| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 15.04% | 30.34% | 37.35% |
Hood River's Small Cap Growth Fund delivered exceptional performance in Q2 2026, returning +30.34% versus the Russell 2000 Growth Index's +25.71%, bringing year-to-date outperformance to +1,517 basis points. The fund's success was driven primarily by stock selection, particularly in information technology (+435 bps in Q2) and industrials, reflecting the managers' focus on AI infrastructure beneficiaries and defense-oriented businesses. The team maintains selective exposure to AI, emphasizing companies with tangible demand rather than broad thematic plays, while defense holdings benefit from structural changes in government procurement and next-generation capabilities investment. Despite incrementally hawkish Federal Reserve communication and modest inflation increases, the managers are not repositioning around macro forecasts, instead assessing individual business execution across potential outcomes. Following an unusually large Russell 2000 Growth reconstitution, the fund's sector weights have widened, with industrials now the largest overweight. The managers acknowledge some recent multiple compression but continue identifying mispriced opportunities through their research-intensive process, viewing elevated dispersion and periodic price-fundamental disconnects as favorable for active stock selection.
Hood River Capital Management pursues a disciplined, bottom-up research process focused on identifying small-cap growth businesses with durable growth profiles, improving fundamentals, and attractive valuations, believing that long-term investment outcomes are ultimately driven by company execution and fundamental progress rather than macro forecasting.
The managers remain grounded in their research-intensive, bottom-up process as they move into the second half of 2026. They continue to focus on identifying businesses with durable growth profiles, improving fundamentals, and attractive valuations through disciplined research. While acknowledging some recent multiple compression and relative underperformance, they continue to identify company-specific opportunities where their estimates differ meaningfully from consensus expectations. The team emphasizes that elevated dispersion, AI-driven concentration of growth, and periodic disconnects between share prices and business fundamentals create a backdrop where active stock selection can be especially valuable.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 17 2026 | 2026 Q2 | - | AI, Defense Spending, growth, industrials, small caps, stock selection, technology | - | Hood River's Small Cap Growth Fund significantly outperformed in Q2 2026, driven by selective AI infrastructure and defense holdings. The managers maintain a disciplined, bottom-up approach focused on durable growth businesses with improving fundamentals, avoiding macro-driven repositioning despite hawkish Fed signals. With meaningful sector weight deviations post-reconstitution and continued identification of mispriced opportunities, the team views elevated market dispersion as favorable for active stock selection. |
| Mar 31 2026 | 2026 Q1 | - | AI, fundamentals, Geopolitical, growth, oil, small caps, technology, valuation | - | Hood River Small Cap Growth Fund outperformed by 819 bps in Q1 2026 through disciplined stock selection, particularly benefiting from AI-levered holdings while avoiding traditional software. Despite geopolitical uncertainty and oil price volatility from Iran conflict, managers maintain bottom-up research focus, seeing current macro-driven dispersion as historically favorable environment for identifying mispriced opportunities with strong fundamentals. |
| Jan 12 2026 | 2025 Q4 | - | AI, earnings, growth, small caps, stock selection, technology, Valuations | - | Hood River's small cap growth fund outperformed significantly in Q4 and full-year 2025, driven by strong stock selection particularly in AI-related technology investments. The portfolio has been rebalanced with more moderate exposure as valuations have risen meaningfully. Managers remain confident in their disciplined approach while acknowledging execution will be critical given elevated valuations and potential AI capex durability questions. |
| Oct 20 2025 | 2025 Q3 | - | AI, Drones, growth, infrastructure, semiconductors, small caps, technology, Valuations | - | Hood River's small-cap growth fund significantly outperformed in Q3 2025, driven by strong stock selection in AI infrastructure themes including semiconductors and drone technology. The fund maintains exposure to secular growth trends while reducing AI concentration. With small-cap valuations compelling relative to large-caps and Fed rate cuts supporting the outlook, managers see attractive opportunities ahead in 2026. |
