Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. The portfolio had a 5.7% gain in the first quarter compared to an 8.2% return in the Russell Midcap Value Index. The Strategy underperformed in Financials and Industrials due to a low hit rate on stock selection. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Heartland Mid Cap Value Fund featured stocks like Donaldson Company, Inc. (NYSE:DCI) in the first quarter 2024 investor letter. Headquartered in Bloomington, Minnesota, Donaldson Company, Inc. (NYSE:DCI) manufactures and sells filtration systems and replacement parts. On April 12, 2024, Donaldson Company, Inc. (NYSE:DCI) stock closed at $73.47 per share. One-month return of Donaldson Company, Inc. (NYSE:DCI) was 0.74%, and its shares gained 15.63% of their value over the last 52 weeks. Donaldson Company, Inc. (NYSE:DCI) has a market capitalization of $8.844 billion.
Heartland Mid Cap Value Fund stated the following regarding Donaldson Company, Inc. (NYSE:DCI) in its first quarter 2024 investor letter:
Industrials. Donaldson Company, Inc. (NYSE:DCI), a filtration manufacturer with more than a century of experience in air, lubricant, hydraulic, and fuel filtration applications, is a new position this quarter.
DCI, an example of a stock in our quality value bucket, typically trades at a premium to its peers, an indication of the market’s appreciation for its economically resilient revenues and high profit margins. However, the company has faced margin headwinds lately, in part owing to heavy upfront investment in its fast-growing life sciences segment. Moreover, several of DCI’s cyclical end markets, including agricultural, mining, and construction equipment, have been under pressure as lower equipment utilization has translated into fewer filter replacements.
We think investors have already incorporated the life sciences operating losses in the company’s valuation, but we believe the segment will ultimately be accretive to revenue growth and margins. If life sciences operating margin approaches the corporate average of around 15% over the next two years, that could translate to a 10-15% lift in total earnings power. For context, this segment’s operating margin exceeded 20% prior to the current investment phase…” (Click here to read the full text)
A close-up of a factory worker carefully installing a part on an air filtration system.
Donaldson Company, Inc. (NYSE:DCI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Donaldson Company, Inc. (NYSE:DCI) was held by 24 hedge fund portfolios, compared to 21 in the previous quarter, according to our database.
We previously discussed Donaldson Company, Inc. (NYSE:DCI) in another article, where we shared the list of best mid-cap dividend aristocrats to buy. In addition, please check out our hedge fund investor letters Q1 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.
