The Mairs & Power, an investment firm, released the first-quarter 2026 investor letter for the “Mairs & Power Balanced Fund.” A copy of the letter can be downloaded here. The fund returned -1.77% in the first quarter of 2026, outperforming its benchmark composite index decline of -2.68% as strong stock selection and exposure to Utilities and Industrials helped offset market volatility triggered by the Iran conflict and rising energy prices. The fund said inflation concerns resurfaced after Middle East tensions pushed oil prices higher, causing the Federal Reserve to adopt a more cautious stance on interest rates. Despite the uncertain backdrop, the firm maintained a constructive long-term outlook, citing resilient corporate earnings, improving small-cap trends, and attractive opportunities in reasonably valued sectors such as Utilities, Industrials, and Health Care. In addition, you can check the Fund’s top five holdings to determine its best picks for 2026.
In its first-quarter 2026 investor letter, Mairs & Power Balanced Fund highlighted stocks like Palo Alto Networks, Inc. (NASDAQ:PANW). Palo Alto Networks, Inc. (NASDAQ:PANW) is a cybersecurity company providing network, cloud, and AI-driven security solutions to organizations worldwide. The one-month return of Palo Alto Networks, Inc. (NASDAQ:PANW) was 42.47% while its shares traded between $139.57 and $302.95 over the last 52 weeks. On June 1, 2026, Palo Alto Networks, Inc. (NASDAQ:PANW) stock closed at approximately $300.48 per share, with a market capitalization of about $239.41 billion.
Mairs & Power Balanced Fund stated the following regarding Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q1 2026 investor letter:
During the quarter, the Fund added Palo Alto Networks (NASDAQ:PANW). Palo Alto provides information security products and services for organizations of all sizes. As the variety of cyber threats continues to grow, spending on IT security is poised to increase, and Palo Alto provides best-in-class tools to help protect companies. Our research strongly suggests AI proliferation should only prove the necessity of the company’s services, not supplant what Palo Alto provides.
Palo Alto Networks, Inc. (NASDAQ:PANW) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 87 hedge fund portfolios held Palo Alto Networks, Inc. (NASDAQ:PANW) at the end of the first quarter, which was 86 in the previous quarter. While we acknowledge the risk and potential of Palo Alto Networks, Inc. (NASDAQ:PANW) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Palo Alto Networks, Inc. (NASDAQ:PANW) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Palo Alto Networks, Inc. (NASDAQ:PANW) and shared the list of stocks that were discussed by Jim Cramer. In addition, please check out our hedge fund investor letters Q1 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.
