In this article, we discuss the Best Small-Cap Value Stocks to Buy According to Bares Capital.
Brian Bares is the founder and Chief Investment Officer of Bares Capital Management, an Austin-based investment firm widely recognized for a disciplined, highly concentrated approach to small-cap and micro-cap investing. Since founding the firm in 2000, Bares has distinguished himself by moving away from traditional quantitative screening in favor of deep, qualitative fundamental research. The investment strategy of Bares is rooted in the belief that true value is found in the qualitative moats of a business, factors that standard financial ratios like P/E or P/B often fail to capture.
READ MORE: Billionaire Joe Edelman’s 10 Stock Picks with Huge Upside Potential.
His process prioritizes concentration. Bares typically runs portfolios of only 8 to 12 stocks. He believes that concentrating capital in a handful of extraordinary businesses allows for a depth of knowledge that mitigates risk more effectively than broad diversification. Bares has built his firm to attract long-term institutional allocators, such as non-profit endowments and foundations, who can withstand short-term volatility in exchange for long-term compounding. Unlike many managers who rely on secondary reports, Bares and his team emphasize boots on the ground research. This includes extensive site visits, rental car trips to small-town headquarters, and direct, probing interviews with management teams.
Our Methodology
For this article, we selected stocks by combing through the 13F portfolio of Bares Capital Management at the end of the third quarter of 2025. It is important to note that with climbing valuations, inflation, and years of market growth, the definition of small cap has become more fluid. The selected firms are also popular among hedge funds. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q4 2025 database of 1041 elite hedge funds.
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).
Best Small-Cap Value Stocks to Buy According to Bares Capital
10. The Middleby Corporation (NASDAQ:MIDD)
Bares Capital Management’s Stake: $7 Million
The Middleby Corporation (NASDAQ:MIDD) is a long-term holding in the 13F portfolio of Bares Capital. The fund first disclosed a stake in the company back in the fourth quarter of 2010. This position comprised just a little over 21,000 shares. By early 2012, the fund had grown this to over 350,000 shares before selling the stake off completely. A new position in the stock was then opened in the third quarter of 2012. This comprised just under 400,000 shares. The fund held onto this stake, growing it slightly, till the end of 2014 before selling it off. Another position was opened in 2018 and closed in 2021. The latest position in the firm was disclosed in the second quarter of 2025. Filings for the third quarter of 2025 show that the fund owned over 54,000 shares in the firm, the same as in the previous quarter.
The Middleby Corporation (NASDAQ:MIDD) is attracting interest from elite investors ahead of a planned business separation scheduled for completion soon. The firm is splitting into two independent, publicly traded entities: one focused on Commercial Foodservice and the other on Food Processing. Hedge funds view this as a way to unlock value by eliminating the conglomerate discount. Earlier this year, Middleby completed the sale of a 51% stake in its Residential Kitchen business to 26North for approximately $565 million in cash. This divestiture effectively removed the most volatile segment from the portfolio. The proceeds are being used to fuel one of the most aggressive capital return programs in the industry.