Heartland Advisors, an investment management firm, published its “Heartland Value Plus Fund” third-quarter 2021 investor letter – a copy of which can be seen here. The inflating bubble in large growth companies early in the quarter continued to drain oxygen from value stocks, and the portfolio was off modestly and lagged its benchmark, the Russell 2000® Value Index. Stock selection in Utilities was strong on a relative basis as were holdings in the Financials sector. The portfolio’s holdings in Health Care were down but outperformed the benchmark average for the group. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Heartland Advisors, in its Q3 2021 investor letter, mentioned Haemonetics Corporation (NYSE: HAE) and discussed its stance on the firm. Haemonetics Corporation is a Boston, Massachusetts-based healthcare company with a $3.6 billion market capitalization. HAE delivered a -39.68% return since the beginning of the year, while its 12-month returns are up by -33.02%. The stock closed at $71.63 per share on October 21, 2021.
Here is what Heartland Advisors has to say about Haemonetics Corporation in its Q3 2021 investor letter:
“Health Check. The portfolio’s Health Care names were down on an absolute basis but outpaced the benchmark average for the group. We continue to find attractive opportunities in the space such as Haemonetics Corporation (HAE), a medical device company that focuses on plasma collection equipment and consumables.
We took a stake in Haemonetics earlier this year after shares slumped on news that it was losing one of its largest customers, beginning in its 2023 fiscal year. Sales of its plasma-related products also slowed during the height of the pandemic and further weighed on the stock. We viewed the sell-off as overdone and saw it as an opportunity to buy a high-quality company at a significant discount.
Haemonetics has seen a recovery in plasma-related sales as COVID-19 concerns have moderated and federal direct payments to consumers have faded. Given its margin profile and prospects for continued sales growth, we view the business as undervalued at its current 12x enterprise value/earnings before interest, depreciation, taxes and amortization.”
Based on our calculations, Haemonetics Corporation (NYSE: HAE) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. HAE was in 30 hedge fund portfolios at the end of the first half of 2021, compared to 37 funds in the previous quarter. Haemonetics Corporation (NYSE: HAE) delivered a 20.57% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 12 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.
