Heartland Opportunistic Value Equity Strategy Initiated a Position in Applied Materials (AMAT) in Q2

Heartland Advisors, an investment management company, released its “Heartland Opportunistic Value Equity Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, investors' sentiments shifted to a more optimistic tone as concerns about a recession were overblown. The strategy returned 0.65% in the quarter, compared to a 3.84% return for the Russell 3000® Value Index. Stock selection was negative in 7 of the 11 sectors, primarily driven by the Industrials and Financials sectors. 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 Opportunistic Value Equity Strategy highlighted stocks such as Applied Materials, Inc. (NASDAQ:AMAT). Applied Materials, Inc. (NASDAQ:AMAT) offers manufacturing equipment, services, and software to the semiconductor, display, and related industries. The one-month return of Applied Materials, Inc. (NASDAQ:AMAT) was 24.16%, and its shares lost 2.60% of their value over the last 52 weeks. On September 25, 2025, Applied Materials, Inc. (NASDAQ:AMAT) stock closed at $199.60 per share, with a market capitalization of $159.01 billion.

Heartland Opportunistic Value Equity Strategy stated the following regarding Applied Materials, Inc. (NASDAQ:AMAT) in its second quarter 2025 investor letter:

"During the quarter, we initiated a new position in Applied Materials, Inc. (NASDAQ:AMAT), the largest and most diversified supplier of capital equipment, services, and solutions for semiconductor manufacturing. The company is a major supplier of wafer fabrication equipment (WFE), controlling 21% market share, which was built over decades of organic and inorganic growth. It is the world’s dominant player in deposition, a highly precise, mission-critical step in the fabrication process where a thin film imparts electrical characteristics to the wafer’s surface at the atomic level.

We capitalized on the cyclical downturn in the semiconductor industry to purchase AMAT near our downside target. Our confidence in the company was further strengthened by insider buying, especially a $7mm stock purchase by CEO Gary Dickerson in early April.

In our opinion, Applied Materials will enjoy several tailwinds, including increased demand for advanced packaging and complex manufacturing processes fueled by rising chip architecture complexity. That should boost WFE spending, positioning AMAT as a secular beneficiary.

These tailwinds should lead to a re-rating of the stock as a premier analog semiconductor manufacturer along with Texas Instruments and Analog Devices, which command a multiple well above 25x earnings. At that multiple, AMAT shares could trade in the low $300 range based on mid-cycle EPS, up from its current price of around $170 a share."

Applied Materials, Inc. (NASDAQ:AMAT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 81 hedge fund portfolios held Applied Materials, Inc. (NASDAQ:AMAT) at the end of the second quarter, down from 83 in the previous quarter. Applied Materials, Inc. (NASDAQ:AMAT) reported total net revenue of approximately $7.3 billion in the fiscal third quarter of 2025, representing an 8% increase year-over-year and approximately $100 million above the midpoint of guidance range. While we acknowledge the potential of Applied Materials, Inc. (NASDAQ:AMAT) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Applied Materials, Inc. (NASDAQ:AMAT) and shared the list of stocks Jim Cramer discussed. 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.