| Jun 30 2025 | 2025 Q2 | - | AI, financials, growth, industrials, small caps, technology, Trade Policy | - | Hood River's small-cap growth fund outperformed significantly in Q2 as markets shifted from macro concerns to fundamentals. Strong stock selection in financials, industrials, and technology drove returns. The fund maintains AI overweight while managing trade policy risks. Small-cap valuations look attractive relative to large caps, and conservative guidance sets up favorable earnings revisions for the back half of 2025. |
| Mar 31 2025 | 2025 Q1 | FTAI | AI, earnings, growth, industrials, small caps, technology, valuation | - | Hood River's small-cap growth strategy underperformed in Q1 2025 due to geopolitical tensions and risk-off sentiment, but managers see opportunity in attractive small-cap valuations. Despite AI infrastructure uncertainty, they maintain conviction in technology overweights and focus on fundamentally strong companies positioned for earnings surprises as market conditions normalize. |
| Dec 31 2024 | 2024 Q4 | - | Deregulation, energy, financials, growth, healthcare, small cap, valuation | - | Hood River's small cap growth strategy delivered exceptional 2024 performance, outpacing benchmarks through disciplined stock selection. Small caps offer compelling relative value versus expensive large caps, trading at unusual discount to S&P 500. Expected deregulation from new administration should benefit small businesses. Portfolio positioned for 2025 opportunities with management teams expressing optimism about improved business environment. |
| Sep 30 2024 | 2024 Q3 | APLD, QXO | AI, consumer, growth, industrials, small caps, technology |
APLD QXO |
Hood River's Small Cap Growth Fund outperformed by 373 bps in Q3 despite early volatility, delivering +31.33% year-to-date returns. The team's fundamental research process identified unique opportunities including co-investments with NVIDIA. With the Fed easing cycle beginning and small caps trading at a discount to large caps, the managers see continued outperformance potential. |
| Jun 30 2024 | 2024 Q2 | - | AI, Data centers, growth, industrials, Outperformance, small caps, stock selection | - | Hood River outperformed by 562 basis points in Q2 through superior stock selection, particularly in industrials with AI/data center exposure. Small cap growth valuations remain attractive at historical discounts, with the team finding ample opportunities despite macro headwinds from higher rates and slowing consumer spending on big-ticket purchases. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe fund maintains meaningful but selective exposure to AI infrastructure beneficiaries, emphasizing companies with tangible exposure to AI-related demand rather than broad thematic exposure. The managers believe a meaningful portion of market growth is tied to artificial intelligence capital expenditure, with the most direct benefits accruing to companies participating in the infrastructure buildout. They remain disciplined in managing exposure where valuations and expectations have grown more elevated, with confidence resting on continued hyperscaler capital expenditure. |
Infrastructure Hyperscaler Capital Expenditure Technology |
Defense SpendingThe fund holds defense-oriented businesses benefiting from structural changes in government procurement and defense spending. While several holdings experienced valuation compression after appreciating significantly into year-end 2025, underlying businesses have continued to develop favorably. Replenishment demand following recent global conflicts may provide support, while longer-term defense budgets increasingly reflect investment in drones, hypersonics, space-based systems, and other next-generation capabilities, creating opportunities for innovative suppliers. |
Defense Drones Space Government Procurement | |
Small CapsThe Russell 2000 Growth Index now trades at approximately 22.8x 2027E and 18.7x 2028E earnings, representing a modest premium to the S&P 500 but below the historical premium small cap growth stocks have commanded. The managers view this valuation environment as reinforcing the importance of selectivity and continue to identify company-specific opportunities where their estimates differ meaningfully from consensus. Elevated dispersion and periodic disconnects between share prices and business fundamentals create a backdrop where active, bottom-up stock selection can be especially valuable. |
Valuation Selectivity Dispersion Stock Selection | |
