Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” third quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, Mid Cap Value Investor Class returned -5.06% and Mid Cap Value Institutional Class returned -5.03% compared to a -4.93% return for the Russell Midcap Value Index. Initially, in the third quarter, the fund lagged behind its benchmark, the Russell Mid Cap Value Index. But at the end of the third quarter, the fund was able to close the gap compared to the benchmark index and outperformed year-to-date. Security selection contributed to the fund’s performance in the quarter. Financials and Utility sectors outperformed, while Consumer Discretionary, Consumer Staples, and Energy sectors detracted from the performance. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Heartland Advisors discussed stocks like Texas Capital Bancshares, Inc. (NASDAQ:TCBI) in the third quarter investor letter. Headquartered in Dallas, Texas, Texas Capital Bancshares, Inc. (NASDAQ:TCBI) is a bank holding company. On October 12, 2022, Texas Capital Bancshares, Inc. (NASDAQ:TCBI) stock closed at $61.57 per share. One-month return of Texas Capital Bancshares, Inc. (NASDAQ:TCBI) was -0.90% and its shares gained 1.17% of their value over the last 52 weeks. Texas Capital Bancshares, Inc. (NASDAQ:TCBI) has a market capitalization of $3.071 billion.
Here is what Heartland Advisors specifically said about Texas Capital Bancshares, Inc. (NASDAQ:TCBI) in its Q3 2022 investor letter:
“We do not force deep value exposure into the portfolio, preferring instead to identify self-help opportunities and act when progress is evident and headwinds are clearing. One such example is Texas Capital Bancshares, Inc. (NASDAQ:TCBI), a Dallas-based middle market commercial lender with a particular focus on the four major Texas markets of Dallas-Fort Worth, Houston, San Antonio, and Austin.
We initiated a position in the third quarter because the company could be on the verge of improving its returns and market perception. TCBI is a classic self-help story: Prior management ran the bank as a “growth at all cost” institution. When the bank was small and interest rates were at historic lows, it was easy to sustain growth by booking new loans and growing deposits regardless of the quality of either relationship. Credit problems began to percolate after the company downgraded several levered loan credits in 2019.
As the bank grew and approached a critical asset level that triggered a greater degree of regulatory burden, management engaged in a merger-of-equals between TCBI and another Texas-based bank, Independent Bank Group. While the merger was pending, the pandemic struck and the deal was called off exposing, Texas Capital’s problems to the market.
Last year, a new CEO was brought in from J.P. Morgan Chase. He quickly exited risky loans and reoriented TCBI as a local Texas commercial lender with a niche focus on deep customer relationships. The stock trades at around 1.1 times tangible book value, compared to 1.8 times for regional banks in general. While its return on assets is below the average for its peers, in our opinion, over time TCBI will close the return gap with valuations likely to follow suit.”
Texas Capital Bancshares, Inc. (NASDAQ:TCBI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held Texas Capital Bancshares, Inc. (NASDAQ:TCBI) at the end of the second quarter which was 26 in the previous quarter.
In addition, please check out our hedge fund investor letters Q3 2022 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.
