PM Commentary

Discussing how our fundamental research drives results.
 

For long-term investors, we believe today's volatile market, characterized by a "flight to quality," may be missing a more important aspect of quality. As we define it, quality is a fundamental driver of a company's intrinsic value and does not change significantly over short periods, though market valuations can and certainly do. Our 10 Principles of Value Investing™ were designed to guide our portfolio managers and research analysts toward high quality companies with firm-specific catalysts, selling at attractive valuations, irrespective of the noise of volatile markets. We discussed this and other timely topics in our 4Q11 Conference Call that took place on January 18, 2012.

  If you have any questions, please call Michael Kops at 414-977-8717, or send an email.
 

4Q11 Conference Call (mp3)

4Q11 Factsheets 4Q11 Commentary
 Select Value Fund (HRSVX)  Select Value Fund (HRSVX)   Select Value Fund (HRSVX) 

 Value Plus Fund (HRVIX)

 Value Plus Fund (HRVIX)

 Value Plus Fund (HRVIX)
 Value Fund (HRTVX)   Value Fund (HRTVX   Value Fund (HRTVX) 
     
 Read the transcript (slides included)      

 

 

Archived Conference Call

3rd Quarter Conference Call 

 Read the transcript

Audio files:

 Select Value Fund (HRSVX)
 Value Plus Fund (HRVIX)
 Value Fund (HRTVX)

 

 

 

 

 

 

 


 

In the prospectus dated 5/1/11, the gross expense ratios for the Heartland Select Value, Value Plus and Value Funds Investor Class shares were 1.23%, 1.17% and 1.14%, respectively. The expense ratios for the Heartland Select Value Fund, Value Plus Fund and Value Fund Institutional Class Shares were 0.96%, 0.86% and 0.95%, respectively. The Advisor has voluntarily agreed to waive fees and/or reimburse expenses with respect to the Institutional Class, to the extent necessary to maintain the Institutional Class's "Net Operating Expenses" at a ratio of 0.99% of average daily net assets. This voluntary waiver/reimbursement may be discontinued at any time. Also, through November 30, 2001, the Advisor voluntarily waived a portion of the Select Value Fund's expenses. Without such waivers, total returns would have been lower.

Past performance does not guarantee future results. Performance information for the Institutional Class Shares prior to May 1, 2008 is based on the performance of the Investor Class. Performance represents past performance; current returns may be lower or higher. 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. To obtain performance through the most recent month end, call 800-432-7856 or visit the Funds' Returns page on the website. 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. 

The 1, 3, 5, 10-year and since inception (10/11/96) average annual total returns for the Select Value Fund Investor Class are -3.74%, 1.87%, 1.13%, 7.89% and 9.03%, respectively. The 1, 3, 5, 10-year and since inception (10/26/96) average annual total returns for the Value Plus Fund Investor Class are -4.63%, 0.66%, 4.81%, 10.40% and 9.95%, respectively. The 1, 3, 5, 10-year and since inception (12/28/84) average annual total returns for the Value Fund Investor Class are -2.31%, 2.52%, -0.93%, 7.98% and 12.06%, respectively. The 1, 3, 5 and 10-year and since inception of the Select Value Fund Investor Class average annual total returns for the Russell 3000 Value Index are -2.22%, -1.62%, -3.50%, 3.58% and 6.14%, respectively. The 1, 3, 5, 10-year since inception of the Value Plus Fund Investor Class and since inception of the Value Fund Investor Class average annual total returns for the Russell 2000 Value Index are -5.99%, -2.78%, -3.08%, 6.47%, 8.30% and 10.34%, respectively. Returns are as of September 30, 2011.

The 1, 3, 5, 10-year and since inception (10/11/96) average annual total returns for the Select Value Fund Investor Class are -6.68%, 15.07%, 1.73%, 7.04%, and 9.57% respectively. The 1, 3, 5, 10-year and since inception (10/26/93) average annual total returns for the Value Plus Fund Investor Class are -5.37%, 15.40%, 5.74%, 10.15% and 10.72% respectively. The 1, 3, 5, 10-year and since inception (12/28/84) average annual total returns for the Value Fund Investor Class are -6.92%, 17.71%, -1.40%, 7.17% and 12.37% respectively. The 1, 3, 5, 10-year and since inception of the Select Value Fund Investor Class average annual total returns for the Russell 3000 Value Index are -0.10%, 11.62%, -2.58%, 4.08% and 6.90% respectively. The 1, 3, 5, 10-year, since inception of the Value Plus Fund Investor Class and since inception of the Value Fund Investor Class average annual total returns for the Russell 2000 Value Index are -5.50%, 12.36%, -1.87%, 6.40%, 9.07% and 10.85% respectively. Returns are as of December 31, 2011.

