Heartland Advisors, an investment management firm, published its “Heartland Mid Cap Value Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 15.81% was delivered by the fund’s institutional class shares for the Q1 of 2021, outperforming its Russell Midcap® Value benchmark that delivered a 13.05% return for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Heartland Mid Cap Value Fund, in its Q1 2021 investor letter, mentioned Post Holdings, Inc. (NYSE: POST), and shared their insights on the company. Post Holdings, Inc. is a Brentwood, Missouri-based consumer packaged goods holding company that currently has a $7.4 billion market capitalization. Since the beginning of the year, POST delivered a 15.68% return, extending its 12-month gains to 37.66%. As of May 13, 2021, the stock closed at $116.85 per share.
Here is what Heartland Mid Cap Value Fund has to say about Post Holdings, Inc. in its Q1 2021 investor letter:
“The run up in equity prices over the past several months has narrowed the pool of attractively valued businesses. Economically sensitive areas of the market, in particular, have seen valuations stretched—but the impact of investor exuberance is evident in share prices of companies throughout the broader market. In response, we continue to focus on finding and owning companies that are poised to succeed against a variety of backdrops or those that are priced at significant discounts to peers regardless of the sector or industry. Recent addition Post Holdings, Inc. (POST) is an example of the type of business we’ve found attractive.
Post manufactures and markets food products through five business lines including a breakfast cereals unit, a food service division, refrigerated retail products, and active nutrition. Shares of the company came under pressure due to the severe impact the COVID-19 economic shutdown had on its food service segment.
Additionally, investors were wary of the company’s use of debt given the uncertainty surrounding how long the economic pullback would last. The bear case against the stock, in our view, is overblown.
In recent years, Post has transformed itself into a higher-growth packaged food enterprise with a diversified portfolio that, taken as a whole, possesses superior growth and free cash flow characteristics vs. its peers. Despite this, shares sell at a meaningful discount to the peer group based on enterprise value/earnings before interest taxes depreciation and amortization, as well as our estimates of the company’s intrinsic value. As the economy returns to normal, Post’s food service line should rebound, and we believe investors will gain a greater appreciation of the company and its stock.”
Our calculations show that Post Holdings, Inc. (NYSE: POST) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Post Holdings, Inc. was in 27 hedge fund portfolios, compared to 30 funds in the third quarter. POST delivered a 16.85% return in the past 3 months.
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Disclosure: None. This article is originally published at Insider Monkey.
