Artisan Partners, an investment management company, released its first-quarter 2026 investor letter for the “Artisan Small Cap Fund”. A copy of the letter is available to download here. US equities were mixed in Q1 2026, with major indices hitting all-time highs in January before retreating amid geopolitical tensions, changing monetary policy, and economic uncertainty. Energy stocks surged, outpacing the market, while value outperformed growth as investors moved from tech to commodity-sensitive sectors. Market leadership broadened, with mid- and small-cap indices performing better than large caps. The Iran conflict influenced market behavior. AI-related investments supported capital spending and earnings, though investor sentiment was mixed. The portfolio saw negative absolute returns but outpaced the Russell 2000® Growth Index, offering some downside protection. Investor Class: ARTSX, Advisor Class: APDSX, and Institutional Class: APHSX returned -2.72%, -2.68%, and -2.69%, respectively, in the first quarter compared to -2.81% return for the index. The market shifted towards cyclical, commodity sectors, less aligned with high-quality franchises, due to geopolitical events and energy shocks. Despite this, many portfolio companies maintained solid earnings aligned with their profit cycles. The Firm views this environment as supportive of its stock selection approach, focused on bottom-up stock selection across industries. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Artisan Small Cap Fund highlighted stocks like Flowserve Corporation (NYSE:FLS). Flowserve Corporation (NYSE:FLS) is an industrial company that designs, manufactures, distributes, and services industrial flow management equipment including pumps, pre-configured industrial pumps, pump systems, mechanical seals, auxiliary systems, and replacement parts. On June 4, 2026, Flowserve Corporation (NYSE:FLS) closed at $75.42 per share. One-month return of Flowserve Corporation (NYSE:FLS) was 6.03%, and its shares gained 54.33% over the past 52 weeks. Flowserve Corporation (NYSE:FLS) has a market capitalization of $9.64 billion.
Artisan Small Cap Fund stated the following regarding Flowserve Corporation (NYSE:FLS) in its Q1 2026 investor letter:
“In addition to Compass, we added to our positions in Ollie’s Bargain Outlet and Flowserve Corporation (NYSE:FLS) during the quarter. Flowserve is a leading provider of fluid motion and control products and services. We added to the CropSM position as our confidence in the company’s internal operational initiatives—focused on prioritizing higher value customers and products, improving pricing discipline and reducing complexity— increased. Maintaining this momentum should support continued revenue growth and margin expansion over the coming years.”
Flowserve Corporation (NYSE:FLS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 48 hedge fund portfolios held Flowserve Corporation (NYSE:FLS) at the end of the first quarter, compared to 51 in the previous quarter. Flowserve Corporation (NYSE:FLS) reported Q1 2026 revenue of $1.1 billion, down 7% year-over-year. While we acknowledge the risk and potential of Flowserve Corporation (NYSE:FLS) 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 Flowserve Corporation (NYSE:FLS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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.
