Heartland Advisors, an investment management company, released its second-quarter 2026 investor letter for "Heartland Opportunistic Value Equity Strategy". The letter can be downloaded here. Second-quarter indices signaled a broadening market, but strong performance was mainly focused on a limited range of technology infrastructure and semiconductor stocks.
The strategy returned 12.32% in the quarter, underperforming the Russell 3000 Value Index's 14.02% gain. While security selection was positive in nine out of eleven sectors, led by Communications, Materials, and Industrials, negative selection within the Technology sector offset these benefits. In this volatile market, the firm focuses on businesses with significant upside potential and downside protection, rather than predicting the duration of AI infrastructure developments.
Please review the Fund's top five holdings to learn more about its key selections for 2026. In its second-quarter 2026 investor letter, Heartland Opportunistic Value Equity Strategy highlighted Texas Instruments Incorporated (NASDAQ:TXN), a semiconductor manufacturer providing chips and solutions for electronics designers and manufacturers. On September 21, 2026, Texas Instruments Incorporated (NASDAQ:TXN) closed at $270.87 per share.
Over the past month, Texas Instruments Incorporated (NASDAQ:TXN) returned 4.16%, while its shares gained 48.80% over the past 52 weeks. Texas Instruments Incorporated (NASDAQ:TXN) has a market capitalization of $247.37 billion. Heartland Opportunistic Value Equity Strategy stated the following regarding Texas Instruments Incorporated (NASDAQ:TXN) in its Q2 2026 investor letter: "A significant contributor to second-quarter performance was Texas Instruments Incorporated (NASDAQ:TXN), which joined the AI infrastructure narrative, though it still underperformed the Tech sector.
Texas Instruments is the world's largest analog semiconductor manufacturer, selling low-cost chips to a variety of end markets, including the auto industry, communications equipment manufacturers, and other industrial customers. TXN's sales have recently been turbocharged by the AI infrastructure boom, as its chips support critical data center functions such as electrical power regulation and management. Its chips are also used in AI-driven devices, vehicles, and industrial equipment.
Texas Instruments' data center power management revenues are up more than 90% year over year. Even if abnormally strong data center growth continues for years—and we expect it to—the industry will remain a relatively small share of total revenue through 2030. Although the stock rose more than 70% through late June, which is extremely rare for a company of TXN's size and maturity, we believe there are several operational inflections that could continue to drive TXN's improved relative performance versus its analog semiconductor peers and the broader Technology sector; most importantly, the company has passed peak capital expenditures as part of a multi-year fabrication-capacity buildout.
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