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 The Bank of N.T. Butterfield & Son (NYSE:NTB). The Bank of N.T. Butterfield & Son (NYSE:NTB) operates as a Bermuda-based bank providing banking and wealth-management services across select international markets. The one-month return of The Bank of N.T. Butterfield & Son (NYSE:NTB) was -5.20% while its shares traded between $40.59 and $64.17 over the last 52 weeks. On August 28, 2026, The Bank of N.T. Butterfield & Son (NYSE:NTB) stock closed at approximately $59.30 per share, with a market capitalization of about $2.32 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding The Bank of N.T. Butterfield & Son (NYSE:NTB) in its Q2 2026 investor letter:
“The Bank of N.T. Butterfield and Sons (NYSE:NTB) owns attractive deposit and wealth management franchises in the Caribbean financial centers of Cayman and Bermuda. The bank has a very attractive return on equity despite investing in low risk assets. On May 28, Butterfield announced a deal to acquire CIBC’s Caribbean franchises for 1.1x book and 9x earnings, roughly doubling the size of the business. The deal will provide some growth and further consolidate Butterfield’s attractive Caribbean markets but adds some operational and balance sheet risk. Still, Butterfield remains a well-run banking franchise and were pleased to be able to accumulate shares at less than 10x earnings.”
