Heartland Advisors, an investment management firm, published its “Heartland Mid Cap Value Fund” second-quarter 2022 investor letter – a copy of which can be downloaded here. The Russell Mid Cap® Value Index was down for the quarter and the first half of the year, but it beat the S&P 500 and significantly outperformed the Russell Mid Cap Growth index over each timeframe. The Heartland Mid Cap Value Strategy, meanwhile, outperformed the Russell Mid Cap® Value Index in Q2 and on a year-to-date basis. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Heartland Mid Cap Value Fund mentioned First Interstate BancSystem, Inc. (NASDAQ:FIBK) and explained its insights for the company. Founded in 1968, First Interstate BancSystem, Inc. (NASDAQ:FIBK) is a Billings, Montana-based bank holding company with a $4.3 billion market capitalization. First Interstate BancSystem, Inc. (NASDAQ:FIBK) delivered a -2.80% return since the beginning of the year, while its 12-month returns are down by -5.27%. The stock closed at $39.53 per share on July 22, 2022.
Here is what Heartland Mid Cap Value Fund has to say about First Interstate BancSystem, Inc. (NASDAQ:FIBK) in its Q2 2022 investor letter:
“Certain names made progress against developing headwinds. First Interstate BancSystem, Inc. (NASDAQ:FIBK) represents one example. Based in Billings, Montana, First Interstate maintains the second-largest market share based on deposits among community banks in Montana and Wyoming.
The company in recent years has pursued strategic acquisitions across the Northwest. While this has extended the bank’s reach across a “less-competitive” region — known for higher margins and more attractive returns – the bank’s purchase of Great Western Bancorp last year, weighed on shares given the target’s history of poor credit underwriting.
Several catalysts could drive shares higher and offer a level of protection. As part of the acquisition, First Interstate was able to write down Great Western’s troubled-loan portfolio by approximately 20%, an aggressive mark that should provide a buffer against the potential for a negative credit cycle in the future. The company is also expected to show substantial earnings growth in fiscal year 2023, projected to be north of 30% including accretion from the Great Western acquisition. The removal of the stock’s dual-share class structure should also open the door for passive index inclusion. Shares, as of the end of Q2, were trading at 9.7x our FY23 earnings estimate, implying there could be considerable room to appreciate toward its historic median P/E multiple of 13.6x.”
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Our calculations show that First Interstate BancSystem, Inc. (NASDAQ:FIBK) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. First Interstate BancSystem, Inc. (NASDAQ:FIBK) was in 23 hedge fund portfolios at the end of the second quarter of 2022, compared to 13 funds in the previous quarter. First Interstate BancSystem, Inc. (NASDAQ:FIBK) delivered a 14.08% return in the past 3 months.
In May 2021, we also shared another hedge fund’s views on First Interstate BancSystem, Inc. (NASDAQ:FIBK) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
