Ariel Investments' Small/Mid Cap Value Composite returned 15% in Q2, adding WESCO, Brookfield Infrastructure, Liberty Energy and UWM Holdings to the portfolio.
Ariel Investments' Small/Mid Cap Value Composite returned +15.08% gross of fees (+14.95% net) in the second quarter, the firm said in its quarterly commentary.
The fund added four new positions during the period. It bought into WESCO International, a distributor of electrical and industrial supplies, and opened a stake in Brookfield Infrastructure Partners, the owner of utilities and transport assets. Ariel also initiated positions in Liberty Energy, a North American oilfield services provider, and in UWM Holdings, the mortgage lender previously known as United Wholesale Mortgage.
The fund's top contributor was aerospace supplier HEICO, which rose after posting stronger-than-expected earnings. Another large gain came from construction materials firm Eagle Materials, which benefited from continued demand in highway and data-center building projects. On the downside, specialty insurer Kinsale Capital lagged after a slowdown in premium growth, and waste management company GFL Environmental, which is undergoing a corporate restructuring, also weighed on returns.
Ariel's portfolio managers said they continue to find opportunities in mid-cycle industrial companies trading at discounts to their intrinsic value, particularly in distribution and infrastructure-linked sectors.
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