Heartland Advisors, an investment management company, released its “Heartland Value Plus Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund declined 1.79% in the quarter, compared to a 1.06% loss for the Russell 2000 Value Index. Although stock selection was modestly negative for the entire portfolio, the selection effect was most pronounced in the financial sector. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Heartland Value Plus Fund highlighted stocks like Semtech Corporation (NASDAQ:SMTC), in the fourth quarter 2024 investor letter. Semtech Corporation (NASDAQ:SMTC) manufactures and distributes analog and mixed-signal semiconductor products and advanced algorithms. The one-month return of Semtech Corporation (NASDAQ:SMTC) was -0.58%, and its shares gained 252.29% of their value over the last 52 weeks. On January 13, 2025, Semtech Corporation (NASDAQ:SMTC) stock closed at $65.35 per share with a market capitalization of $5.632 billion.
Heartland Value Plus Fund stated the following regarding Semtech Corporation (NASDAQ:SMTC) in its Q4 2024 investor letter:
“Technology. Semtech Corporation (NASDAQ:SMTC), which manufactures optical components and technology solutions used in data centers and IoT (Internet of Things) systems, is a position we initiated in the third quarter and increased our exposure to in the fourth.
Semtech, one of our Strategy’s best performers in the past quarter, is an example of a stock we’ve owned in the past and recently returned to as circumstances improved. We last held SMTC a few years ago, before it announced its acquisition of Sierra Wireless. The company levered up in late 2022 to make the purchase. Soon after the deal was completed, the stock sold off and the existing management team was replaced. The new management team is now seeking to divest some of Sierra Wireless’ assets to de-lever and regain focus on Semtech’s core business.
We’ve kept the company on our radar since the acquisition. Semtech’s signal integrity business, the company’s crown jewel franchise, is a backbone component of many data centers. With growing demand for data centers in the AI boom, we believe this could be a real opportunity for the company. New management has been clear they intend to divest non-core business lines to reduce leverage, which should unlock additional value. Yet the stock currently trades at a 20-25% discount to its peers based on EBITDA.”
A technician looking at a circuit board of analog semiconductor products.
Semtech Corporation (NASDAQ:SMTC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Semtech Corporation (NASDAQ:SMTC) at the end of the third quarter which was 37 in the previous quarter. While we acknowledge the potential of Semtech Corporation (NASDAQ:SMTC) 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 Semtech Corporation (NASDAQ:SMTC) and shared AI news updates that investors are watching. 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.