| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.38% | -10.01% | -10.01% |
The FAM Small Cap Fund returned -10.01% in Q1 2026 versus the Russell 2000's 0.89% gain, underperforming due to AI disruption fears that particularly hurt software-as-a-service companies. Five of the fund's six worst performers were SaaS companies caught in the 'SaaSpocalypse' narrative, while energy and low-quality stocks rallied amid Middle East military operations. Despite this headwind, the manager emphasizes that earnings growth across portfolio holdings remains strong at approximately 10%, while valuation multiples have compressed to levels below historical norms. Element Solutions and Landstar System were top contributors, benefiting from data center demand and transportation market improvement respectively. The fund added to seven high-conviction holdings and maintained about 5% cash. Management remains committed to their long-term discipline of owning high-quality businesses with healthy balance sheets, ample cash flow, and pricing power, viewing current conditions as potentially creating attractive entry points for long-term compounding as market sentiment eventually normalizes.
Focus on high-quality small-cap businesses with strong fundamentals trading at compressed valuations, maintaining long-term discipline despite short-term market volatility and AI disruption fears.
The manager expects continued volatility as investors weigh solid earnings power against higher-for-longer interest rates and various disruptions. They remain committed to long-term investment discipline and focus on high-quality businesses, believing current conditions can lay groundwork for attractive long-term returns as market sentiment normalizes.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 14 2026 | 2026 Q1 | BIP, BROS, BWIN, CBIZ, CIGI.TO, CWST, DFH, DSGX.TO, ESI, EXLS, LSTR, OSW, SPSC | AI, energy, Quality, small caps, software, value | - | Small-cap fund down 10% as AI fears crushed software holdings despite strong underlying earnings growth. Manager sees opportunity in compressed valuations of high-quality businesses, adding to conviction names while maintaining disciplined approach. Energy rally and low-quality stock preference hurt performance, but fundamentals remain solid with potential for attractive long-term returns as sentiment normalizes. |
| Jan 13 2026 | 2025 Q4 | APH, BIPC, BROS, BWIN, CASS, CHH, CIGI, DFH, EXLS, EXPO, FND, FSV, FTDR, JKHY, LSTR, NOVT, OSW, PNFP, ROST, SPSC, TRRSF | AI, Quality, small cap, Speculation, underperformance, value | - | Fenimore's Small Cap Fund declined 4.12% in Q4 as quality stocks lagged speculative AI-related names, similar to the late 1990s tech bubble. Despite underperformance, the firm maintains disciplined focus on high-quality businesses with strong fundamentals, believing these characteristics will eventually drive long-term returns as market speculation subsides. |
| Oct 9 2025 | 2025 Q3 | APH, BROS, BWIN, CBZ, CHE, CIGI, CTAS, CWST, ENTG, EXPO, FSV, FTDR, GEHC, JKHY, LSTR, NOMD, POOL, ROST, SPSC, VRSK | AI, dividends, Quality, rates, small caps, value | CWST US | Fenimore's quality-focused funds underperformed in Q3 2025 as speculation favored lower-quality stocks over fundamentally strong businesses. Despite short-term headwinds, portfolio companies showed operational strength with strong earnings beats and AI adoption. The firm is deploying capital into attractively valued positions while maintaining discipline, expecting increased volatility but confident in long-term outperformance from high-quality holdings. |
| Jun 30 2025 | 2025 Q2 | APH, BWIN, CDW, CHE, CTAS, DFH, ENTG, EXLS, FND, FTDR, GEHC, HEI, HGTY, MCHP, MKC, NOMD, ROST, SITE, TRRSF, TT | AI, dividends, mid cap, Quality, small cap, tariffs, value | - | Fenimore's quality-focused strategy underperformed in Q2's speculative rally driven by AI enthusiasm and tariff volatility. Despite trailing benchmarks, the firm maintains conviction in high-quality companies with strong financials and proven management. Portfolio companies delivered strong dividend growth averaging 9.6%, while the firm used market volatility to add positions at attractive valuations. |
| Mar 31 2025 | 2025 Q1 | AJG, APH, BWIN, CDW, CTAS, DFH, ENTG, HEI, HGTY, IEX, MCHP, MKC, POOL, ROST, RSG, SITE, SPSC, STE, TT, VRSK | insurance, Quality, small cap, tariffs, Trade Policy, value | BWIN | Fenimore's Small Cap Fund outperformed during Q1's tariff-driven volatility by focusing on quality businesses with strong fundamentals. The fund added insurance broker Baldwin Insurance Group and increased positions in select holdings while maintaining discipline around valuations. Trade policy uncertainty creates near-term headwinds, but the selloff has made valuations more attractive for long-term quality-focused investors. |
