| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.59% | 20.75% | 25.29% |
The Mairs & Power Small Cap Fund returned 25.29% year-to-date through Q2 2026, outperforming its benchmarks as small-cap stocks posted their first meaningful earnings growth after three years of contraction. The Fund's outperformance was driven primarily by sector allocation in Information Technology, Industrials, and Financials, with holdings positioned as downstream beneficiaries of massive AI infrastructure spending. Top contributors included Entegris, Plexus, Cognex, Littelfuse, and AAR Corp, reflecting exposure to semiconductor equipment, automation, data center buildout, and aerospace. Detractors included software names Workiva and Bentley Systems caught in a broader selloff, and cyclical names like Patrick Industries pressured by higher rates. The Fund added six new positions including edge-AI semiconductor company Ambarella and two regulated utilities for defensive support. Key risks include the sustainability of AI capital expenditures and sticky inflation driven by Middle East conflict. However, managers remain optimistic citing improved small-cap earnings trends, compelling valuations 24% below large caps, continued market broadening, and potential productivity tailwinds from AI adoption. The Fund maintains valuation discipline while positioning for long-term benefit from technological innovation.
The Mairs & Power Small Cap Fund is positioned to benefit from market broadening and the downstream effects of massive AI infrastructure spending, focusing on high-quality, reasonably valued small-cap businesses that serve as suppliers and beneficiaries of technological innovation rather than the most cyclical hardware names.
The managers remain optimistic about the small-cap environment despite headwinds from higher interest rates and Middle East conflict. They cite several reasons for optimism: small-cap stocks continue to show vastly improved earnings growth after three years of contraction, valuations remain compelling after a long period of underperformance, and the market continues to broaden away from narrow megacap leadership. The managers emphasize sticking to their valuation discipline and believe the Fund is well positioned to benefit long-term investors, especially if the market broadens further. They continue to believe that remaining disciplined during times of ambiguity is the most reliable way to navigate periods like this.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 21 2026 | 2026 Q2 | AIR, AMBA, APG, BSY, CGNX, CVRX, ENTG, EXAS, HWKN, IDA, JBTM, LFUS, MGEE, MGPI, PATK, PLXS, RDNT, SFM, THRM, WK | AI, earnings, inflation, Market Broadening, productivity, semiconductors, small caps, Valuations | - | Mairs & Power Small Cap Fund returned 25.29% YTD, outperforming benchmarks as small caps posted first earnings growth in three years. The Fund is positioned as downstream beneficiary of AI infrastructure spending through semiconductor equipment, automation, and data center suppliers. Despite risks from AI spending sustainability and sticky inflation, managers see compelling valuations, improved earnings trends, and market broadening supporting small-cap outperformance. |
| Apr 29 2026 | 2026 Q1 | AMBA, APG, CGNX, ENTG, HUBG, HWKN, PLXS, RDNT, SFM, WK | Automation, earnings, energy, inflation, Middle East, semiconductors, small cap, Valuations |
ENTG PLXS CGNX AMBA APG HWKN SFM |
Small-cap fund outperformed in Q1 2026 as the asset class showed improved earnings and rotation away from megacaps. Middle East conflict disrupted energy markets and reignited inflation concerns, but small-cap earnings growth remains strong at 16% expected for S&P 600. Fund maintains disciplined approach targeting high-quality businesses at attractive valuations. |
| Jan 18 2026 | 2025 Q4 | ABT, AIR, BSY, CASY, CVRX, EXAS, INSP, KNF, MEDP, MGPI, NVT, WK | AI, earnings, healthcare, rates, small caps, technology, Valuations | - | Small caps delivered first earnings growth in three years but the Fund underperformed due to healthcare stock selection challenges. With small caps trading at significant discounts while showing 13% earnings growth and benefiting from Fed rate cuts, managers see attractive long-term opportunity despite AI cycle entering higher-risk phase with excessive capital deployment. |
