Heartland Advisors, an investment management firm, published its “Heartland Mid Cap Value Fund” third-quarter 2021 investor letter – a copy of which can be seen here. Security selection was mixed with holdings in Real Estate and Financials leading on the upside, but the Strategy lagged its Russell Mid Cap® Value Index benchmark for the period. Holdings in Materials detracted from relative performance. The portfolio continued to outpace its benchmark year to date through September 30. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Heartland Advisors, in its Q3 2021 investor letter, mentioned AmerisourceBergen Corporation (NYSE: ABC) and discussed its stance on the firm. AmerisourceBergen Corporation is a Conshohocken, Pennsylvania-based drug wholesale company with a $25.4 billion market capitalization. ABC delivered a 25.52% return since the beginning of the year, while its 12-month returns are up by 23.48%. The stock closed at $122.71 per share on October 21, 2021.
Here is what Heartland Advisors has to say about AmerisourceBergen Corporation in its Q3 2021 investor letter:
"The ABCs of quality.AmerisourceBergen Corp. (ABC), a leading national pharmaceutical distributor, provides an example of our approach. The company has been quietly bolstering its business model during the past few years to include animal health products for the European market and an expanded line of higher-margin, value-added services that reach beyond drug distribution. During these efforts, valuations for the company have been under pressure due to liability issues stemming from opioid litigation as well as concerns about increased scrutiny of drug prices by politicians.
Our team has been following these developments and believes the strides management has made on the business side are not being fully recognized by the market. As more clarity has emerged related to opioid litigation, we’ve increased the portfolio’s stake in AmerisourceBergen and believe the investment provides the portfolio with additional exposure to a high-quality business that is well positioned to grow despite operating in a mature industry."
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Based on our calculations, AmerisourceBergen Corporation (NYSE: ABC) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ABC was in 43 hedge fund portfolios at the end of the first half of 2021. AmerisourceBergen Corporation (NYSE: ABC) delivered a 1.15% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.