Heartland Advisors, an investment management company, released its “Heartland Value Plus Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, the market’s gains continued to widen, as small value stocks outpaced the Magnificent 7, and the artificial intelligence (AI) trade pulled back in November amid concerns about overinvestment and a reassessment of who will benefit from this disruptive technology. The firm is finding opportunities in firms that were overlooked but appear to be on track for high earnings growth in 2026. The value plus strategy fell 0.10% in the quarter compared to the Russell 2000® Value Index’s 3.26% gain. Stock selection in Information Technology and Real Estate was favorable to its performance, but the stock effect was negative in Health Care, Industrials, and Energy sectors. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its fourth-quarter 2025 investor letter, Heartland Value Plus Fund highlighted stocks such as Builders FirstSource, Inc. (NYSE:BLDR). Based in Irving, Texas, Builders FirstSource, Inc. (NYSE:BLDR) is a building material, manufactured components, and construction services provider. The one-month return of Builders FirstSource, Inc. (NYSE:BLDR) was 18.56%, and its shares lost 15.29% of their value over the last 52 weeks. On January 12, 2026, Builders FirstSource, Inc. (NYSE:BLDR) stock closed at $124.08 per share, with a market capitalization of $13.721 billion.
Heartland Value Plus Fund stated the following regarding Builders FirstSource, Inc. (NYSE:BLDR) in its fourth quarter 2025 investor letter:
“Builders FirstSource, Inc. (NYSE:BLDR) was one of the biggest detractors in the quarter, but one where we have continued faith. BLDR is the largest distributor of lumber and building products materials for contractors and home builders. The company has been a consolidator of smaller regional lumberyards over time and made a push towards increasing value-add building products such as pre-assembled trusses to save builders time and labor on the job site.
Housing starts weakened in 2025 as high interest rates cooled housing demand amid decreased housing affordability and an oversupply of new homes. Many of these markets have been hot coming out of the pandemic. As a result, BLDR earnings and estimates have been revised lower, and the stock is down nearly 40% since late January.
We believe it’s early days in the housing market’s cyclical recovery and fundamental improvement. Moreover, BLDR’s chairman bought $55 million of stock in the summer. The company has also been a consistent acquirer of its own shares through buybacks, so the business checks two of the three capital allocation boxes we look for.
The company should have considerable EPS upside when housing fundamentals improve, which is more likely now as interest rates are falling. We believe housing starts are likely to normalize back to long-term averages, as the country is in dire need of more housing supply. Management has said it believes the business can generate $2.1 billion to $2.4 billion of EBITDA in a normalized housing start environment. Even if we take the low-end of that range, that still represents very strong upside. Yet the stock trades at less than 11 times EBITDA.”
Builders FirstSource, Inc. (NYSE:BLDR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 72 hedge fund portfolios held Builders FirstSource, Inc. (NYSE:BLDR) at the end of the third quarter, compared to 74 in the previous quarter. While we acknowledge the risk and potential of Builders FirstSource, Inc. (NYSE:BLDR) 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 Builders FirstSource, Inc. (NYSE:BLDR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Builders FirstSource, Inc. (NYSE:BLDR) and shared Tapasya Fund’s views on the company. 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.
