Heartland Advisors, an investment management company, released its “Heartland Value Fund” second quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned 8.85%, compared to the 4.97% return for the Russell 2000 Value Index. The fund outperformed the benchmark over the past 1, 3, 5, and 10 years since inception. Over the past three months, stock selection accounted for almost all of the outperformance, specifically strong in Energy, Consumer Discretionary, Utilities, and Financials. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its second quarter 2025 investor letter, Heartland Value Fund highlighted stocks such as Photronics, Inc. (NASDAQ:PLAB). Based in Brookfield, Connecticut, Photronics, Inc. (NASDAQ:PLAB) engages in the business of photomask products and services. The one-month return of Photronics, Inc. (NASDAQ:PLAB) was 4.45%, and its shares lost 27.57% of their value over the last 52 weeks. On July 11, 2025, Photronics, Inc. (NASDAQ:PLAB) stock closed at $19.49 per share with a market capitalization of $1.172 billion.
Heartland Value Fund stated the following regarding Photronics, Inc. (NASDAQ:PLAB) in its second quarter 2025 investor letter:
“Photronics, Inc. (NASDAQ:PLAB) is a perfect example of common misconceptions surrounding small stocks. PLAB makes photomasks used to transfer circuit patterns onto semiconductor wafers during the fabrication process, operating manufacturing facilities globally. The company’s modest $1.1 billion market capitalization belies the fact that it is the largest merchant photomask manufacturer in the world. Plus their solid balance sheet, over $550 million in cash and cash equivalents, with minimal debt provides a strong ballast.
PLAB’s work with leading-edge applications, driven largely by artificial intelligence, remains strong. On the other hand, trailing-edge technologies tied to consumer electronics, industrial, and autos have been mired in a downcycle, though those end markets are showing some early signs of a recovery. As that segment rebounds while new semiconductor design activity continues to be robust, Photronics is well-positioned to reap the benefits of several years of growth investments in China, Taiwan, Europe, and the U.S. Giving us added confidence: Management recently implemented a $100 million share repurchase program, $72 million of which was executed earlier this year.
Yet at $18 a share, the company is trading at less than 10x 2026 earnings forecasts. That represents a significant discount to peers like Cohu and Kulicke & Soffa, which are each trading at P/E multiples in excess of 25x. We believe the stock is worth $28 a share, which is 1.7x our 2026 sales estimate for PLAB and 5x 2026 EBITDA.”
An engineer manipulating a complex circuit board that will be used in flat panel displays.
Photronics, Inc. (NASDAQ:PLAB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Photronics, Inc. (NASDAQ:PLAB) at the end of the first quarter, which was 23 in the previous quarter. Photronics, Inc. (NASDAQ:PLAB) reported first-quarter revenue of $211 million, flat sequentially and down 3% year over year. While we acknowledge the risk and potential of PLAB 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 PLAB and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Photronics, Inc. (NASDAQ:PLAB) and shared the list of cheap stocks with huge upside potential. In addition, please check out our hedge fund investor letters Q2 2025 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.
