Heartland Advisors, an investment management company, released its “Heartland Value Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund was up 1.97% in the fourth quarter compared to a 1.06% fall for the Russell 2000 Value Index. The fund outperformed the benchmark over the past 1, 3, and 5 years. As in the previous 1, 3, and 5 years, stock selection accounted for almost all of the fourth-quarter outperformance. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Heartland Value Fund highlighted stocks like Patterson Companies, Inc. (NASDAQ:PDCO) in the fourth quarter 2024 investor letter. Patterson Companies, Inc. (NASDAQ:PDCO) offers distribution of dental and animal health products. The one-month return of Patterson Companies, Inc. (NASDAQ:PDCO) was -0.19%, and its shares gained 4.08% of their value over the last 52 weeks. On January 13, 2025, Patterson Companies, Inc. (NASDAQ:PDCO) stock closed at $30.84 per share with a market capitalization of $2.72 billion.
Heartland Value Fund stated the following regarding Patterson Companies, Inc. (NASDAQ:PDCO) in its Q4 2024 investor letter:
“Often, our patience is what drives our selection effect and leads us to businesses like Patterson Companies, Inc. (NASDAQ:PDCO).
Patterson is really two companies: a supply and equipment distributor for dental practices as well as for veterinary clinics. Investors have been assigning little value to the animal health portion of the business. While that segment isn’t as profitable as the company’s dental unit, it still generates over $4 billion in sales. PDCO remaining sales are in dental distribution, which competes directly against Henry Schein (HSIC). Based on enterprise value to sales, however, Patterson trades at roughly half of HSIC’s valuation. While some of this discount may be warranted because PDCO’s animal health segment are less profitable than its dental operations, the company’s dental profitability matches that of Henry Schein.
In our view, Patterson shares were grossly undervalued, so we held on even as the stock lost more than a quarter of its value from January through the end of November. We were ultimately rewarded when the company was acquired in mid-December by a private equity health investment firm for $31.35 a share, representing a 36% premium.”
An overhead view of a dental practice, showcasing the variety of infection control products used in the office.
Patterson Companies, Inc. (NASDAQ:PDCO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held Patterson Companies, Inc. (NASDAQ:PDCO) at the end of the third quarter which was 25 in the previous quarter. Patterson Companies, Inc. (NASDAQ:PDCO) reported $1.67 billion in consolidated sales in the fiscal second quarter of 2025, an increase of 1.3% from previous year’s quarter. While we acknowledge the potential of Patterson Companies, Inc. (NASDAQ:PDCO) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Patterson Companies, Inc. (NASDAQ:PDCO) and shared the list of best pet stocks to invest in according to analysts. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.