Heartland Advisors, an investment management company, released its “Heartland Opportunistic Value Equity Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The strategy returned 0.90% (net of bundled fees) in the quarter, compared to a 1.64% return for the Russell 3000® Value Index. Stock selection varied during the quarter, exhibiting a positive selection effect in 5 out of 11 sectors, primarily driven by Utilities and Information Technology. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, Heartland Opportunistic Value Equity Strategy highlighted stocks such as Donaldson Company, Inc. (NYSE:DCI). Headquartered in Bloomington, Minnesota, Donaldson Company, Inc. (NYSE:DCI) manufactures and sells filtration systems and replacement parts. The one-month return of Donaldson Company, Inc. (NYSE:DCI) was 3.34%, and its shares lost 10.93% of their value over the last 52 weeks. On May 7, 2025, Donaldson Company, Inc. (NYSE:DCI) stock closed at $66.15 per share with a market capitalization of $7.906 billion.
Heartland Opportunistic Value Equity Strategy stated the following regarding Donaldson Company, Inc. (NYSE:DCI) in its Q1 2025 investor letter:
Industrials: During the quarter, we initiated a new position in Donaldson Company, Inc. (NYSE:DCI), a leading manufacturer of industrial filtration systems. Filtration is a “razor & razorblade” business model, with margins significantly lower on first-fit original equipment and higher on the annuity-like revenue stream from aftermarket sales. Thanks to Donaldson’s long history of operating in niche markets, its business skews around 65% aftermarket and 35% first fit, providing a more stable revenue profile than traditional Industrial machinery suppliers.
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. As per our database, 26 hedge fund portfolios held Donaldson Company, Inc. (NYSE:DCI) at the end of the fourth quarter, compared to 29 in the third quarter. Donaldson Company, Inc. (NYSE:DCI) reported sales of $870 million in the second quarter of fiscal 2025, down 1% year-over-year. While we acknowledge the potential of Donaldson Company, Inc. (NYSE:DCI) 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.