| Dec 31 2024 | 2024 Q4 | APH, BIPC, BR, BROS, CBIZ, CDW, CIGI, CTAS, DFH, EXLS, EXPO, FND, MCHP, MLM, PAYX, SITE, SSB, STE, TRRSF, VRSK | Homebuilders, Outsourcing, Quality, small cap, technology, value | - | Fenimore's Small Cap Strategy declined 0.13% in Q4 as quality stocks underperformed. Strong performers included Dutch Bros and CBIZ, while housing-related names like Dream Finders Homes faced affordability headwinds. The manager sees opportunities in current market volatility and expects 2025 growth driven by rate cuts and deregulation. |
| Sep 30 2024 | 2024 Q3 | APH, ASGTF, BROS, CBZ, CHH, CIGI, CTAS, DFH, ENTG, ESAB, FSV, FTDR, LSTR, MCHP, PNFP, POOL, SITE, SSB, TT, VRSK | AI, interest rates, Quality, real estate, small caps, value | - | Fenimore's Small Cap Fund outperformed with a 12.69% Q3 return, benefiting from Fed rate cuts that boosted housing and real estate holdings. The manager remains bullish on small caps based on growing earnings, increased buybacks, and M&A activity. Portfolio trades slightly above fair value but maintains focus on high-quality businesses positioned for long-term outperformance. |
| Jun 30 2024 | 2024 Q2 | BIPC, BROS, CBZ, CHE, CHH, CIGI, DFH, ESAB, ESI, EXLS, EXPO, FND, HGTY, OLLI, OSW, PNFP, SITE, TSG | dividends, industrials, Quality, small caps, value | - | FAM Small Cap Fund underperformed in Q2 due to industrial exposure amid manufacturing contraction. Dutch Bros and Exponent were top contributors while Dream Finders Homes and SiteOne detracted. New positions in OneSpaWorld and ESAB reflect focus on quality companies. Anticipated Fed rate cuts should benefit small caps going forward. |
| Mar 31 2024 | 2024 Q1 | APD, BIP, BOC, CBZ, CIGI, CTAS, DFH, EXPO, FTDR, HEI, IEX, JKHY, MCHP, MLM, NOMD, PAYX, SYK, TROW, TT, VRSK | consumer, financials, Quality, small cap, value | - | Fenimore's Small Cap Fund outperformed the Russell 2000 by 88 basis points in Q1 2024, driven by strong financial and consumer holdings. The firm maintains its disciplined focus on quality small-cap companies meeting strict criteria, adding to attractively valued positions while remaining optimistic about long-term prospects despite near-term market uncertainties. |
| Dec 31 2023 | 2023 Q4 | BIPC, BOC, BROS, CBZ, CHE, CHH, CIGI, CSV, DFH, EXLS, EXPO, HGTY, LSTR, NOMD, PNFP, SITE, SSB, TRRSF | consumer, financials, Quality, small cap, value | - | Fenimore's Small Cap Fund returned 12.76% in Q4, underperforming the Russell 2000 as quality stocks lagged in a broad rally favoring lower-quality names. Strong performance from Dream Finders Homes and Colliers offset weakness in Choice Hotels and Carriage Services. The fund maintains its quality focus with elevated cash levels providing deployment opportunities. |
| Sep 30 2023 | 2023 Q3 | AVY, BIP, BOC, CDW, CIGI, CSV, CTAS, ENTG, ESI, EXPO, IEX, MCHP, MKC, NOMD, PAG, PAYX, ROP, SPSC, THG, TT, TWNK | dividends, Quality, rates, semiconductors, small caps, value | - | Fenimore's small-cap strategy outperformed in Q3 by focusing on quality companies with strong balance sheets. Rising rates pressured markets but the fund's emphasis on low-debt, cash-generative businesses provided downside protection. Active portfolio management included selling leveraged names while maintaining 11% cash for opportunities. |
| Jun 30 2023 | 2023 Q2 | BOC, CASS, CBZ, CHH, CIGI, CSV, DFH, EXLS, HST, LSTR, NOMD, PAG, PNFP, SITE, SPSC, SSB, TRRSF | AI, Quality, Recession, small caps, technology, value | - | Fenimore's Small Cap Fund returned 4.68%, trailing the Russell 2000 as investors favored low-quality names over their high-quality approach. AI excitement drove market gains while recession fears persist. Top performers included Dream Finders Homes and SPS Commerce. The manager used weakness to add positions, maintaining focus on quality stocks for long-term outperformance. |
| Mar 31 2023 | 2023 Q1 | BOC, CHH, DFH, FND, FTDR, NVEI.TO, PAYA, PNFP, TSU.TO | Banking, consumer, Quality, small caps, technology | - | FAM Small Cap Fund delivered strong 5.97% Q1 returns, outperforming the Russell 2000 by 323 basis points through quality stock selection. Consumer discretionary, staples, and real estate holdings drove outperformance while banking concerns weighed on some positions. The manager remains confident in their quality-focused approach for long-term superior results. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIThe fund experienced significant underperformance due to AI disruption fears affecting software-as-a-service companies. Five of the six worst performers were caught up in fears that AI will disintermediate SaaS companies, creating what the manager calls a 'SaaSpocalypse' narrative. |
