Heartland Value Fund believes artificial intelligence will benefit I3 Verticals rather than disrupt it, according to the fund's second-quarter 2026 investor letter. The fund noted that shares of I3 Verticals, which provides enterprise software to public sector entities including school payment systems, slumped from around $34 last fall to below $20 in May over concerns that automation and machine learning technologies are disrupting software stocks. Heartland argued that the company's data, domain expertise, and technical knowledge in a slow-to-adopt public sector environment create a deeply embedded platform, and management has stated customers will likely adopt AI more slowly than the company can deliver. The fund sees earnings per share accelerating as recent application investments roll out and internal cost savings from automation take hold, and highlighted that the stock trades at just 10.3 times fiscal year 2026 EBITDA, a steep discount to its largest peer at 17.1 times despite similar growth and margins.
i3 Verticals IncFund highlights low valuation (10.3x EBITDA vs peer 17.1x) and expects EPS acceleration from cost savings and investments.