Heartland Small Cap Value Strategy

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

Overview

Investment Focus

Pursues long-term capital appreciation by investing in micro- and small-cap companies

Distinguishing Characteristics

  • Invests in stocks with a market capitalization of less than $2 billion and can have a significant allocation to micro-cap names
  • Designed for investors who seek a portfolio with micro-cap exposure and additional liquidity provided by small-cap stocks
  • Benchmarked to the Russell 2000® Value Index
  • Typically holds 30-50 stocks
  • Inception date: 1988

Investment Minimum & Standard Fee Schedule

Minimum: $1 million

Account SizeAnnual Rate (%)
First $5 million1.00
Next $10 million0.85
Above $15 millionNegotiable

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

Portfolio Management Team

Heartland Advisors Small Cap Value Strategy Portfolio Management Team

74 years of industry experience
50 years of experience at Heartland

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Bill Nasgovitz

Nasgovitz is Chairman and Portfolio Manager of the Value Fund and its corresponding separately managed account strategy. He also is President and Director of Heartland Funds. He has 50 years of industry experience, 35 at Heartland.

Eric Miller

Miller is Vice President and Portfolio Manager of the Heartland Value Fund and its corresponding separately managed account strategy. He has 24 years of industry experience, 15 at Heartland.

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News & Investing Perspectives

Video
5/18 - 2:06
Heartland Advisors Value Investing Portfolio Manager Eric Miller

Finding a Spark in Utilities

Why we see opportunities in the usually sleepy Utilities sector.

PM Perspective
3/18
Heartland Value Fund Portfolio Manager Bill Nasgovitz

How Micro-Caps Add Value to a Small-Cap Value Strategy

Micro-caps can be an overlooked source of opportunities in a small-cap strategy. Portfolio Manager Bill Nasgovitz explores the advantages and our approach to the group.

Performance*

Average Annual Total Returns
  • Quarter-End
  • Annual
9/30/2018

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Since Inception (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD (%)QTD (%)
Small Cap Value Composite (Net of Advisory Fees)**11.014.200.215.43-6.31-1.29-2.61
Small Cap Value Composite (Net of Bundled Fees)9.323.37-0.415.06-6.60-1.53-2.68
Russell 2000® Value10.859.529.9116.129.337.141.60

 

2017 (%) 2016 (%)

2015 (%)

2014 (%)

2013 (%)

2012 (%)

2011 (%)

2010 (%)

2009 (%)

2008 (%)

2007 (%)

2006 (%)

2005 (%)

Small Cap Value Composite (Net of Advisory Fees)**

-2.20 11.51

-13.41

-2.96

19.72

6.51

-4.32

23.54

73.03

-44.18

-10.54

20.09

1.99

Small Cap Value Composite (Net of Bundled Fees)

-2.49 11.19 -14.27

-3.92

18.54

5.45

-5.27

22.37

71.35

-44.75

-11.78

17.77

-0.01

Russell 2000® Value

7.84 31.74 -7.47

4.22

34.52

18.05

-5.50

24.50

20.58

-28.92

-9.78

23.48

4.71

 

*Source: FactSet Research Systems, Inc., Russell Investment Group, and Heartland Advisors, Inc. Performance data is preliminary. YTD and QTD returns are not annualized. The Strategy's inception date is 10/1/1988.
**Shown as supplemental information.

Commentary

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9/30/18
Heartland Advisors Small Cap Value Strategy Portfolio Manager Commentary

Heartland Small Cap Value Strategy 3Q18 Portfolio Manager Commentary

An uncertain future has led some investors to take a risky path in pursuit of growth and momentum.

Portfolio Composition

Characteristics
9/30/2018

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Weighted Average Market Cap ($)Median Market Cap ($)Trailing 1-Year Turnover (%)
Small Cap Value Composite1.6 billion930 million68.0
Russell 2000® Value2.1 billion809 million-

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

Valuation Analysis
Equity securities only, weighted harmonic average unless otherwise noted

9/30/2018

Source: FactSet Research Systems Inc., Russell Investment Group, and Heartland Advisors, Inc.
*Weighted average

Heartland Advisors Small Cap Value Strategy Valuation Analysis Charts 1Heartland Advisors Small Cap Value Strategy Valuation Analysis Charts 2

Sector Allocation

9/30/2018

Source: FactSet Research Systems Inc., and Russell Investment Group
Composite statistics shown as percentage of equity investments

Heartland Advisors Small Cap Value Strategy Sector Charts 1Heartland Advisors Small Cap Value Strategy Sector Charts 2

Top 10 Holdings in a Representative Account
9/30/2018

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TickerHolding% of AccountIndustry
LINCLincoln Educational Services Corp.4.71Diversified Consumer Services
ARAYAccuray, Inc.4.16Health Care Equipment & Supplies
MTGMGIC Investment Corp.3.89Thrifts & Mortgage Finance
KWKennedy-Wilson Holdings, Inc.3.81Real Estate Management & Development
UBSIUnited Bankshares, Inc.3.64Banks
HIFRInfraREIT, Inc.3.58Equity Real Estate Investment Trusts (REITs)
HSONHudson Global, Inc.3.51Professional Services
PESIPerma-Fix Environmental Services3.39Commercial Services & Supplies
RDNRadian Group Inc.3.34Thrifts & Mortgage Finance
MITLMitel Networks Corp.3.05Communications Equipment
% of Total Net Assets37.08

Security-Level Attribution & Contribution

9/30/2018

These materials are for financial professional use only. You will be prompted to log in. Free account registration is available.

5-Year Risk Analysis

9/30/2018

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Alpha*Standard Deviation (%)*BetaInfo RatioSharpe RatioUpside Capture (%)*Downside Capture (%)*R-
Squared (%)
Active Share
Small Cap Value Composite (Net of Advisory Fees)-7.4014.790.86-1.03-0.0257.98100.6461.0698.30
Russell 2000® Value0.0013.401.000.000.70100.00100.00100.000.00

*Annualized
Source: FactSet Research Systems Inc., Russell Investment Group
Alpha, beta, and information ratio are versus the Russell 2000® Value Index.

The above performance, portfolio composition, and risk analysis data is preliminary.

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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

Past performance does not guarantee future results. Performance represents past performance, and current returns may differ.

Heartland Advisors, Inc. (the "Firm") claims compliance with the Global Investment Performance Standards (GIPS®). The Firm is a wholly owned subsidiary of Heartland Holdings, Inc., and is registered with the Securities and Exchange Commission. For a complete list and description of Heartland Advisors composites and/or a presentation that adheres to the GIPS® standards, contact the Institutional Sales Team at Heartland Advisors.

The U.S. dollar is the currency used to express performance.

The inception date for the Small Cap Value Strategy is 10/1/1988.

The Small Cap Value Strategy invests in small companies selected on a value basis. Such 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.

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

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.

Representative account chosen based on composite membership, not on performance-based criteria. Other accounts within the strategy may have different holdings.

Representative account holdings are preliminary, may not be reconciled, and may be updated when reconciled.

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

There is no guarantee that a particular investment strategy will be successful.

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

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

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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