Software SaaS Disruption Technology |
QualityThe manager emphasizes their commitment to high-quality businesses with healthy balance sheets, ample cash flow, pricing power, and long-term focused management. They note that the rally in low-quality stocks has created opportunities to add to high-quality names at discounts. |
Balance Sheets Cash Flow Pricing Power Management | |
ValueValuation multiples across the investable universe are meaningfully below historical norms, with several names trading near or below COVID-era lows. The manager sees these compressed valuations as compelling relative to both history and fundamentals. |
Multiples Valuations Historical Fundamentals | |
| 2025 Q4 |
AIThe fund extensively analyzes whether current AI markets represent a bubble, comparing it to historical manias like the late 1990s internet bubble. They question AI investment returns, infrastructure costs, and valuations while noting the market's shift in viewing Google from AI laggard to leader. |
Artificial Intelligence Bubble Valuations Infrastructure Technology |
Long/ShortThe fund operates as a global long/short strategy targeting risk-adjusted returns with diversified short book to reduce risk. Short book remained a headwind this quarter particularly in Biotech and Materials, though they saw encouraging gains across other sectors. |
Hedge Fund Short Selling Risk Management Diversification | |
BiotechnologyBiotech was specifically mentioned as an area where their short book faced headwinds during the quarter, indicating challenges in their short positions within this sector. |
Biotech Pharmaceuticals Short Positions | |
| 2025 Q3 |
AIAI euphoria fueled strong market performance in Q3, with mega-cap AI leaders driving gains. Portfolio companies are using AI to improve operations, reduce costs, and better serve customers. Several holdings are participating directly in AI adoption, particularly in data center infrastructure buildout. |
Data Centers Infrastructure Technology Growth |
QualityHigh-quality stocks lagged during the quarter as speculation favored lower-quality names with flashy characteristics but poor fundamentals. Fenimore maintains focus on businesses with significant free cash flow generation, high profitability, and appropriate debt levels despite short-term underperformance. |
Value Fundamentals Cash Flow Profitability | |
DividendsStrong dividend growth across the portfolio with 25 out of 26 names in the Dividend Focus Fund increasing dividends in the past 12 months. Average year-over-year dividend increase was 9.7%, suggesting underlying business strength despite market volatility. |
Income Growth Shareholder Returns Cash Flow | |
| 2025 Q2 |
QualityFenimore emphasizes high-quality companies with strong financials, durable business models, and proven management as the right approach for long-term investors. They believe quality profiles enable companies to endure downturns, compound returns, and manage risk more effectively compared to low-quality, speculative businesses that outperformed in Q2. |
Quality Financials Management Risk Durability |
AIArtificial intelligence drove significant market enthusiasm and performance, particularly benefiting technology companies and data center cooling solutions. Firms associated with cutting-edge AI technology became magnets for speculative investing, with companies like Trane Technologies capitalizing on demand for technical cooling solutions in AI data centers. |
AI Technology Data Centers Speculation Growth | |
Trade PolicyThe administration's changing tariff messages created market volatility, with steep reciprocal tariffs announced in April followed by a 90-day suspension. Tariffs are expected to impact corporate profits, consumer strength, and present material challenges for companies like McCormick that face difficulties passing on cost increases. |
Tariffs Trade Policy Volatility Costs | |
DividendsStrong dividend growth across the portfolio with every holding except one increasing dividends in the past 12 months. The average year-over-year dividend increase was 9.6%, with top growers including Amphenol Corp at 50%, GE HealthCare Technologies at 17%, and Cintas Corp at 16%. |
Dividends Growth Income Returns Yield | |
| 2025 Q1 |
Trade PolicyThe new administration's tariff announcements sparked market volatility and fears of higher inflation and potential recession. Companies are scrambling to adjust to the rapidly changing trade landscape, though many have diversified supplier bases since the first term and COVID. |
