Heartland Advisors, an investment management company, released its “Heartland Opportunistic Value Equity Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The strategy returned 0.90% (net of bundled fees) in the quarter, compared to a 1.64% return for the Russell 3000® Value Index. Stock selection varied during the quarter, exhibiting a positive selection effect in 5 out of 11 sectors, primarily driven by Utilities and Information Technology. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, Heartland Opportunistic Value Equity Strategy highlighted stocks such as J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) offers surface transportation, delivery, and logistic services in the United States. The one-month return of J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) was -0.18%, and its shares lost 21.13% of their value over the last 52 weeks. On May 7, 2025, J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) stock closed at $132.95 per share with a market capitalization of $13.311 billion.
Heartland Opportunistic Value Equity Strategy stated the following regarding J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) in its Q1 2025 investor letter:
“Industrials. This was a challenging quarter for JB Hunt Transportation Services, Inc. (JBHT), a diversified transportation company with a focus on intermodal shipping. Customers hire Hunt to move freight in a more efficient manner than substitutes. The company owns the largest fleet of 53-foot shipping containers, which allows three ocean-freight containers to be consolidated into two Hunt containers that are moved by rail (via third party partners) and by company-owned trucks that transport containers to their final destination. Rail is the most efficient method of freight transportation, and Hunt is a key enabler of transferring semi-trailer miles onto railroads.
While the company’s fourth-quarter earnings came in slightly better than consensus estimates, management provided an uncharacteristic preview of challenging earnings expected in early 2025. Intermodal pricing is typically struck annually, and contracts agreed upon when the substituted trucking industry was operating near trough demand will carry into 2025 and keep margins depressed. While recent intermodal volumes have been strong, we believe this is largely due to inventory buildup in anticipation of tariffs, raising the likelihood of weaker demand later in 2025.
The intermodal industry appears oversupplied today; however, Hunt’s largest rail partner, Burlington Northern Santa Fe (BNSF), is constructing a major terminal expansion California. BNSF plans to have this facility complete over the next two to three years resulting in new demand that will absorb Hunt’s recent fleet growth. Despite near-term headwinds, the stock trades at around 9.6X consensus EV/EBITDA over the next 12 months, which represents a 15-year low 30% discount to the Industrial sector and is in line with the company’s long-term valuation despite a greater than 30% decline in earnings expectations since 2022. In other words, we do not expect significant multiple compression as earnings recover. JBHT operates in a cyclical industry, yet the company has grown per-share earnings at a mid-teens annual growth rate over multiple decades.”
A truck on a highway, its exhausts billowing in the air.
J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) at the end of the fourth quarter, compared to 39 in the third quarter. While we acknowledge the potential of J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we covered J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) and shared the list of stocks on Jim Cramer’s Radar. In addition, please check out our hedge fund investor letters Q1 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.
