Heartland Advisors, an investment management company, recently released its second-quarter 2026 investor letter for the “Heartland Value Fund.” The letter highlighted the ongoing trend of AI driving the market, with small-cap stocks continuing to outperform. The Russell 2000® Index saw a significant rise of 21.49% in the quarter, while the Heartland Value Fund achieved a 17.05% gain, slightly below the 17.19% return for the Russell 2000® Value Index.
One of the key holdings mentioned in the investor letter was I3 Verticals, Inc. (NASDAQ:IIIV). This enterprise software and services solutions provider to public sector entities closed at $20.87 per share on July 14, 2026. While the stock had a one-month return of 4.56%, it had lost 27.51% over the past 52 weeks, with a market capitalization of $582.93 million.
Heartland Value Fund expressed optimism about I3 Verticals, Inc. (NASDAQ:IIIV) in its investor update, emphasizing the company’s strengths in providing software for the public sector, including school payment systems. Despite concerns about AI disruption impacting the stock price, Heartland believes that AI technologies will ultimately benefit the company. With a focus on data, domain expertise, and technical knowledge, I3 Verticals, Inc. is well-positioned to capitalize on the slow adoption of new technology in the public sector.
The fund anticipates that earnings per share for I3 Verticals, Inc. will accelerate as new applications are rolled out to customers and cost-saving initiatives are implemented through automation. Additionally, the company’s outlook for recurring revenue growth, margin expansion, and free cash flow generation make it an attractive target for potential acquirers in the future.
While I3 Verticals, Inc. (NASDAQ:IIIV) is not among the 40 most popular stocks held by hedge funds, Heartland Advisors remains confident in its potential as an investment. The fund believes that the stock is undervalued, especially in comparison to its peers in the industry, making it an intriguing opportunity for investors.
In conclusion, Heartland Advisors’ positive outlook on I3 Verticals, Inc. (NASDAQ:IIIV) reflects the fund’s confidence in the company’s ability to navigate the challenges posed by AI disruption and leverage its strengths in the public sector. As the market continues to evolve, I3 Verticals, Inc. stands out as a promising investment opportunity with significant growth potential.
