Heartland Advisors, an investment management company, released its first-quarter 2026 investor letter for “Heartland Mid Cap Value Fund”. A copy of the letter can be downloaded here. Mid-cap stocks experienced initial gains due to improved market breadth; however, increasing geopolitical risks led investors to favor larger-cap companies perceived as safer. The firm remains committed to a valuation-driven strategy to navigate short-term risks while seeking long-term opportunities. The fund returned 4.09% in the quarter, outpacing the Russell Midcap® Value Index’s 3.68% return. Stock selection drove the outperformance, with notable contributions from Financials, Consumer Discretionary, and Information Technology. In addition, you can check the Fund’s top 5 holdings to determine its best picks for 2026.
In its first-quarter 2026 investor letter, Heartland Mid Cap Value Fund highlighted stocks like Murphy USA Inc. (NYSE:MUSA). Murphy USA Inc. (NYSE:MUSA) is a gas station and convenience store operator across the United States. On April 14, 2026, Murphy USA Inc. (NYSE:MUSA) closed at $498.46 per share. One-month return of Murphy USA Inc. (NYSE:MUSA) was 7.97%, and its shares lost 1.58% over the past 52 weeks. Murphy USA Inc. (NYSE:MUSA) has a market capitalization of $9.22 billion.
“Consumer Discretionary. During the quarter, we added a new holding in Murphy USA Inc. (NYSE:MUSA), a large-scale, low-cost operator of gas stations and convenience stores throughout the country.
Until recently, the relatively modest absolute level and volatility of gasoline prices created a challenging backdrop for “everyday low price” fuel retailers like Murphy. Shortly after we initiated a position, the stock jumped as the return of higher gas prices, driven by the conflict in Iran, allowed MUSA to flex its low-cost advantage, offering everyday discounted prices to consumers seeking value. Ultimately, how low-cost leaders respond in a trough speaks to their resilience and ability to emerge as winners when the cycle normalizes. We believe Murphy has done just that, and management seems to know it, as they have been buying back shares along the way.
We can’t predict exactly how this cycle will unfold. What we do know, though, is that MUSA’s long-term margin opportunity is attractive, especially when more than 60% of its industry peers are independents who generally have difficulty competing in an inflationary backdrop. The stock—which traded at a 10-30% discount to the S&P 1500 Food and Staples group during the prior cycle—was recently at an all-time discount to peers of 45%. The company’s structural share gains and attractive valuation gave us confidence to purchase shares despite no certainty that fuel margins would improve. Thus far, our timing has proven lucky, but this situation serves as a reminder that buying a good business at an attractive valuation is more important than trying to predict the unpredictable, in this case, the price of fuel.”
Murphy USA Inc. (NYSE:MUSA) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 39 hedge fund portfolios held Murphy USA Inc. (NYSE:MUSA) at the end of the fourth quarter, up from 33 in the previous quarter. While we acknowledge the risk and potential of Murphy USA Inc. (NYSE:MUSA) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Murphy USA Inc. (NYSE:MUSA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In addition, please check out our hedge fund investor letters Q1 2026 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.
