Artisan Partners, an investment management company, released its second-quarter 2026 investor letter for its “Artisan Small Cap Fund”. A copy of the letter can be downloaded here. The fund reported strong absolute returns and modestly outperformed the Russell 2000® Growth Index, which gained 25.7%. Global equities rebounded as resilient US growth, moderating inflation, strong earnings and continued AI investment outweighed delayed rate cuts, rising bond yields and geopolitical uncertainty. Investor Class: ARTSX, Advisor Class: APDSX, and Institutional Class: APHSX returned 26.02%, 26.05%, and 26.11%, respectively, in the second quarter, compared to a 25.71% return for the index. Market leadership favored loss-making, highly leveraged companies, creating a difficult environment for quality-focused active managers. Health care was the strongest relative contributor, while energy, materials, financials and real estate also helped. Technology, industrials and consumer discretionary detracted, partly because the fund did not own oversized index contributors. Software holdings also weakened despite strong fundamentals. The fund remains positive on small-cap opportunities, AI infrastructure and health care, but has reduced software exposure and is staying selective as valuations rise and competitive risks increase. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its second-quarter 2026 investor letter, Artisan Small Cap Fund highlighted USA Rare Earth, Inc. (NASDAQ:USAR). USA Rare Earth, Inc. (NASDAQ:USAR) engages in mining, processing, and supplying rare earths and other critical minerals. On July 23, 2026, USA Rare Earth, Inc. (NASDAQ:USAR) closed at $15.14 per share. One-month return of USA Rare Earth, Inc. (NASDAQ:USAR) was -28.92% and its shares gained 21.05% over the past 52 weeks. USA Rare Earth, Inc. (NASDAQ:USAR) has a market capitalization of $3.8 billion with a 52-week range between $10.91 – $43.98.
Artisan Small Cap Fund stated the following regarding USA Rare Earth, Inc. (NASDAQ:USAR) in its Q2 2026 investor letter:
“USA Rare Earth, Inc. (NASDAQ:USAR) is a vertically integrated rare earths producer developing mining, separation and magnet manufacturing capabilities. We initiated a Garden position after the company announced its acquisition of Serra Verde, which we believe will strengthen its franchise and advance its strategy to build an integrated mine-to-magnet platform. The acquisition will provide exposure to strategic heavy rare earth production outside China and appears to position the company as one of the highest quality franchises in the Western Hemisphere poised to benefit from growing rare earth demand and the geopolitical shift away from Eastern Hemisphere-based suppliers.”
USA Rare Earth’s magnet facility in Stillwater, Oklahoma. Photo from the USA Rare Earth website
USA Rare Earth, Inc. (NASDAQ:USAR) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held USA Rare Earth, Inc. (NASDAQ:USAR) at the end of the first quarter which was 23 in the previous quarter. While we acknowledge the risk and potential of USA Rare Earth, Inc. (NASDAQ:USAR) 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 USA Rare Earth, Inc. (NASDAQ:USAR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered USA Rare Earth, Inc. (NASDAQ:USAR) and shared a list of best rare earth stocks to buy in 2026. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
