Heartland Advisors, an investment management company, released its “Heartland Value Plus Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In one aspect, it was a difficult quarter for small-cap investors as the Russell 2000 Index fell 3.28% while the S&P 500 Index gained 4.28%. The strategy was down 7.37% compared to the Russell 2000 Small-Cap Value Index’s 3.64% returns. The underperformance was due to the stock selection in the Consumer Discretionary, Financials, and Energy sectors. On the other hand, the selection effect helped the Strategy to outperform the benchmark in the Information Technology, Health Care, and Utilities sectors. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Heartland Value Plus Fund highlighted stocks like Kennametal Inc. (NYSE:KMT) in the Q2 2024 investor letter. Headquartered in Pittsburgh, Pennsylvania, Kennametal Inc. (NYSE:KMT) engages in the manufacturing of tungsten carbide metal cutting tooling. The one-month return of Kennametal Inc. (NYSE:KMT) was 1.35%, and its shares lost 17.10% of their value over the last 52 weeks. On July 12, 2024, Kennametal Inc. (NYSE:KMT) stock closed at $24.09 per share with a market capitalization of $1.895 billion.
Heartland Value Plus Fund stated the following regarding Kennametal Inc. (NYSE:KMT) in its Q2 2024 investor letter:
“These are companies like Kennametal Inc. (NYSE:KMT), the manufacturer of industrial cutting tools and components that we mentioned in our Q1 commentary. The company is emerging from trough demand and has seen EBITDA contract on a year-over-year basis in 5 of the last 7 quarters. But the company has been undergoing extensive self-help during the past 5 years, taking out $200 million in structural costs, cutting its headcount by 20%, and closing 6 plants as part of an extensive restructuring. The heavy lifting/investment phase seems to now be in the rearview mirror. While demand has not yet inflected higher, sales are stabilizing. If Kennametal sees even a slight pickup in demand in its end markets, that could provide an immediate and robust boost to its operating margins. Furthering our confidence, KMT’s newly appointed CEO purchased shares in the quarter and the company is active on its buyback program.”
A machinist worker in a factory using a precision cutting tool.
Kennametal Inc. (NYSE:KMT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Kennametal Inc. (NYSE:KMT) at the end of the first quarter which was 26 in the previous quarter. During the fiscal third quarter of 2024, the sales of KMT decreased 4% year over year with organic decline of 2%. While we acknowledge the potential of Kennametal Inc. (NYSE:KMT) 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.
Heartland value plus fund initiated a position in Kennametal Inc. (NYSE:KMT) in the first quarter 2024. 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.
