Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the portfolio returned 3.07% compared to a 1.32% gain for the Russell Midcap Value Index. During the quarter the company shifted its focus to beaten-down shares of well-run businesses believing that it would benefit if the market became less fearful of the business cycle. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Heartland Mid Cap Value Fund highlighted stocks like Interactive Brokers Group, Inc. (NASDAQ:IBKR) in the first quarter 2023 investor letter. Headquartered in Greenwich, Connecticut, Interactive Brokers Group, Inc. (NASDAQ:IBKR) provides an automated electronic brokerage platform. On April 12, 2023, Interactive Brokers Group, Inc. (NASDAQ:IBKR) stock closed at $81.39 per share. One-month return of Interactive Brokers Group, Inc. (NASDAQ:IBKR) was 4.48%, and its shares gained 24.66% of their value over the last 52 weeks. Interactive Brokers Group, Inc. (NASDAQ:IBKR) has a market capitalization of $33.923 billion.
Heartland Mid Cap Value Fund made the following comment about Interactive Brokers Group, Inc. (NASDAQ:IBKR) in its Q1 2023 investor letter:
“Financials. Unlike the broader financial sector, which sank in the quarter, Interactive Brokers Group, Inc. (NASDAQ:IBKR), a fully digital brokerage platform, gained 14.24% in the first three months of the year.
Interactive Brokers’ differentiated business model shined because the company’s management team built the business to avoid the two risks that came to the forefront for sector peers this quarter, credit and interest-rate risk. IBKR is a prime example of why analyzing businesses under multiple scenarios, both good and bad, is so important. In late 2021, when we began purchasing IBKR, the market was not pricing credit or interest-rate risk into the sector. Banks appeared optically “cheap” on P/E multiples, but after adjusting for downside risks, the upside versus downside potential was far more compelling in Interactive Brokers than in banks. Today that gap has narrowed, however, we continue to hold a position in IBKR given its lack of credit risk, which has yet to be fully priced into many banks.
IBKR enjoys industry- and sector-leading pre-tax margins thanks to its highly automated platform that drives scale efficiencies, which are partially passed on to customers in the form of attractive interest rates on cash balances. For this reason, clients have little incentive to move deposits as interest rates rise. IBKR’s management team has refused to take duration risk thereby significantly lowering the chances of a “run on the bank” scenario that proved disastrous for several banks this year. Credit risk is limited to margin loans that are over-collateralized and marked to market in real time thereby significantly reducing any loss given default.”
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Interactive Brokers Group, Inc. (NASDAQ:IBKR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Interactive Brokers Group, Inc. (NASDAQ:IBKR) at the end of the fourth quarter which was 35 in the previous quarter.
We discussed Interactive Brokers Group, Inc. (NASDAQ:IBKR) in another article and shared the list of best cryptocurrency stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q1 2023 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.
