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 Science Applications International Corporation (NASDAQ:SAIC), in the second quarter 2024 investor letter. Science Applications International Corporation (NASDAQ:SAIC) offers technical, engineering, and enterprise information technology (IT) services. The one-month return of Science Applications International Corporation (NASDAQ:SAIC) was 2.32%, and its shares gained 1.21% of their value over the last 52 weeks. On July 12, 2024, Science Applications International Corporation (NASDAQ:SAIC) stock closed at $117.74 per share with a market capitalization of $6.032 billion.
Heartland Value Plus Fund stated the following regarding Science Applications International Corporation (NASDAQ:SAIC) in its Q2 2024 investor letter:
“We see a similar opportunity in Science Applications International Corporation (NASDAQ:SAIC), which offers a range of IT services to its customers.
SAIC has faced recent challenges with lower-than-average government contract renewals and lower demand for their IT services, prompting the appointment of new management to address business development concerns. We purchased shares of SAIC in the second quarter on the premise that the new management team, led by a CEO previously with Microsoft, will be able to succeed in two key self-help efforts: increasing the volume of SAIC bids and improving the firm’s below-average industry “recompete rates,” which consist of rebidding on previously awarded expiring government contracts that are typically 5 years in length.
These efforts, coupled with internally focused capital allocation strategies that include dividend growth and active share buybacks, are likely to drive price appreciation for the stock. In the meantime, SAIC shares trade at a modest 13 times forecast earnings with a strong 8% free cash flow/enterprise value yield. Additionally, SAIC’s newly appointed CEO and CFO purchased shares during the quarter — suggesting to us the management team is confident in future prospects at SAIC.”
A DOD assistant presenting a portfolio of products and solutions from the company, highlighting its expertise in the IT sector.
Science Applications International Corporation (NASDAQ:SAIC) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Science Applications International Corporation (NASDAQ:SAIC) at the end of the first quarter which was 20 in the previous quarter. Science Applications International Corporation (NASDAQ:SAIC) reported revenue of $1.85 billion in the fiscal first quarter of 2025 (see the details here). While we acknowledge the potential of Science Applications International Corporation (NASDAQ:SAIC) 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 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.