Heartland Advisors: “Methode (MEI) is an Attractive Opportunity to Capture Growing Cash Flows”

Heartland Advisors, an investment management firm, published its “Heartland Value Plus Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 20.62% was delivered by the fund’s institutional class shares for the Q1 of 2021, slightly below its Russell 2000® Value benchmark that delivered a 21.17% return for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Heartland Value Plus Fund, in its Q1 2021 investor letter, mentioned Methode Electronics, Inc. (NYSE: MEI), and shared their insights on the company. Methode Electronics, Inc. is a Chicago, Illinois-based engineering company that currently has a $1.7 billion market capitalization. Since the beginning of the year, MEI delivered a 20.43% return, extending its 12-month gains to 68.31%. As of May 13, 2021, the stock closed at $46.10 per share.

Here is what Heartland Value Plus Fund has to say about Methode Electronics, Inc. in its Q1 2021 investor letter:

“The portfolio’s IT holdings boosted results and we continue to find opportunities in a variety of industries in the space. Methode Electronics, Inc. (MEI) is a manufacturer of electronic controls and components primarily for the automobile and industrial end markets and is an example of the type of business we favor.

Shares of Methode advanced nearly 10% during the period following management reporting solid quarterly results and a robust sales forecast for 2022 along with improving margins.

The company offers an attractive mix of steady revenue from an established core business and rapid growth from its electric/hybrid vehicle, which may see sales double within the next year. Additionally, Methode’s management team has been aggressive in paying down debt and has optimized costs following recent acquisitions.

With Methode shares trading at 7.5x estimates of 2022 EV/EBITDA, we believe the company is an attractive opportunity to capture growing cash flows at a price that could mitigate downside risk.”



Our calculations show that Methode Electronics, Inc. (NYSE: MEI) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Methode Electronics, Inc. was in 11 hedge fund portfolios. MEI delivered a 16.30% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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