Investment management company First Pacific Advisors recently released its "FPA Queens Road Small Cap Value Fund" second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Fund returned 27.02% in the first half of 2026, outperforming the Russell 2000 Value Index's 22.99% gain and the S&P 600 Index's 23.90% return. Small-cap earnings growth also began accelerating relative to large caps, while the small-cap technology sector surged nearly 100% in 26H1. The fund's technology holdings gained 72.39%, contributing 14.87 percentage points, compared with a 95.27% return and 7.10-point contribution from the benchmark's technology sector. Excluding IT and cash, the Fund contributed 12.73% versus 15.89% for the Russell 2000 Value Index; on a fully invested basis, the figures were 16.62% and 17.59%, respectively. The portfolio continued to trim appreciated technology holdings amid the AI-driven rally, while maintaining a bottom-up approach and avoiding beaten-down SaaS stocks due to the widening range of AI-related outcomes. The fund also eliminated about $62 million in capital gains during Q2 and approximately $140 million year-to-date through July, while ending the quarter with 10.2% in cash. In addition, please check the Fund's top five holdings to know its best picks in 2026.
In its second-quarter 2026 investor letter, FPA Queens Road Small Cap Value Fund highlighted stocks like Vontier (NYSE:VNT). Vontier (NYSE:VNT) provides technology and solutions for mobility, transportation, and industrial markets, including fueling, fleet, and repair applications. The one-month return of Vontier (NYSE:VNT) was -4.76% while its shares traded between $27.25 and $48.20 over the last 52 weeks. On August 31, 2026, Vontier (NYSE:VNT) stock closed at approximately $32.76 per share, with a market capitalization of about $4.35 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Vontier (NYSE:VNT) in its Q2 2026 investor letter:
"In Q2 we added new position. Vontier (NYSE:VNT) manufactures tanks, pumps and payment systems for gas stations. The company was a 2021 spinoff from Fortive, which itself was the spinoff of Danaher's lower growth industrial ****** ets. Since 2021, Vontier has been dealing with headwinds following a pull forward of sales from changing payment standards (EMV) and reorganizing the disparate collection of businesses that were originally acquired by Danaher. At their November 2025 Investor Day, Vontier made the cogent argument that they benefit from potential sales to the growing convenience store end market. We believe that shares are attractively priced at roughly 9x earnings."

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