Tariffs Trade Inflation Supply Chain Policy |
InsuranceBaldwin Insurance Group was added as a new position, representing the type of insurance broker Fenimore has invested in for decades. The firm sees multiple strategic initiatives that should create long-term shareholder value at Baldwin. |
Insurance Brokers Baldwin Strategic Initiatives Value Creation | |
ValueValue stocks outpaced growth counterparts during the quarter as technology stocks were hit hard. Stock valuations became more reasonable given the market selloff, creating opportunities to add to existing positions and initiate new ones. |
Value Investing Valuations Market Selloff Opportunities | |
| 2024 Q4 |
QualityFenimore focuses on finding quality companies with strong leadership that can push through changes and continue driving profits higher over the medium and long term. They seek robust businesses that make their own luck through hiring producers, creating new products, and taking market share from fragile competitors. |
Quality Leadership Resilience Profitability Market Share |
Small CapsThe fund invests in small-cap companies, with the Russell 2000 as its benchmark. Low-quality stocks outperformed high-quality stocks in Q4, as evidenced by the Russell 2000 Growth Index's positive return versus the Russell 2000 Value Index's loss. |
Small Cap Russell 2000 Growth Value | |
OutsourcingExlService Holdings continues to report strong results based on companies' interest in outsourcing and automation. This represents a key theme in the portfolio as businesses seek to optimize operations through external service providers. |
Outsourcing Automation Business Services | |
| 2024 Q3 |
AIIncreasing enthusiasm surrounding AI and considerable capital investments in its infrastructure have helped propel positive stock market returns this year. While no one knows exactly what the future of this technology holds, it's likely to help businesses improve efficiency by allowing them to organize and analyze data faster than ever before. |
Artificial Intelligence Infrastructure Efficiency Data |
Commercial Real EstateThe fund saw outperformance in holdings related to commercial real estate with the Fed's decision to lower rates. Altus Group was initiated as a new position, being a leading provider of advisory services and software for the commercial real estate industry. |
Real Estate Advisory Software Interest Rates | |
BuybacksShareholder value is being created by strengthening stock-buyback activity. This is identified as one of the positive signs the manager is seeing at the company level that supports their bullish stance on stocks. |
Shareholder Value Capital Allocation Stock Repurchases | |
| 2024 Q2 |
Small CapsThe fund focuses exclusively on small-cap investments, with the Russell 2000 Index serving as its benchmark. Small-cap stocks struggled in Q2 2024, with the Russell 2000 declining 3.28% as investors anticipated rate cuts and earnings for smaller companies waned. |
Russell 2000 Small Cap Underperformance Earnings Rate Cuts |
IndustrialsMuch of the fund's underperformance was attributed to higher exposure to industrials relative to the benchmark and underperformance of industrial holdings. The Manufacturing PMI fell below 50 indicating contraction for three months in Q2 2024. |
Manufacturing PMI Industrial Exposure Contraction Benchmark Underperformance | |
| 2024 Q1 |
Small CapsThe FAM Small Cap Fund rose 6.06% in the first quarter, outperforming the Russell 2000 Index by 88 basis points. The fund continues to focus on small and midsize businesses that meet strict investment criteria, with outperformance attributed to strength in financial and consumer holdings. |
Small Cap Russell 2000 Outperformance Quality Value |
QualityFenimore continues to seek quality/value investments and painstakingly seeks small and midsize businesses that meet strict criteria. The team examines enterprises through facility visits, management meetings, and industry trade shows to learn more about business quality. |
Quality Value Criteria Research Analysis | |
| 2023 Q4 |
QualityFenimore maintains exclusive focus on high-quality businesses with strong balance sheets, ample cash for reinvestment or dividends, competitive advantages, and capable management. The fund's underperformance versus benchmark was attributed to being underweight in lower-quality firms that rallied on positive inflation news. |
Quality Balance Sheets Competitive Advantages Management |
Small CapsThe fund focuses specifically on the small-cap space with concentrated portfolios. Cash holdings ended at 7.13% on the high end of desired range, causing performance drag as markets rallied. The manager is actively exploring potential new holdings and opportunities to add to existing positions. |
