Does International Flavors and Fragrances (IFF) Discounted Valuation Unlocks Opportunity?

Heartland Advisors , an investment management company, released its second-quarter 2026 investor letter for "Heartland Mid Cap Value Fund". A copy can be downloaded here . Mid-cap stocks sharply rose in the second quarter, driven by perceived AI beneficiaries, particularly in Technology. The Fund returned 9.90% in the quarter, compared to the Russell Midcap® Value Index's 13.40% return. The underperformance was driven by negative stock selection despite Tech being one of the top absolute return contributors. In the challenging environment, the Fund remains focused on its disciplined approach to security selection. In addition, you can check the Fund's top 5 holdings to determine its best picks for 2026.

In its Q2 2026 investor letter, Heartland Mid Cap Value Fund highlighted International Flavors & Fragrances Inc. (NYSE: IFF ). International Flavors & Fragrances Inc. (NYSE:IFF) is a specialty chemical company that manufactures products across food, beverage, health and biosciences, scent, pharma solutions, and complementary adjacent products. On July 14, 2026, International Flavors & Fragrances Inc. (NYSE:IFF) closed at $74.67 per share, reflecting a market capitalization of $19.06 billion. International Flavors & Fragrances Inc. (NYSE:IFF) posted a one-month return of -1.81%, while its shares gained 0.61% over the past 52 weeks.

Heartland Mid Cap Value Fund stated the following regarding International Flavors & Fragrances Inc. (NYSE:IFF) in its Q2 2026 investor update:

"Materials. A new deep-value holding is International Flavors & Fragrances Inc. (NYSE:IFF), a specialty ingredient producer that sells flavors, fragrances, and enzymes to food, beverage, personal care, household products, and human health product manufacturers. This is an example of identifying a self-help opportunity through bottom-up research.

For more than two years, management has worked on streamlining IFF's portfolio and operations to focus on higher-margin businesses where it enjoys leading market share, better pricing power, attractive growth, and significantly enhanced capital allocation flexibility. This strategy follows years of wayward capital allocation executed by prior management. Today, IFF's revenue is evenly split across three segments. Taste accounts for 30% of profits, Health & Biosciences generates 37%, and Scent contributes 32%. In the Scent segment, IFF's pioneering of encapsulated fragrance technology secured its leadership in fabric care, a position now expanding into scent boosters, shampoos, and body washes.

Driven by improving growth, margins, and free cash flow, we believe IFF is poised to operationally resemble industry leader Givaudan. Yet while Givaudan trades at 19.14X forward EBITDA, IFF trades at a steep discount of just 12.23X. Highlighting management's confidence in this valuation gap closing, the company recently instituted its first share buyback program in six years."

International Flavors & Fragrances Inc. (NYSE:IFF) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026 . According to our database, 35 hedge fund portfolios held International Flavors & Fragrances Inc. (NYSE:IFF) at the end of the first quarter, compared to 39 in the previous quarter. In Q1 2026, International Flavors & Fragrances Inc. (NYSE:IFF) reported revenue of greater than $2.7 billion with volume growth across all businesses. While we acknowledge the potential of International Flavors & Fragrances Inc. (NYSE:IFF) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock .

In another article , we covered International Flavors & Fragrances Inc. (NYSE:IFF) and shared the list of high growth stocks insiders are buying. In addition, please check out our hedge fund investor letters Q2 2026 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.

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