RatesFederal Reserve communication from the new Chair became incrementally more hawkish during the quarter, with inflation moving modestly higher and market expectations shifting away from the easing cycle anticipated earlier in the year. While the possibility of a measured rate increase has entered the discussion, the managers do not view a more aggressive tightening cycle as the most likely outcome and note that labor costs remain manageable with corporate guidance generally remaining constructive. |
Federal Reserve Inflation Monetary Policy | |
| 2026 Q1 |
AIAI adoption cycle is maturing with companies actively implementing AI across organizations rather than just evaluating it. Use cases are expanding from experimentation into operational improvements including optimizing sales processes, enhancing customer interactions, and improving workforce productivity. Companies are hiring fewer incremental employees per unit of growth, creating margin tailwinds over time. |
Artificial Intelligence Automation Productivity Software Implementation |
OilGeopolitical conflict with Iran has introduced uncertainty with oil prices responding sharply. The primary downside risk being monitored is further escalation in the Strait of Hormuz which could push oil prices meaningfully higher and create broader downstream impacts for industries reliant on petroleum-based inputs. However, energy as a share of consumer spending remains near historical lows. |
Energy Prices Geopolitical Risk Iran Strait of Hormuz Inflation | |
Small CapsRussell 2000 Growth Index trades at roughly 19.8x 2027 earnings, a modest premium to large-cap benchmark but well below the 20% premium that small caps have historically commanded. The current environment characterized by elevated dispersion, macro-driven volatility, and periodic disconnection from fundamentals is precisely the backdrop where research-intensive processes have historically thrived. |
Valuation Dispersion Research Fundamentals Outperformance | |
| 2025 Q4 |
AIAI remains a powerful secular theme with robust demand trends and earnings visibility. The fund benefited from select investments in AI and supporting infrastructure during Q4. However, managers are mindful of potential valuation compression if expectations extend beyond underlying earnings power and have selectively moderated exposure where expectations moved ahead of fundamentals. |
Artificial Intelligence Infrastructure Secular Theme Valuation Capital Expenditure |
Small CapsSmall cap growth universe ended 2025 trading at 20.0x 2027 earnings, in-line with S&P 500 but attractively valued on a relative basis given historical 20% premium. Elevated valuations increase importance of execution as companies need to meet or exceed guidance. Dispersion between winners and losers likely to remain elevated. |
Valuation Execution Dispersion Russell 2000 Growth | |
GrowthFund focuses on companies with sustainable growth profiles, improving profitability, and valuations that appropriately compensate for risk. Stock selection was the dominant contributor with +1,321 bps for full year, consistent with fundamental research-driven investment process. Emphasis remains on disciplined, bottom-up stock selection. |
Stock Selection Fundamental Research Profitability Sustainable Growth Bottom-up | |
| 2025 Q3 |
AIThe buildout of AI infrastructure and associated power needs continue to reverberate across the economy. Demand for semiconductors, energy, industrial capacity, and drone technology remains robust. Nearly half of U.S. GDP growth in the first half of 2025 was driven by technology capital expenditures, with this elevated pace of investment poised to continue. |
Infrastructure Semiconductors Capital Expenditures Technology Growth |
SemiconductorsDemand for semiconductors remains robust as part of the AI infrastructure buildout. Infrastructure beneficiaries have largely delivered beat-and-raise quarters, demonstrating strong fundamentals and execution in this space. |
AI Infrastructure Beat-and-raise Technology Growth Demand | |
DronesDrone technology demand remains robust as part of the broader AI infrastructure buildout and represents one of the powerful secular trends that could create company-specific growth drivers less visible in larger-cap benchmarks. |
Technology Infrastructure Secular Trends Growth AI | |
Small CapsSmall-cap equities have rallied strongly since Liberation Day, with fundamentals taking center stage. Valuations remain compelling as the Russell 2000 Growth Index trades at similar multiples to the S&P 500 despite historically commanding a premium, creating attractive opportunities for small-cap investors. |
Valuations Fundamentals Opportunities Growth Outperformance | |
| 2025 Q2 |
