Mairs & Power, an investment advisor, released the fourth-quarter 2025 investor letter for the “Mairs & Power Small Cap Fund.” A copy of the letter can be downloaded here. In 2025, artificial intelligence (AI) and market concentration dominated the market. Increased investment in technology and AI infrastructure drove rising valuations and corporate spending, leading to bubble-like tendencies. However, easing inflation, a Federal Reserve rate cut in Q4, and resilient corporate earnings provided some optimism. In this environment, the Fund returned 3.98% in 2025, trailing the Russell 2000 Total Return (TR) Index’s 12.81% gain, the S&P Small Cap 600 TR’s 6.02% return, and the Morningstar U.S. Fund Small Blend’s 7.68% gain. Macro headwinds affected smaller companies in 2025, but the second half of the year saw small-cap stocks gain as the labor market softened. Stock selection notably impacted performance, especially in Health Care, Information Technology, and Materials. While sector allocation positively contributed. Looking ahead to 2026, the Fund remains optimistic about small-cap stocks, which are expected to grow at or above the S&P 500’s rate. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Mairs & Power Small Cap Fund highlighted MGP Ingredients, Inc. (NASDAQ:MGPI). MGP Ingredients, Inc. (NASDAQ:MGPI) is a leading producer and distributor of distilled spirits, branded spirits, and food ingredients. On April 2, 2026, MGP Ingredients, Inc. (NASDAQ:MGPI) closed at $18.49 per share. One-month return of MGP Ingredients, Inc. (NASDAQ:MGPI) was -0.75%, and its shares lost 31.75% over the past 52 weeks. MGP Ingredients, Inc. (NASDAQ:MGPI) has a market capitalization of $395.01 million.
Mairs & Power Small Cap Fund stated the following regarding MGP Ingredients, Inc. (NASDAQ:MGPI) in its fourth quarter 2025 investor letter:
“Notable detractors from relative performance during the period were Inspire Medical, CVRx, and MGP Ingredients, Inc. (NASDAQ:MGPI). Difficult conditions across the beer/wine/spirits industry have impacted MGP Ingredients as the company continues to work through elevated bourbon inventory levels. We believe those cyclical pressures will likely ease in the coming quarters, and the company’s premium brands and market share still support our optimism for long-term growth.”
MGP Ingredients, Inc. (NASDAQ:MGPI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 19 hedge fund portfolios held MGP Ingredients, Inc. (NASDAQ:MGPI) at the end of the fourth quarter, up from 18 in the previous quarter. While we acknowledge the risk and potential of MGP Ingredients, Inc. (NASDAQ:MGPI) 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 MGP Ingredients, Inc. (NASDAQ:MGPI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered MGP Ingredients, Inc. (NASDAQ:MGPI) and shared a list of best small-cap consumer staples stocks to buy under $30. In addition, please check out our hedge fund investor letters Q4 2025 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.
