Heartland Advisors, an investment management company, released its “Heartland Value Plus Fund” second quarter 2025 investor letter. A copy of the letter can be downloaded here. Although the second quarter was another tough period for small stocks, the firm is becoming more optimistic that the environment is getting better. The fund gained 1.86% in the second quarter, compared with the 4.97% gain for the Russell 2000 Value Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its second quarter 2025 investor letter, Heartland Value Plus Fund highlighted stocks such as Silicon Motion Technology Corporation (NASDAQ:SIMO). Silicon Motion Technology Corporation (NASDAQ:SIMO) designs, develops, and markets NAND flash controllers for solid-state storage devices. The one-month return of Silicon Motion Technology Corporation (NASDAQ:SIMO) was 5.26%, and its shares lost 7.96% of their value over the last 52 weeks. On July 11, 2025, Silicon Motion Technology Corporation (NASDAQ:SIMO) stock closed at $73.47 per share with a market capitalization of $2.497 billion.
Heartland Value Plus Fund stated the following regarding Silicon Motion Technology Corporation (NASDAQ:SIMO) in its second quarter 2025 investor letter:
“Silicon Motion Technology Corporation (NASDAQ:SIMO) — a leading maker of memory components used in PCs, smartphones, data centers, and industrial applications — also took a hit earlier this year, on tariff concerns and as investors questioned the capex needs of large-scale cloud service providers known as hyperscalers. SIMO shares sank more than 30% from March 24 to April 21, on fears that further weakness in consumer spending could impact PC and smartphone sales. Since then, however, hyperscalers have confirmed robust datacenter capex growth, as consumer sentiment has rebounded somewhat. Since April 21, SIMO shares have surged more than 70%.
We continue to hold SIMO because we believe it is in the early days of a re-rating from its upcoming growth and margin expansion as data center products evolve to become a larger percentage of the company’s total revenue mix. Silicon Motion has historically leaned more to the consumer electronics side of the business, which is marked by trailing edge technology and lower margins. However, throughout the recent downcycle the company made a push into higher-margin, leading-edge applications driven by hyperscaler demand. On its last earnings call, management announced it was partnering with Nvidia on memory storage banks.
Due to the longer-than-usual down cycle for consumer electronics companies, though, our analysis indicates that SIMO remains meaningfully undervalued. The stock currently trades at $75.17 a share, but we believe the company should be valued at $90. That’s based on a 13X EBITDA multiple plus an anticipated $160 million cash settlement from SIMO’s ongoing arbitration with MaxLinear surrounding the termination of a proposed merger agreement two years ago.”
An engineer in a lab coat tweaking a circuit board with intricate semiconductors.
Silicon Motion Technology Corporation (NASDAQ:SIMO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Silicon Motion Technology Corporation (NASDAQ:SIMO) at the end of the first quarter, which was 39 in the previous quarter. Silicon Motion Technology Corporation’s (NASDAQ:SIMO) first quarter sales decreased 12.9% sequentially to $166.5 million. While we acknowledge the risk and potential of SIMO 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 SIMO and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Silicon Motion Technology Corporation (NASDAQ:SIMO) and shared the list of tech stocks on Wall Street’s radar. In addition, please check out our hedge fund investor letters Q2 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.
