Where the Deer and the Antelope Play

Last year, I expressed bullishness on small-cap stocks, particularly small-cap value.

Here are some results:

• 2025 S&P 500: 17.88%

• 2025 Russell 2000: 12.81%

• 2025 Russell 2000 Value: 12.59%

  
  

• YTD S&P 500: 5.05%

• YTD Russell 2000: 12.67%

• YTD Russell 2000 Value: 14.60%

As you can see, I predicted the future! Small-cap value is probably the best-kept secret in the investment world right now. Look at me, I sound like some shlocky copywriter—18 years in the business and look what I’ve become. But it’s true: Small-cap value is in the midst of a strong bull market, and nobody is talking about it. International small-cap value returned 46% in 2025, and this is going to continue for years.

Wouldn’t you want to be a part of it? Well, armed with this information, I suppose you could buy IWN, the Russell 2000 Value ETF, and call it a day. You could do worse. Or you could invest alongside a guy who has a lot of experience picking value stocks, with the hopes of outperforming the index. And I have to say, with my experience in indexes, the Russell 2000 is not a great index. It’s actually pretty easy to beat, especially the R2 Value.

Look, I get the appeal of just buying the ETF. No brain damage. I do the same thing with emerging markets. I buy the EM ETFs, and the smart EM guys tell me I am nuts and give me individual stocks to buy. I usually ignore them because complexity is the enemy. But I’m giving up a lot in the way of returns.

Green on the Screen

Heartland Investor, from my pal Adam Crawford, is a portfolio of mostly small-cap value names, with a few overseas ones thrown in. Since the letter launched about six months ago, Adam hasn’t made all the picks yet. The portfolio is not yet full, so it’s hard to do an apples-to-apples comparison with the index, but I can tell you the performance has been great… lots of green on the screen. And he’s done it with minimal drawdowns.

I am very proud of Adam, and I am very proud of this newsletter. The goal here was to give people exposure to an asset class that I believed would outperform for 10+ years and then do some stock picking above and beyond that to make the returns even better. We have satisfied customers so far. And hey, we want you to be a customer.

Nobody really knows why the style box trades work. One theory as to why small cap underperformed all those years is because regulation benefitted scale players, and as we re-regulated the economy, we created large moats around big companies. Small cap suffers under high-interest-rate regimes as well. But that is all academic, and I am not too concerned with the academic stuff. I don’t care why it works; I only care that it does work. Inject that outperformance into my veins.

If you’re accustomed to reading Jared Dillian newsletters, you’re probably accustomed to a lot of humor and storytelling. Adam is no stand-up comedian, and to the extent that he tells a story, he is doing it with numbers. Fiercely analytical, he dives deep into a company’s financial statements, something that is not among my strengths. He’s been assisting me for years in Street Freak, calculating the portfolio and doing some pretty good idea generation. 

Everyone likes their newsletters to have a little in the way of entertainment value, but all you should really care about is that you are making money. Right? The whole USP behind Heartland is that you have this publicity-shy stock market genius out in the middle of the heartland, who, with a little more polish, could probably be working at some deep value shop or even as an analyst at a place like Millennium, and you can have access to him for $995/year (or $1,495 for two). 

Now, I don’t want to oversell Adam. We’ve been working together for 8–9 years, and he has had a clunker or two. But this is a very large, diversified portfolio, so the only way this doesn’t work is if the whole small-cap value factor goes to hell all at once. In which case, you can blame me, not Adam. Capisce?

Anyway, we are reopening Heartland Investor at a discount—you can join here. I hope I’ve made a strong case for it. If I weren’t so busy knife-fighting in commodities and paying off my mortgage, I’d probably take 10% of my liquid assets and allocate it to Adam’s strategy. That’s how much I believe in it.

Jared Dillian, MFA