The Funds invest 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 values may not be recognized by the broad market. The Select Value and Value Plus Funds also invest in a smaller number of stocks (generally 40 to 60 and 40 to 70, respectively) than the average mutual fund. The performance of these holdings generally will increase the volatility of the Funds’ returns. 

An investor should consider the Funds’ investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information can be found in the Funds’ prospectus. To obtain a prospectus, please call 1-800-432-7856 or download it from our website. Please read the prospectus carefully before investing.

The statements and opinions expressed in the video are those of the presenter. Any discussion of investments and investment strategies represents the Funds' investments and portfolio managers' views as of the date of the video, and are subject to change without notice. All information is historical, not indicative of future results and subject to change. Audience should not assume that an investment in the securities mentioned was or would be profitable in the future. This information is not a recommendation to buy or sell.

The value of the Funds' investments will vary from day to day in response to the activities of individual companies and general market and economic conditions, which may cause loss of principal.

The above guidelines are applied under normal market conditions, and may change over time. The returns and charts presented show historical patterns and are not intended to be indicative of any Heartland product, except as indicated. The value of the Fund’s investments will vary from day to day in response to the activities of individual companies and general market and economic conditions, which may cause loss of principle. Economic predications are based on estimates and are subject to change.

Small Cap Stocks as defined by Furey Research Partners include Ibbotson CRSP 6th to 8th deciles data by market capitalization (CRSP measures all equity securities listed on NYSE, Amex, NASDAQ and NYSE Arca that existed during the time period and with 1 being the largest market capitalization decile and 10 being the smallest.) for all periods before 12/31/78
and Russell 2000 data for all periods after 12/31/78. Heartland Advisors, Inc. considers large-cap companies to be larger than $10 billion in market cap, mid-cap companies to be
between $2 billion and $10 billion, small cap companies to be between $300 million and $2 billion, and micro-cap companies to be less than $300 million. The above breakdown does not include short-term investments. Portfolio holdings are subject to change without notice.

Because of the ongoing market volatility, fund performance may be subject to substantial short-term changes.

Patterson-UTI Energy, Inc. represented 2.35% of the Value Plus Fund’s holdings as of September 30, 2011, and 2.34% as of December 31, 2011. FedEx Corp was not held in the Value Plus Fund as of September 30, 2011 or as of December 31, 2011. AuRico Gold, Inc. represented 5.37% of the Value Fund's holdings, as of September 30, 2011, and 4.24% as of December 31, 2011. Energold Drilling Corp represented 0.33% of the Value Fund’s holdings as of September 30, 2011, and 0.39% as of December 31, 2011. Black Hills Corp represented 2.66% of the Select Value Fund’s holdings as of September 30, 2011, and 2.69% as of December 31, 2011.

As of December 31, 2011 Accuray, Inc. represented 1.86% of the Value Fund’s holdings. As of December 31, 2011 PharMerica Corporation and Omnicare, Inc. represented 1.30% and 3.11% of the Value Plus Fund’s holdings, respectively. As of December 31, 2011 URS Corporation and Benchmark Electronics represented 1.81% and 2.26% of the Select Value
Fund’s holdings, respectively. Portfolio holdings are subject to change. Current and future holdings are subject to risk.
 
Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. As of the latest reconstitution, the average market capitalization was approximately $4.8 billion; the median market capitalization was approximately $944.7 million. The index had a total market capitalization range of approximately $386.9 billion to $182.6 million. Russell 3000 Value Index measures the performance of those Russell 3000 Index companies with lower price-to-book ratios and lower forecasted growth values. Russell Microcap Index is a capitalization weighted index of 2,000 small-cap and micro-cap stocks that captures the smallest 1,000 companies in the Russell 2000, plus 1,000 smaller U.S.-based listed stocks. S&P 500 Index is an index of 500 U.S. stocks chosen for market size, liquidity and industry group representation and is a widely used U.S. equity benchmark. All indices are unmanaged. It is not possible to invest directly in an index. 10-Year Treasury (GT10) measures actively traded U.S. government 10 year issues include Treasury and agency bills, notes, bonds, and strips and is meant to be representative of the broader government market. Alpha is an annual measure of a portfolio’s return in excess of the market return, both adjusted for risk. It is a measure of the manager’s contribution to performance due to security selection. A positive annual Alpha indicates that the portfolio outperformed the market on a risk-adjusted basis, and a negative annual Alpha indicates the portfolio did worse than the market. Basing Chart Pattern is a period in which a stock price has very little or no trend: the resulting price pattern is a flat line. Consumer Confidence Index measures how optimistic or pessimistic consumers are with respect to the economy in the near future. Earnings Yield is the reciprocal of the price to earnings ratio. Long Term Debt/Total Capital of a stock is calculated by dividing the long-term debt of the company by its total capital. Organization of Petroleum Exporting Countries (OPEC) is an organization consisting of the world's major oil-exporting nations, and was founded in 1960 to coordinate the petroleum policies of its members, and to provide member states with technical and economic aid. Price/Earnings Ratio (12-month trailing) of a stock is calculated by dividing the current price of the stock by its trailing 12 months’ earnings per share. Price/Earnings Ratio (Forward) of a stock is based on actual earnings to date and future estimates made by Heartland Advisors, Inc. Securities with negative earnings or per share earnings greater than or equal to 100 are excluded from the calculation. Estimates made by Heartland Advisors, Inc. are based on factors such as management guidance, historical performance of the company and its peer group, industry growth rates, street estimates and other factors as deemed appropriate. Price/Book Ratio of a stock is calculated by dividing the market price of its stock by the company’s per-share book value. For the portfolio and indices the price/book ratio is presented as a weighted median. Price/Sales Ratio is the stock price divided by the sales per share for the trailing 12-month period. Price/Cash Flow Ratio represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. It shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Return on Invested Capital is a calculation used to determine a company’s efficiency at allocating the capital under its control to profitable investments. Risk (Standard Deviation) is a measure of volatility of returns and is computed as the square root of the average squared deviation of the returns from the mean value of the return.Real Estate Investment Trust (REIT) is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. Correlation is a statistical measure of how two securities move in relation to each other.Inside Buying Activity is the purchase of shares of stock in a corporation by someone who is employed by the company. Value Trap is a stock that has experienced a large price depreciation and is mistaken to be a value stock. Quantitative Easing is a government monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market.

 

The Overall Morningstar Rating™ for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year Morningstar Rating™ metrics. As of 12/31/11 the Select Value Fund was rated against 354, 307 and 145 mid-cap value funds over the 3-, 5- and 10-year periods, respectively. The Value Plus Fund was rated against 302, 264 and 145 small value funds over the 3-, 5- and 10-year periods, respectively. The Value Fund was rated against 302, 264 and 145 small value funds over the 3-, 5- and 10-year periods, respectively. The Select Value Fund has received Morningstar's 3-star rating for the 3-year period, and Morningstar's 4-star rating for the 5- and 10-year periods. The Value Plus Fund has received Morningstar's 3-star rating for the 3- year period, and Morningstar's 5-star rating for the 5- and 10-year periods. The Value Fund has received  Morningstar's 3-star rating for the 3-, 5- and 10-year periods. For each fund with at least a 3-year history, Morningstar calculates a Morningstar Rating™ based on Morningstar's risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in a category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately which may cause slight variations in the distribution percentages.) The Morningstar Ratings™ are for the specified share class; other classes may have different performance characteristics.

©2012 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance, rankings and ratings are no guarantee of future results. Rankings and ratings change monthly. Investment return and principal value will fluctuate so that your shares, when redeemed may be worth more or less than their original purchase price.

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

The above individuals are Registered Representatives of ALPS Distributors, Inc.

Lipper ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical and are based on total return with capital gains and dividends reinvested and are not intended to predict future results. Lipper does not guarantee the accuracy of this information. For purposes of Lipper rankings, the inception date of the Value Fund is 1/3/85. For the Since Inception, 10, 5, 3 and 1-year periods, the Value Fund’s Lipper numeric rankings were 1 of 9, 60 of 315, 274 of 531, 204 of 659 and 311 of 730, respectively, as of September 30, 2011. For the Since Inception, 10, 5, 3 and 1-year periods, the Value Fund's Lipper numeric rankings were 1 of 9, 74 of 304, 388 of 501, 237 of 635 and 590 of 698, respectively, as of December 31, 2011.

Lipper does not guarantee the accuracy of this information. As of December 31, 2011, for the 10, 5, 3 and 1-year periods, the Select Value Fund's Lipper numeric rankings were 16 of 114, 12 of 219, 104 of 263 and 244 of 309, respectively. As of December 31, 2010, for the 10, 5, 3 and 1 year periods, the Select Value Fund was ranked 2 of 102, 5 of 244, 10 of 288 and 112 of 345

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© 2012 Heartland Funds
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The Heartland Funds are distributed by ALPS Distributors, Inc. Separately managed accounts and related investment advisory services are provided by Heartland Advisors, a federally registered investment adviser. ALPS Distributors, Inc., is not affiliated with Heartland Advisors.
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