In this article, we will discuss: 10 Best Russell 2000 Stocks to Invest In According to Hedge Funds
On May 29, Reuters reported that the Russell 2000 fell 0.6%, lagging the broader Wall Street indexes, which closed at new highs. Despite the daily dip, the small-cap index rose 1.72% for the week and 4.24% for the month, showing broader market strength. Benchmark indexes climbed, with the Dow Jones up 0.72%, the S&P 500 up 0.22%, and the Nasdaq gaining by 0.21%, supported by growth in technology stocks.
Investors closely watched geopolitical developments as Donald Trump hinted at a potential Iran deal, while solid earnings growth sparked risk appetite. Ohsung Kwon, chief equity strategist at Wells Fargo, said, “There’s definitely euphoric sentiment in the market around AI. The rally has really been driven by earnings.” According to Reuters, SimCorp’s head of investment decision research, Melissa Brown, stated that there have been higher trading volumes over the past few weeks, showing rising market involvement.
With that said, here are the 10 Best Russell 2000 Stocks to Invest In According to Hedge Funds.
Photo by Arturo Añez on Unsplash
Methodology:
We began with a pool of 30 stocks from the Russell 2000 Stocks and identified those with the highest number of hedge fund holders, which we assessed using Insider Monkey’s database of hedge funds as of Q1 2026. We have limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds. The stocks are ranked in ascending order of the number of hedge fund holders.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. Douglas Emmett, Inc. (NYSE:DEI)
Number of Hedge Fund Holders: 29
Douglas Emmett, Inc. (NYSE:DEI) is among the Best Russell 2000 Stocks.
On May 21, Scotiabank analyst Nicholas Yulico bumped up his price target on Douglas Emmett, Inc. (NYSE:DEI) to $12 from $11.50. The analyst maintained a “Sector Perform” rating. On the positive side, he told investors that Q1 showed a strong start for NYC office leasing and strong tenant demand from asset managers, banks, and tech firms. He also stated that there has been mixed Multifamily rent growth across the Sunbelt, and occupancy is still below pre-2019 levels.
On May 5, Douglas Emmett, Inc. (NYSE:DEI) disclosed Q1 revenue of $251 million as compared to $252 million a year before. This quarter had a net loss income of $2 million as compared to the same quarter last year’s $40 million. FFO per share fell to $0.37 from $0.40. Leasing accelerated with 461,000 square feet signed while absorption stayed positive for a second quarter.
For 2026, the company is expecting net loss per common share to be between $0.20 and $0.14 and FFO per fully diluted share to be $1.39 to $1.45.
Douglas Emmett, Inc. (NYSE:DEI) is a real estate investment trust working in real estate properties. It runs through two divisions of Office and Multifamily.
9. Stoke Therapeutics, Inc. (NASDAQ:STOK)
Number of Hedge Fund Holders: 30
On May 7, Stoke Therapeutics, Inc. (NASDAQ:STOK) reported Q1 results and business updates. The company stated that four years of data from “Phase 1/2a open-label extension” studies revealed statistically meaningful gains in cognition and behavior, along with recurrent seizure drops from baseline. “Zorevunersen” remained generally well tolerated, with some patients treated for more than five years.
Chief Executive Officer and Director Ian F. Smith said the data “suggest that zorevunersen may change the course of Dravet syndrome,” noting seizure reductions and potential developmental benefits.
The company also said “Phase 3 EMPEROR” enrollment of approximately 150 patients is expected to be completed in June 2026. It supports mid-2027 data and a planned rolling US NDA submission in Q1 of 2027.
As of March 31, 2026, Stoke Therapeutics, Inc. (NASDAQ:STOK) had $411 million in cash and investments, including $80.7 million raised by ATM sales. It is funding operations into 2028.
Stoke Therapeutics, Inc. (NASDAQ:STOK) is a biotechnology company that conducts research and develops treatments for genetic diseases.
8. NETSTREIT Corp. (NYSE:NTST)
Number of Hedge Fund Holders: 30
On May 12, Scotiabank analyst Greg McGinniss raised his price target on NETSTREIT Corp. (NYSE:NTST) to $23 from $22. It maintained an “Outperform” rating on the shares. The analyst told investors that the first quarter across net lease REITs showed higher AFFO and investment guidance, with many issuing forward equity to fund growth.
On the same day, Truist analyst Michael Lewis lifted his price goal on NETSTREIT Corp. (NYSE:NTST) to $22 from $21. The analyst maintained a Buy rating on the stock and noted higher acquisition assumptions while warning his 4.1% five year FAD growth view could prove conservative if capital costs ease.
Separately, NETSTREIT Corp. (NYSE:NTST) raised the 2026 AFFO outlook to be between $1.36 to $1.39 per share while increasing net investment expectations to be between $550 million and $650 million. It also factors in $0.03 to $0.06 per share dilution from forward equity.
NETSTREIT Corp. (NYSE:NTST) is a firm that internally manages a real estate investment trust with an eye on acquiring single-tenant net lease retail properties across the country.
7. SPS Commerce, Inc. (NASDAQ:SPSC)
Number of Hedge Fund Holders: 31
SPS Commerce, Inc. (NASDAQ:SPSC) is among the Best Russell 2000 Stocks.
On May 4, Citi lowered its price target on SPS Commerce, Inc. (NASDAQ:SPSC) to $76 from $84. The firm maintained a “Buy” rating on the stock.
On May 1, Morgan Stanley cut its target to $70 from $95 on SPS Commerce, Inc. (NASDAQ:SPSC). The firm retains an “Equal Weight” rating on the shares.
Morgan Stanley said Q1 “disappointed” and noted that revenue missed consensus and reduced FY26 guidance because of headwinds from an Amazon policy change. The firm also stated that the corporation must deliver “more consistent execution” before confidence returns.
SPS Commerce, Inc. (NASDAQ:SPSC) expects second-quarter revenue to be $194.5 million to $196.5 million and projects 4% to 5% growth. It also expects GAAP EPS of $0.53 to $0.56 and adjusted EBITDA of $60.9 million to $62.4 million.
For 2026, the company anticipates revenue of $796 million to $802 million while expecting 6% to 7% growth, with adjusted EBITDA of $262.8 million to $267.3 million.
SPS Commerce, Inc. (NASDAQ:SPSC) is a company that offers cloud-based supply chain management services.
6. Verra Mobility Corporation (NASDAQ:VRRM)
Number of Hedge Fund Holders: 31
On May 27, Barron’s reported that Verra Mobility Corporation (NASDAQ:VRRM) shares dipped more than 46% in premarket trading after Avis Budget Group terminated its contract, starting in September.
On May 26, Verra Mobility Corporation (NASDAQ:VRRM) reported that it received a termination notice from Avis Budget. It is taking quick steps to cut costs and assign resources linked to the customer. The company is also reviewing its contractual rights and the handling of confidential information.
President and Chief Executive Officer David Roberts said the company was “surprised and disappointed” and that it is “moving decisively” to adjust operations and position for future opportunities.
At the same time, the corporation revised its 2026 outlook. It projected revenue of $985 million to $995 million, adjusted EBITDA of $380 million to $385 million, adjusted EPS of $1.19 to $1.25, and free cash flow of $140 million to $150 million.
Verra Mobility Corporation (NASDAQ:VRRM) works in the supply of smart mobility technology solutions through Government Solutions, Commercial Services, and Parking Solutions segments.
While we acknowledge the potential of VRRM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than VRRM and that has 100x upside potential, check out our report about the cheapest AI stock.
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