Heartland Advisors, an investment management company, released its “Heartland Value Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund was down 5.63% in the first quarter compared to a 7.74% fall for the Russell 2000 Value Index. The fund outperformed the benchmark over the past 1, 3, and 5 years. Stock selection accounted for almost all of the first-quarter outperformance, specifically strong in Energy, Financials, Technology, Real Estate, and Consumer Discretionary. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first quarter 2025 investor letter, Heartland Value Fund emphasized stocks such as Columbus McKinnon Corporation (NASDAQ:CMCO). Columbus McKinnon Corporation (NASDAQ:CMCO) designs, manufactures, and markets motion solutions that facilitate the movement, lifting, positioning, and securing of materials. The one-month return of Columbus McKinnon Corporation (NASDAQ:CMCO) was -24.40%, and its shares lost 66.99% of their value over the last 52 weeks. On April 14, 2025, Columbus McKinnon Corporation (NASDAQ:CMCO) stock closed at $13.48 per share with a market capitalization of 385.696 million.

Heartland Value Fund stated the following regarding Columbus McKinnon Corporation (NASDAQ:CMCO) in its Q1 2025 investor letter:

"Recently, we’ve been willing to add to positions in companies where the fundamentals make sense and with promising levels of insider buying to confirm our views. A good example is Columbus McKinnon Corporation (NASDAQ:CMCO), which we initially added to our Strategy in the fourth quarter. The company designs, manufactures, and distributes materials, handling products, and systems used in a variety of industrial applications, including lifting, precision conveyance, and linear motion.

Historically, CMCO’s growth has been largely driven by changes in manufacturing activity. A new CEO joined the business in June 2020 with the goal of higher growth and margin applications while increasing the recurring revenue mix. CMCO, however, reported a softer recent quarter due to slowing industrial demand driven by U.S. policy uncertainty. The company also announced a $2.7 billion acquisition of competitor Kito Crosby, which sent the stock plummeting 41% due to uncertainty around execution and an increased leverage profile of 4.8x upon closing.

We believe Columbus McKinnon offers investors a compelling risk/reward case and a strong catalyst as it seeks to reduce leverage and improve the growth and margin profile of the consolidated business. Management, which has been aggressively purchasing the stock in the open market during the recent sell-off, is targeting mid 20% EBITDA margins upon integration. That’s up from an estimated 15.5% in FY25 pre-acquisition. At the end of the quarter, the stock was trading at about $17 a share. Our current target price target of $54 would imply a valuation of 10.5 times Enterprise Value to EBITDA. Upon execution of the acquisition, however, we believe CMCO should be treated similarly to its industrial peers trading an at average of 12x EV/EBITDA."

A large construction site with a modern industrial hoist in focus.

Columbus McKinnon Corporation (NASDAQ:CMCO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held Columbus McKinnon Corporation (NASDAQ:CMCO) at the end of the fourth quarter which was 17 in the previous quarter. In the fiscal third quarter of 2025, Columbus McKinnon Corporation (NASDAQ:CMCO) reported net sales of $234.1 million, down 8% from the prior year. While we acknowledge the potential of Columbus McKinnon Corporation (NASDAQ:CMCO) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We covered Columbus McKinnon Corporation (NASDAQ:CMCO) in another article, where we shared Aristotle SMID Cap Equity Strategy's views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 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.