5 Best Small-Cap Value Stocks to Buy According to Bares Capital

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1. Pegasystems Inc. (NASDAQ:PEGA)

Bares Capital Management’s Stake: $194 Million

Pegasystems Inc. (NASDAQ:PEGA) has been a constant feature in the 13F portfolio of Bares Capital since the third quarter of 2019. Back then, this position comprised just under a million shares. In the coming quarters, the fund started loading up on the stock. By the end of 2023, the fund owned more than 11.7 million shares in the company. Since then, Bares has been trimming the position. Filings for the third quarter of 2025 show that the fund owned 3.3 million shares in the firm, down close to 5% compared to filings for the previous quarter. The company develops, markets, licenses, hosts, and supports enterprise software in the United States, rest of the Americas, the United Kingdom, rest of Europe, the Middle East, Africa, and the Asia-Pacific.

Pegasystems Inc. (NASDAQ:PEGA) is being viewed as a pure-play leader in the shift toward autonomous enterprise orchestration. While the company had a mixed Q1 2026 earnings report, professional investors are looking past short-term revenue noise and focusing on the rapid adoption of its AI-native Blueprint architecture. There is a lot of interest around Pega Blueprint, an AI-powered design tool released earlier this year. In the Q1 2026 investor presentation, management revealed that Blueprint has significantly shortened sales cycles and increased the pipeline for new customer wins. Funds see this as a solution to one of Pegasystems’ historical weaknesses, the long implementation time of its software. By automating the application design process with GenAI, Pega is becoming more agile.

While we acknowledge the potential of PEGA 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 PEGA and that has 100x upside potential, check out our report about the cheapest AI stock.

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