Small Cap Concentrated Cash Holdings Russell 2000 | |
| 2023 Q3 |
RatesRising interest rates weighed on the market throughout the quarter, with the Fed raising rates by 0.25% in July and signaling potential additional increases. The Fed's higher for longer stance pressured stocks and created headwinds for companies with significant debt. |
Interest Rates Federal Reserve Monetary Policy Debt Credit |
Semiconductor CycleSemiconductor performance cooled in the third quarter after strong first-half performance driven by AI hype. Order backlogs returned to normal and broader economic weakness led to demand slowdown, with worldwide semiconductor sales down 17% year-over-year. |
Semiconductors AI Demand Backlogs Technology | |
QualityHigh-quality companies with strong fundamentals held up better during the market downturn. Fenimore focuses on companies with attractive pricing, ethical management, strong balance sheets, clear competitive advantages, and ample free cash flow. |
Balance Sheets Fundamentals Cash Flow Competitive Advantages Management | |
| 2023 Q2 |
QualityFenimore emphasizes their focus on high-quality equities with strong financials, stable earnings growth, competitive advantages, solid management, and consistent returns. They believe this approach will preserve and create the most value over longer time periods despite short-term underperformance. |
Quality Financials Earnings Value |
AIArtificial intelligence is discussed as both a market driver and business risk. The quarter's gains came largely from big tech names expected to benefit from the AI boom, while some holdings like Genpact and ExlService faced unfounded fears about AI disrupting their business models. |
AI Technology Disruption | |
| 2023 Q1 |
Small CapsThe fund focuses on small-cap quality stocks, which outperformed during the quarter. The Russell 2000 Growth Index gained 6.22% while the Russell 2000 Value Index declined by -0.66%. Quality stocks outperformed during the quarter, and the manager believes that the highest quality businesses should generate the best investment results over longer time periods. |
Quality Russell 2000 Growth Value Outperformance |
QualityThe manager emphasizes their focus on quality businesses and believes quality stocks outperformed during the quarter. Although lower-quality stocks may outperform in speculation-driven markets, they believe that the highest quality businesses should generate the best investment results over longer time periods. |
Business Quality Long Term Outperformance Speculation Investment Results |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 9, 2025 | Fund Letters | John Fox | CWST US | Casella Waste Systems, Inc. | Industrials | Environmental & Facilities Services | Bull | NASDAQ | acquisition, growth, infrastructure, Integration, Margins, Pricing power, Recycling, waste | Login |
| Mar 31, 2025 | Fund Letters | Fenimore Small Cap Strategy | BWIN | Baldwin Insurance Group | Financials | Insurance Brokers | Bull | NASDAQ | Early stage, financials, Insurance Broker, margin of safety, small-cap, strategic initiatives, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| ESI | Our biggest contributor to performance was Element Solutions (ESI) which benefited from higher demand, including data center equipment. |
| LSTR | Landstar System (LSTR) gained ground amid signs that the transportation market may finally improve. |
| CBIZ | Five of our six worst performers were caught up in the fear that AI will disintermediate software-as-a-service companies. The list included CBIZ (CBIZ). |
| SPSC | Five of our six worst performers were caught up in the fear that AI will disintermediate software-as-a-service companies. The list included SPS Commerce (SPSC). |
| EXLS | Five of our six worst performers were caught up in the fear that AI will disintermediate software-as-a-service companies. The list included ExlService Holdings (EXLS). |
| CIGI.TO | Five of our six worst performers were caught up in the fear that AI will disintermediate software-as-a-service companies. The list included Colliers International Group (CIGI). |
| DSGX.TO | Five of our six worst performers were caught up in the fear that AI will disintermediate software-as-a-service companies. The list included the Descartes Systems Group (DSGX). |
| CWST | We added to Casella Waste Systems (CWST). |
| BWIN | We added to Baldwin Insurance Group (BWIN). |
| BROS | We sold Dutch Bros (BROS). |
| DFH | We sold Dream Finders Homes (DFH). |
| BIP | Trims included Brookfield Infrastructure Partners (BIP). |
| OSW | Trims included OneSpaWorld Holdings (OSW). |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
