Heartland Advisors, an investment management company, released its “Heartland Value Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Small-cap companies started to rebound in the quarter, with the Heartland Value Fund gaining 10.04% compared to a 12.60% return for the Russell 2000® Value Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its third-quarter 2025 investor letter, Heartland Value Fund highlighted stocks such as Calavo Growers, Inc. (NASDAQ:CVGW). Calavo Growers, Inc. (NASDAQ:CVGW) is a leading distributor of avocados, prepared avocados, and other perishable foods. The one-month return of Calavo Growers, Inc. (NASDAQ:CVGW) was -9.03%, and its shares lost 11.17% of their value over the last 52 weeks. On October 10, 2025, Calavo Growers, Inc. (NASDAQ:CVGW) stock closed at $24.97 per share, with a market capitalization of $445.798 million.
Heartland Value Fund stated the following regarding Calavo Growers, Inc. (NASDAQ:CVGW) in its third quarter 2025 investor letter:
“Another industry leader that caught our attention in early 2024 is Calavo Growers, Inc. (NASDAQ:CVGW), which is headquartered in Santa Paula, California. Their unique health-conscious food products were intriguing, but they were in the midst of a management transition, so it was put on our watch list. After a series of research calls uncovering an improving outlook, we began to accumulate the stock early this year.
CVGW is a leading marketer and distributor of avocados and guacamole. After a multi-year period of mismanagement that included several CEOs, the long-time former chief executive came out of retirement to stabilize operations. He is aligned with shareholders receiving large equity grants that vest significantly higher than current stock levels and has purchased a sizeable number of shares in the open market.
Since returning to the business, he has focused on exiting low-margin business lines and growing the prepared guacamole business that was 10% of total sales last year but has double the gross margin of the core business. This business grew +40% YOY in the latest quarter. CVGW believes they can double the size of this business within the next two years, which would be fruitful for Calavo’s earnings potential . The evolving narrative positions Calavo less as a commodity dependent packer and more as a growing “fresh + value-added” food company. If management can scale the prepared guacamole business, control costs, and navigate tax/regulatory risks, we believe shareholders will be rewarded.
We aren’t the only believers. Calavo received an unsolicited buyout offer for $32 a share in July. Further, the downside risk seems to be limited, supported by a solid balance sheet that includes around $3.50 per share of net cash plus $3 a share of cash potentially from the resolution of a long-standing dispute with Mexican tax authorities.”
Calavo Growers, Inc. (NASDAQ:CVGW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 19 hedge fund portfolios held Calavo Growers, Inc. (NASDAQ:CVGW) at the end of the second quarter, compared to 20 in the previous quarter. While we acknowledge the risk and potential of Calavo Growers, Inc. (NASDAQ:CVGW) 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 Calavo Growers, Inc. (NASDAQ:CVGW) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Calavo Growers, Inc. (NASDAQ:CVGW) and shared the list of best organic food and farming stocks to buy. In addition, please check out our hedge fund investor letters Q3 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.
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