Miller Value Partners, an investment management company, released its “Deep Value Strategy” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Strategy started the year on a strong note, returning +8.39% (net of fees) compared to the S&P 1500 Value Index’s +0.19% and the S&P 600 Value Index’s +4.32% returns. The strategy gained from ongoing rotation to small-cap value stocks and investments made in the energy sector. The year began with broadening market trends favoring lower-valued, smaller-capitalization equities, though this Value outperformance cycle remains overlooked by investors focused on AI and tech firms. The February onset of war in Iran led to increased energy prices, rising bond yields, and market volatility. The firm believes attractive investment opportunities persist in lower-valued securities and smaller market caps, highlighting companies with robust earnings and cash-flow yields. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Miller Value Deep Value Strategy highlighted Bloomin’ Brands, Inc. (NASDAQ:BLMN) as a newly established position. Bloomin’ Brands, Inc. (NASDAQ:BLMN) is a leading restaurant holding company that owns and operates casual, polished casual, and fine dining restaurants in the United States and internationally. On April 16, 2026, Bloomin’ Brands, Inc. (NASDAQ:BLMN) closed at $6.40 per share. One-month return of Bloomin’ Brands, Inc. (NASDAQ:BLMN) was 9.97%, and its shares lost 19.50% over the past 52 weeks. Bloomin’ Brands, Inc. (NASDAQ:BLMN) has a market capitalization of $545.46 million.
Miller Value Deep Value Strategy stated the following regarding Bloomin’ Brands, Inc. (NASDAQ:BLMN) in its Q1 2026 investor letter:
“We also initiated a position in Bloomin’ Brands, Inc. (NASDAQ:BLMN), a company in the midst of a multi-year transformation. The company has $4B in revenue focused on the casual dining portion of the restaurant market. Bloomin Brands’ two largest banners – Outback and Carrabbas – are leading brands in the large steakhouse and Italian segments of the market. The company’s smaller growing brands are Bonefish Grille and Flemings. Two years ago, Starboard Value took a 9%+ equity stake, highlighting the parallels to their previous successful turnaround in a casual dining space. Darden Restaurants has a very similar portfolio of brands as Bloomin Brands (Longhorn Steakhouse, Olive Garden and Capital Grille). Darden’s former successful Chief Operating Officer has been a recent addition to the Bloomin Brands board. The company also hired a new CEO who has embraced Starboards turnaround plan focusing on improving the Outback banner, enhancing the company balance sheet, and reinvesting back into the asset base. The company has been investing in new systems and guest-facing technology to reduce check-out time and gather consumer feedback. Late last year, management rolled out a new steak line-up at Outback and is reporting better consumer feedback and an inflection in restaurant traffic. During the upcoming year, management is using productivity savings to reinvest back into the business with a focus on improving food quality, enhancing server experience, and rolling out new marketing. In addition, management is undertaking a remodel program focused on refreshing all Outback stores by the end of 2028. Success of the transformation plan could help to drive the restaurant banners back to consistent positive comps and lead to margin improvements over time. Today Bloomin Brands’ share price is 80% below their all-time high, as the company is near historical low EBITDA margins versus industry peers in the low to mid-teens. Near term risk is ongoing revenue and margins headwinds from adverse weather and rising beef costs. Bloomin Brands low valuation appears to reflect these concerns and limited expectations on the success of the turnaround plan; forward EV/EBITDA is below 4x and price to earnings (FY2) is below 6x based on trough earnings expectations. Success on the transformation suggests normalized EBITDA at >$500M and, with only $60M of long-term maintenance capex, our view of normalized annual free cash flow is near the company current market cap. Bloomin Brands’ long-term potential upside could be multiples of the current share price.”
Bloomin’ Brands, Inc. (NASDAQ:BLMN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 36 hedge fund portfolios held Bloomin’ Brands, Inc. (NASDAQ:BLMN) at the end of the fourth quarter, up from 32 in the previous quarter. While we acknowledge the risk and potential of Bloomin’ Brands, Inc. (NASDAQ:BLMN) 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 Bloomin’ Brands, Inc. (NASDAQ:BLMN) 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.