| Oct 24 2025 | 2025 Q3 | AIR, AZEK, CASY, CLFD, HUBG, INSP, JHX, KNF, MEDP, MGPI, NVT, PATK, TREX, WK | AI, earnings, GLP1, infrastructure, small caps, technology, value | PATK | Small cap fund underperformed due to GLP-1 headwinds and construction delays, but sees attractive opportunities as small caps trade at significant discounts despite earnings stabilization. Added positions in Patrick Industries and Trex at compelling valuations. Maintains valuation discipline while AI-driven mega caps reach extreme valuations, positioning for long-term outperformance when market leadership broadens. |
| Jul 18 2025 | 2025 Q2 | AIR, AZEK, CASY, CLFD, HUBG, INSP, JHX, KNF, MEDP, MGPI, NVT, PATK, TREX, WK | AI, healthcare, infrastructure, materials, small caps, technology, valuation |
PATK TREX JHX |
Small cap fund underperformed due to stock selection, with GLP-1 headwinds hitting healthcare holdings and construction slowdowns affecting materials names. However, small caps trade at significant discounts despite earnings stabilization, creating attractive long-term opportunities. Managers maintain valuation discipline in concentrated market, adding selective positions while avoiding expensive momentum plays. |
| May 1 2025 | 2025 Q1 | ALTR, AZEK, BKH, CASY, CGNX, HUBG, JHX, LFUS, LTH, NWE, PLXS, SIEGY, THRM, WK | Automation, small caps, tariffs, Trade Policy, Utilities, valuation | CGNX | Mairs & Power Small Cap Fund fell 11.04% in Q1 2025 on tariff uncertainty and sector rotation, underperforming due to software and automotive holdings while utilities outperformed. Despite trade policy creating stagflation risks, compressed small-cap valuations at 30% discount to large caps present compelling long-term opportunities for quality companies with durable advantages. |
| Dec 31 2024 | 2024 Q4 | ALTR, AZEK, CASY, CLFD, CTLT, CVRX, CWAN, DOC, FUL, JBT, KNF, LFUS, LTH, MCS, MGPI, PIPR, PLXS, THRM, TNC, WTFC | financials, industrials, infrastructure, Manufacturing, small caps, value | - | Small cap fund targeting quality companies at attractive valuations, with small caps trading at 29% discount to S&P 500 despite superior earnings growth estimates. Active portfolio management adding to high-conviction positions while trimming appreciated holdings. Optimistic on small cap rotation potential given historical cycles and improving business fundamentals across portfolio companies. |
| Sep 30 2024 | 2024 Q3 | AZEK, CASY, CFR, CLFD, CTLT, CVRX, DOC, ENTG, JBT, KNF, LTH, MCS, MGPI, PIPR, QCRH, THRM, TNC, TTC, WK, WTFC | banks, Fed, growth, rates, small caps, Valuations | - | Small caps trade at steep discounts despite superior earnings growth prospects, creating compelling opportunities as Fed rate cuts reduce borrowing costs for smaller companies. The fund maintains conviction in quality small cap names with durable advantages while trimming bank exposure due to commercial real estate concerns. |
| Jul 23 2024 | 2024 Q2 | ALRS, ASB, AZEK, CASY, CFR, CLFD, CVRX, GBCI, HUBG, INSP, JBT, KNF, MEDP, MGPI, NVT, PIPR, QCRH, TNC, WK, WTFC | healthcare, interest rates, Regional Banks, small caps, technology, value | - | Small cap fund outperformed benchmark despite challenging environment dominated by large cap concentration. Managers trimmed regional banks on commercial real estate concerns while adding to attractively valued positions. Small caps trade at significant discounts with superior earnings growth prospects. Potential Fed rate cuts could catalyze outperformance by reducing borrowing costs that have pressured smaller companies. |
| Apr 15 2024 | 2024 Q1 | AMZN, AZEK, CASY, CLFD, CTLT, CVRX, DOC, KNF, LFUS, MEDP, META, MGPI, MSFT, NVDA, NVT, PIPR, PLXS, TNC, WK | AI, financials, productivity, small caps, technology, value | - | Small cap fund outperformed by 241bps in Q1 on strong stock selection across sectors. Financials led performance recovery while AI infrastructure and Old Economy names with technology adoption potential drive positioning. Small caps trade at 32% discount to market despite superior earnings growth outlook, creating attractive long-term opportunities for disciplined value investors. |
