For investors willing to look beyond daily headlines or the latest earnings releases, however, uncertainty during the first half of the year has created opportunities. During this period, we’ve sought to maintain a balanced approach rooted in valuations while also taking a clear view of the risk/reward profile of each business. As such, we aren’t making market calls, and are instead focused, as always, on capitalizing on the opportunities presented.
Our efforts have resulted in each of our strategies trading at the end of the second quarter at a discount on a price/earnings basis ranging from 13% to 33% compared to the S&P 500. These valuations, we believe provide a margin of safety for investors in what is an expensive market. Additionally, each of the four portfolios has a lower debt-to-capital ratio than its respective benchmark.
Looking forward, we believe it’s important to avoid jumping into positions that have only recently come under pressure, even if their valuations have improved. In our view, the prudent course is to get past a fear of missing out on upside potential and stay focused on company-specific factors.
We thank you for your continued trust and confidence.
Sincerely,
Your Heartland Team