Heartland Advisors, an investment management company, released its “Heartland Opportunistic Value Equity Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. Large- and mega-cap stocks posted another quarter of outperformance in Q4, despite a brief broad-based performance across market caps. The Russell 2000® Index of small stocks returned 2.19% in the quarter, lagging the 2.66% gain for the S&P 500. The market remains uncertain on the definitive long-term winners from the proliferation of AI. To navigate economic uncertainty, the strategy adheres to its 10 Principles of Value Investing by focusing on attractively priced, financially sound, and well-managed businesses that can grow intrinsic value. The Strategy returned 0.79% during the quarter, trailing the Russell 3000® Value Index’s 3.78% return. The Strategy remains optimistic about the market’s expansion and opportunities for growth. However, the recent volatility in AI trends highlights the need to evaluate multiple outcomes. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Heartland Opportunistic Value Equity Strategy highlighted Prestige Consumer Healthcare Inc. (NYSE:PBH). Prestige Consumer Healthcare Inc. (NYSE:PBH) is a leading manufacturer and distributor of over-the-counter (OTC) health and personal care products. On March 24, 2026, Prestige Consumer Healthcare Inc. (NYSE:PBH) stock closed at $61.98 per share. One-month return of Prestige Consumer Healthcare Inc. (NYSE:PBH) was -10.64%, and its shares lost 27.06% over the past 52 weeks. Prestige Consumer Healthcare Inc. (NYSE:PBH) has a market capitalization of $2.98 billion.
Heartland Opportunistic Value Equity Strategy stated the following regarding Prestige Consumer Healthcare Inc. (NYSE:PBH) in its fourth quarter 2025 investor letter:
“A new mid-cap holding in the quarter was Prestige Consumer Healthcare Inc. (NYSE:PBH), whose over-the-counter brands are familiar to many including Dramamine motion sickness relief, Clear Eyes eye drops, and CompoundW wart removal products among others. The stock had been a laggard, losing more than 30% since mid-May, thanks to supply chain issues related to its eye care business. PBH’s supplier was simply not able to ship enough products to meet demand for the company’s Clear Eyes business, causing Prestige to lose sales and lower 2025 profit guidance.
The company has since fixed this issue by acquiring that supplier for $100 million. This asset acquisition raised concerns that management was pivoting their capital allocation strategy because they had historically outsourced manufacturing to third parties. We believe the manufacturing asset purchase is a function of tight ophthalmic industry production capacity and the high regulatory hurdles that must be met to add more capacity.
The eye care business should recover as customers re-stock, and we expect the company’s 2027 earnings to accelerate now that its supply chain issues are behind it. Yet after the sell-off, PBH shares trade at less than 13 times earnings, based on consensus estimates for profits over the next 12 months. Meanwhile, the stock sports a free cash flow-to-enterprise value yield of nearly 6.5%.”
Prestige Consumer Healthcare Inc. (NYSE:PBH) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 22 hedge fund portfolios held Prestige Consumer Healthcare Inc. (NYSE:PBH) at the end of the fourth quarter, compared to 24 in the previous quarter. In the third quarter of fiscal 2026, Prestige Consumer Healthcare Inc. (NYSE:PBH) delivered revenue of $283.4 million declined 2.4% from the prior year, or 2.2% excluding FX. While we acknowledge the risk and potential of Prestige Consumer Healthcare Inc. (NYSE:PBH) 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 Prestige Consumer Healthcare Inc. (NYSE:PBH) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Prestige Consumer Healthcare Inc. (NYSE:PBH) and shared a list of innovative healthcare stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q4 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.
