Heartland Advisors, an investment management company, released its second-quarter 2026 investor letter for “Heartland Mid Cap Value Fund”. A copy can be downloaded here. Mid-cap stocks sharply rose in the second quarter, driven by perceived AI beneficiaries, particularly in Technology. The Fund returned 9.90% in the quarter, compared to the Russell Midcap® Value Index’s 13.40% return. The underperformance was driven by negative stock selection despite Tech being one of the top absolute return contributors. In the challenging environment, the Fund remains focused on its disciplined approach to security selection. In addition, you can check the Fund’s top 5 holdings to determine its best picks for 2026.
In its Q2 2026 investor letter, Heartland Mid Cap Value Fund highlighted ON Semiconductor Corporation (NASDAQ:ON). ON Semiconductor Corporation (NASDAQ:ON) is an American semiconductor company that provides intelligent sensing and power solutions to the automotive, industrial, aerospace and defense, medical, and communication industries. The one-month return of ON Semiconductor Corporation (NASDAQ:ON) was -16.99%, and its shares gained 57.48% over the past 52 weeks. On July 14, 2026, ON Semiconductor Corporation (NASDAQ:ON) closed at $93.73 per share with a market capitalization of $36.48 billion.
Heartland Mid Cap Value Fund stated the following regarding ON Semiconductor Corporation (NASDAQ:ON) in its Q2 2026 investor update:
“Technology. In our Deep Value bucket, ON Semiconductor Corporation (NASDAQ:ON) manufactures power management and image sensing semiconductor products for automotive and industrial end markets.
ON is a leader in silicon carbide semiconductors, which are used primarily in electric vehicles (EVs), renewable energy inverters, and high-power industrial equipment to reduce energy loss and improve efficiency. ON endured a cyclical deceleration in its auto and clean-energy-related markets that began in 2023. Throughout the downturn, management implemented a robust self-help playbook that optimized the company’s manufacturing footprint and product portfolio for both a cyclical upturn and secular growth drivers. This included a new product platform with much higher profit margins than the existing business.
More recently, the company has gained market share with leading global EV manufacturers, enjoying outsized representation in newer car models. In AI datacenters, power voltage requirements are rising, helping to drive adoption for ON’s next-generation power management solutions. However, investors counting on rapid datacenter-related growth should keep in mind that, even in the most optimistic scenarios, datacenter-related revenue will be a materially smaller percentage of ON’s sales compared to its core automotive and industrial end markets. Nevertheless, the market was willing to capitalize future datacenter benefits in short order. After more than doubling in price by early June, the stock reached our price target, and we reduced our weighting. We acknowledge that multiple drivers for ON have come together simultaneously, creating potential for an intrinsic value scenario. We intend to maintain a reasonably sized position.”
ON Semiconductor Corporation (NASDAQ:ON) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 58 hedge fund portfolios held ON Semiconductor Corporation (NASDAQ:ON) at the end of the first quarter, compared to 63 in the previous quarter. While we acknowledge the risk and potential of ON Semiconductor Corporation (NASDAQ:ON) 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 ON Semiconductor Corporation (NASDAQ:ON) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered ON Semiconductor Corporation (NASDAQ:ON) and shared the list of best stocks to buy according to David Greenspan’s Slate Path Capital. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
