Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. In a volatile but positive quarter, the FPA Queens Road Small Cap Value Fund (“Fund”) returned 6.07%, beating the Russell 2000 Value Index’s 4.96%. The Fund expects better performance in down markets and underperformance in speculative ones due to its disciplined approach. Amid ongoing global commodity shocks, political issues, and economic fallout from the Iran conflict, the letter discusses small-caps and the firm’s long-term investment strategy. In Q1, the fund continued to rebalance the portfolio towards higher-quality holdings, focusing on balance sheet strength, earnings consistency, and returns on capital. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, FPA Queens Road Small Cap Value Fund highlighted Fabrinet (NYSE:FN) as a leading contributor. Fabrinet (NYSE:FN) is an optical packaging and precision optical, electro-mechanical, and electronic manufacturing services provider. On May 8, 2026, Fabrinet (NYSE:FN) closed at $621.28 per share. One-month return of Fabrinet (NYSE:FN) was -7.54%, and its shares gained 196.14% over the past 52 weeks. Fabrinet (NYSE:FN) has a market capitalization of $22.26 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Fabrinet (NYSE:FN) in its Q1 2026 investor letter:
“Fabrinet (NYSE:FN) is a contract manufacturer specializing in optical networking equipment and modules. This is complex work at small scales, and Fabrinet dominates its niche. The company has experienced impressive historical revenue growth and growing operating margins. Fabrinet’s highest bandwidth products are finding increasing demand in data centers, especially those data centers used to train artificial intelligence models. In 2023, Fabrinet disclosed that Nvidia is a 10% customer. FN’s stock price has more than doubled since April of last year on rising expectations for data center spending. We believe such spending, as capitalized in FN’s stock price, may have gotten ahead of itself and have been trimming. But the need for high bandwidth networking will continue, Fabrinet dominates its core telecom and data center markets and has prudently diversified into a handful of other niches that reward precise assembly at small scale. We believe Fabrinet will be a “compounder” for many years, and we continue to hold a position.”
Fabrinet (NYSE:FN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 42 hedge fund portfolios held Fabrinet (NYSE:FN) at the end of the fourth quarter, compared to 44 in the previous quarter. In third quarter of 2026, Fabrinet (NYSE:FN) reported revenue of $1.214 billion, an increase of 39% year-over-year. While we acknowledge the risk and potential of Fabrinet (NYSE:FN) 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 Fabrinet (NYSE:FN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Fabrinet (NYSE:FN) and shared the list of stocks Jim Cramer discussed. 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.
