth will be challenging in the near term. However, we also believe the company has more upside as the economy regains some normalcy and as the pandemic recedes in the face of vaccinations.
Based on our analysis, we believe margin expansion spurred by self-help initiatives will accelerate into the later part of 2021, as the company completes supply chain technology upgrades that will help management optimize distribution capacity. Margin expansion and robust capital allocation could result in earnings improvements over the next three to five years and should result in rapid growth of the company’s intrinsic value.
In the face of extreme volatility for much of 2020, our focus has remained on finding businesses where we believe valuations reflect a misunderstanding of risk and those businesses that are poised to succeed against a variety of backdrops. The significant strength of economically sensitive names in the market during the past several months has left little room for error with businesses striving to meet what we view as overly optimistic earnings estimates. As a result, we have sought to own overlooked businesses where even incremental improvement should result in meaningful upside in share price. While that has reduced some of the economic sensitivity of the overall portfolio, we have continued to let our research lead us to what we view are attractively valued companies in both economically sensitive and defensive areas.
McWey, CFA, is Vice President and Portfolio Manager for the Opportunistic Value Equity Strategy, as well as the Mid Cap Value Fund and it’s corresponding Mid Cap Value Strategy. He has 18 years of industry experience, 11 at Heartland.
Nasgovitz is CEO and Portfolio Manager of the Opportunistic Value Equity Strategy, as well as the Mid Cap Value Fund, the Value Fund, and their corresponding Mid Cap Value and Small Cap Value Strategies. He also is President and Director of Heartland Funds. He has 20 years of industry experience, 17 at Heartland.
View Fund Materials
View Fund Performance
Scroll over to view complete data
Source: FactSet Research Systems Inc., Russell®, and Heartland Advisors, Inc.
The inception date for the Mid Cap Value Fund is 10/31/2014 for the investor and institutional class.
Download PDF
View Commentary
Sign In
View Holdings
I am a financial professional or institutional investor
I am an individual investor
©2021 Heartland Advisors | 790 N. Water Street, Suite 1200, Milwaukee, WI 53202 | Business Office: 414-347-7777 | Financial Professionals: 888-505-5180 | Individual Investors: 800-432-7856
In the prospectus dated 5/1/2020, the Net Fund Operating Expenses for the investor and institutional classes of the Mid Cap Value Fund are 1.10% and 0.85%, respectively. The Advisor has contractually agreed to waive its management fees and/or reimburse expenses of the Fund to ensure that Net Fund Operating Expenses for the Fund do not exceed 1.10% of the Fund’s average net assets for the investor class shares and 0.85% for the institutional class shares, through at least 5/1/2022, and subject thereafter to annual reapproval of the agreement by the Board of Directors. Without such waiver and/or reimbursements, the Gross Fund Operating Expenses would be 1.36% for the investor class shares and 1.07% for the institutional class shares.
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. To obtain a print prospectus, call 800-432-7856. Please read the prospectus carefully before investing.
As of 12/31/2020, Heartland Advisors on behalf of its clients held approximately 0.09%, 0.07%, 0.01%, and 0.08% of the total shares outstanding of Advance Auto Parts, Inc., Bunge Limited, Freeport-McMoRan, Inc., and Raymond James Financial, Inc., respectively.
Statements regarding securities are not recommendations to buy or sell.
Portfolio holdings are subject to change without notice. Current and future portfolio holdings are subject to risk.
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.
Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.
The Mid Cap Value Fund seeks long–term capital appreciation and modest current income.
The above individuals are registered representatives of ALPS Distributors, Inc.
The Heartland Funds are distributed by ALPS Distributors, Inc.
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. The specific securities discussed, which are intended to illustrate the advisor’s investment style, do not represent all of the securities purchased, sold, or recommended by the advisor for client accounts, and the reader should not assume that an investment in these securities was or would be profitable in the future. Certain security valuations and forward estimates are based on Heartland Advisors’ calculations. Any forecasts may not prove to be true.
Economic predictions are based on estimates and are subject to change.
There is no guarantee that a particular investment strategy will be successful.
Sector and Industry classifications are sourced from GICS®.The Global Industry Classification Standard (GICS®) is the exclusive intellectual property of MSCI Inc. (MSCI) and S&P Global Market Intelligence (“S&P”). Neither MSCI, S&P, their affiliates, nor any of their third party providers (“GICS Parties”) makes any representations or warranties, express or implied, with respect to GICS or the results to be obtained by the use thereof, and expressly disclaim all warranties, including warranties of accuracy, completeness, merchantability and fitness for a particular purpose. The GICS Parties shall not have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of such damages.
Heartland Advisors defines market cap ranges by the following indices: micro-cap by the Russell Microcap®, small-cap by the Russell 2000®, mid-cap by the Russell Midcap®, large-cap by the Russell Top 200®.
Because of ongoing market volatility, performance may be subject to substantial short-term changes.
Dividends are not guaranteed and a company’s future ability to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time.
There is no assurance that dividend-paying stocks will mitigate volatility.
CFA® is a registered trademark owned by the CFA Institute.
Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indices. Russell® is a trademark of the Frank Russell Investment Group.
Heartland’s investing glossary provides definitions for several terms used on this page.
Data sourced from FactSet: Copyright 2020 FactSet Research Systems Inc., FactSet Fundamentals. All rights reserved.