AIThe fund remains overweight artificial intelligence as a theme, though exposure has moderated from earlier in the year. They are finding selective opportunities where capital expenditures among hyperscalers are translating into improving fundamentals, with anticipated continued earnings revisions and momentum in those names. |
Hyperscalers Capital Expenditures Earnings Revisions Technology |
Trade PolicyTariffs remain a headline topic but the market is growing more comfortable with tapering trade tensions over time. The market is increasingly pricing in a 10% baseline rate on most non-China trading partners. The fund focuses on companies less exposed to global trade volatility to manage risk while seeking upside. |
Tariffs Trade Tensions China Global Trade | |
Small CapsFrom a valuation perspective, the US Small Cap Growth group continues to look attractive on a relative basis. The Russell 2000 Growth Index's 21.4x multiple represents a 5% discount to the S&P 500 Index, well below its typical premium to the larger-cap index. |
Valuation Russell 2000 Relative Value Discount | |
| 2025 Q1 |
AIOver the past three years, AI and its supporting infrastructure has been identified as a primary global growth driver, representing a significant portion of technology and industrial exposure. Despite heightened uncertainty this quarter around scalability and capital expenditures, management discussions reinforce positive outlook with robust spending projections. The launch of China's Deepseek has catalyzed infrastructure expansion plans rather than stalling development. |
Infrastructure Capital Expenditures Deepseek Technology Growth |
Small CapsThe Russell 2000 Growth is trading at roughly a 10% discount despite typically trading at a 20% premium to broader markets. From a valuation perspective, US small caps remain attractive going forward. The recent selloff has taken some air out of valuations, creating opportunities in the small-cap space. |
Valuation Russell 2000 Discount Attractive Opportunities | |
| 2024 Q4 |
Small CapsSmall cap growth appears much more attractive than large caps, trading at a 17% discount to the S&P 500 for 2026 compared to a typical 20% premium. The Russell 2000 Growth Index's absolute valuation of 17.7x '26 earnings is slightly higher than normal but not too far from normal. Expected deregulation is anticipated to benefit small businesses, further supporting the favorable outlook on small caps heading into 2025. |
Valuation Discount Deregulation Small Business Russell 2000 |
| 2024 Q3 |
Small CapsThe fund focuses on US small cap growth stocks and believes small caps have the ability to outperform over the coming quarters given the Fed has begun its easing cycle and small caps typically outperform during easing cycles. The Russell 2000 Growth Index currently trades at a slight discount to the S&P 500 despite typically trading at a 20% premium. |
Russell 2000 Easing Cycle Valuations Outperformance Growth |
AIThe portfolio had an embedded tilt towards AI which faced headwinds in July during the rotation from growth to value. The fund co-invested with NVIDIA in Applied Digital Corporation at a discounted price, demonstrating continued exposure to AI-related opportunities. |
NVIDIA Applied Digital Technology Growth Co-investment | |
| 2024 Q2 |
AIAI and digital currency data centers continue to change the supply/demand balance in several industries, primarily in industrials, technology, materials, and utilities. The buildout of capabilities is requiring more power, land, hardware, and chips. Some companies with ancillary exposure to these dynamics stand to benefit, yet the market is not fully pricing this in. |
Data Centers Power Hardware Semiconductors Infrastructure |
Data CentersAI and digital currency data centers are driving significant changes in supply/demand dynamics across multiple industries. The buildout requires substantial power, land, hardware, and chips, creating opportunities for companies with ancillary exposure that may not be fully priced in by the market. |
AI Power Infrastructure Hardware Real Estate |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30, 2024 | Fund Letters | Hood River Capital - Small Cap Growth Fund | APLD | Applied Digital Corporation | Information Technology | IT Services | Bull | NASDAQ | AI, Co-investment, data centers, digital infrastructure, high-performance computing, Nvidia partnership, technology infrastructure | Login |
| Sep 30, 2024 | Fund Letters | Hood River Capital - Small Cap Growth Fund | QXO | QXO Inc | Industrials | Industrial Conglomerates | Bull | NASDAQ | Brad Jacobs, Business Platform, business services, management team, PIPE, Private Investment, Proven Operator | Login |
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