Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. It has been difficult to reflect on how the market has behaved recently because each month of this year has felt unique. The second quarter was no different. The fund fell 4.12% in the quarter compared to the Russell Midcap® Value Index’s 3.40% decline. Negative selection effect across seven sectors, led by Consumer Discretionary and Utilities partially drove the fund’s underperformance in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Heartland Mid Cap Value Fund highlighted stocks like Stericycle, Inc. (NASDAQ:SRCL), in the second quarter 2024 investor letter. Stericycle, Inc. (NASDAQ:SRCL) regulated waste and compliance services. The one-month return of Stericycle, Inc. (NASDAQ:SRCL) was -0.61%, and its shares gained 29.12% of their value over the last 52 weeks. On July 12, 2024, Stericycle, Inc. (NASDAQ:SRCL) stock closed at $58.27 per share with a market capitalization of $5.407 billion.
Heartland Mid Cap Value Fund stated the following regarding Stericycle, Inc. (NASDAQ:SRCL) in its Q2 2024 investor letter:
“Industrials. Stericycle, Inc. (NASDAQ:SRCL), a leading medical waste disposal and compliance company in the country, is an example where self-help has come to fruition.
After undertaking a variety of self-help strategies — including divesting 12 non-core operations over roughly six years to focus on its core medical waste disposal and document destruction businesses while reducing debt — Stericycle agreed to be acquired by Waste Management for $62 per share, valuing the deal at $7.2 billion.
This is SRCL’s reward for changing its game plan, turning what was a company that sought growth through aggressive M&A into a business focused on organic growth while seeking to optimize margins, capital allocation, and returns on investment. When we wrote about this stock a year ago, we referred to this as a metamorphosis from ‘holding company’ to ‘operating company’ with a better chance for rewarding shareholders. When Waste Management announced the acquisition, Stericycle was well into the process of implementing plans to improve revenue quality (through steps such as implementing better pipeline management processes) and operating efficiency (through modernization and innovation).
Before the deal, we had assigned Stericycle a price target of $63 a share, which was near the takeout price. Waste Management seemed to agree with what we concluded: SRCL had been trading at a discount to its own history and to its waste industry peers that operate bond-like business models.”
A team of waste management experts inspecting a stack of hazardous waste barrels.
Stericycle, Inc. (NASDAQ:SRCL) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held Stericycle, Inc. (NASDAQ:SRCL) at the end of the first quarter which was 18 in the previous quarter. Stericycle, Inc. (NASDAQ:SRCL) reported first-quarter revenues of $664.9 million compared to $684.3 million in Q1 2023. While we acknowledge the potential of Stericycle, Inc. (NASDAQ:SRCL) 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 Stericycle, Inc. (NASDAQ:SRCL) and shared the list of biggest waste management companies in the world. In addition, please check out our hedge fund investor letters Q2 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.
