Heartland Advisors, an investment management company, released its “Heartland Opportunistic Value Equity Strategy” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the strategy returned 13.42% Net of Advisory Fees compared to the Russell 3000 Value Index’s 12.18% return. The robust stock selection in the Information Technology and Healthcare sectors drove the strategy to outperform in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Heartland Opportunistic Value Equity Strategy highlighted stocks like Simpson Manufacturing Co., Inc. (NYSE:SSD) in its Q4 2022 investor letter. Headquartered in Pleasanton, California, Simpson Manufacturing Co., Inc. (NYSE:SSD) is a wood and concrete construction products manufacturer. On March 9, 2023, Simpson Manufacturing Co., Inc. (NYSE:SSD) stock closed at $107.40 per share. One-month return of Simpson Manufacturing Co., Inc. (NYSE:SSD) was -2.57%, and its shares lost 8.45% of their value over the last 52 weeks. Simpson Manufacturing Co., Inc. (NYSE:SSD) has a market capitalization of $4.582 billion.
Heartland Opportunistic Value Equity Strategy made the following comment about Simpson Manufacturing Co., Inc. (NYSE:SSD) in its Q4 2022 investor letter:
“These are companies like Simpson Manufacturing Co., Inc. (NYSE:SSD), which designs and manufactures connectors and fasteners used in new construction. Simpson dominates the domestic wood connector market, controlling roughly 75% share thanks to the company’s high value add. If a structural connector fails, the building is uninhabitable, yet Simpson products typically account for <0.5% of a building’s construction cost. As a result, the company enjoys pricing power and a long-term median operating margin (earnings before interest and taxes, or EBIT, divided by sales) of 17%, versus 12% for its Building Product industry peers. But the stock was down around 45% through late October, as investors grew concerned about a housing recession. Simpson’s earnings will be down significantly in 2023; however, we believe the stock is undervalued relative to normalized earnings. Longer term, the rise in building code requirements should result in more demand for SSD connectors per unit of construction.
When we purchased SSD, the stock was trading at a price/earnings ratio of around 12 based on forecasted earnings over the next 12 months. That was well below Simpson’s long-term median valuation of 21 times earnings. Today, the shares are trading at 16 times earnings for the next 12 months, after analysts cut their fiscal 2023 forecast by around 20% since the end of the third quarter.”
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Simpson Manufacturing Co., Inc. (NYSE:SSD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Simpson Manufacturing Co., Inc. (NYSE:SSD) at the end of the fourth quarter which was 24 in the previous quarter.
We discussed Simpson Manufacturing Co., Inc. (NYSE:SSD) in another article and shared the list of stocks that recently received updated price targets from analysts post earnings. In addition, please check out our hedge fund investor letters Q4 2022 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.