| Jan 28 2024 | 2023 Q4 | AIR, ALTR, AZEK, CFR, CLFD, DGII, ENTG, INSP, JAMF, KNF, NVT, PIPR, SNBR, THRM | financials, healthcare, industrials, infrastructure, small cap, technology, value | - | Small cap fund underperformed in 2023 due to Consumer Discretionary underweight but maintains conviction in Industrials, Technology, Healthcare, and Financials overweights. Added infrastructure and investment banking exposure while trimming execution-challenged names. Expects value rotation and mid-cap outperformance in 2024 as earnings improve and rates stabilize. Views current volatility as buying opportunity for quality companies. |
| Sep 30 2023 | 2023 Q3 | AIR, AZEK, CASY, CFR, CLFD, DCI, FIBK, GBCI, JAMF, NVT, TTC, WK | AI, Banking, financials, industrials, small cap, technology, value | - | Mairs & Power Small Cap Fund underperformed in Q3 2023 primarily due to bank holdings pressured by rising rates. The fund maintains conviction in quality small caps trading at cycle-low discounts, selectively adding to positions with strong fundamentals and attractive valuations while favoring companies positioned to benefit from AI advancements and evolving labor dynamics. |
| Jun 30 2023 | 2023 Q2 | ALTR, ASB, AZEK, CFR, CLFD, ENTG, ENV, FIBK, GBCI, JAMF, LFUS, NVT, THRM, TTC | AI, Banking, healthcare, industrials, small caps, technology, Valuations | - | Small-cap fund outperformed benchmark despite banking sector headwinds, benefiting from technology and electrification themes. Manager sees attractive valuations with small caps trading at 29% discount to large caps during economic normalization period. Selectively adding to financials at cycle lows while trimming industrials after outperformance, maintaining long-term conviction in quality companies at discounted prices. |
| Feb 2 2023 | 2022 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AILarge technology companies continue massive capital expenditures building AI data center infrastructure, with spending expanding beyond NVIDIA GPUs to memory, storage, networking, electrical equipment, and power suppliers. The market has entered a show-me phase, rewarding businesses that can turn AI spending into profit and scrutinizing the largest spenders for returns on their enormous investments. The Fund is positioned as a downstream beneficiary of the AI buildout through holdings in semiconductor equipment, automation, and infrastructure suppliers. |
Data Centers Semiconductors Infrastructure Capital Expenditure Productivity |
Small CapsSmall-cap stocks posted their first meaningful earnings growth after three years of contraction, outperforming large caps for two consecutive quarters in the best run of relative performance in two decades. Small-cap valuations remain compelling after a long period of underperformance, now above their 5-year average but still 24% below large-cap counterparts. The market is broadening away from narrow megacap leadership, with AI spending trickling down to smaller suppliers and chip makers. |
Earnings Valuations Market Broadening Outperformance | |
SemiconductorsThe semiconductor industry is benefiting from expanded AI infrastructure spending beyond GPUs to memory, storage, and networking components where supply is more constrained. The Fund's holdings in Entegris, Cognex, and Ambarella reflect exposure to semiconductor materials, machine vision for semiconductor logistics, and edge-AI vision chips. The Manufacturing PMI moved back above 50 after roughly three years below it, signaling expansion in factory activity. |
Memory Supply Constraints Manufacturing Equipment | |
EarningsThe S&P 500 posted roughly 22% year-over-year earnings growth in Q2, the second straight quarter above 20%, marking the third consecutive year of double-digit earnings expansion. This growth is notable because it follows two prior years of impressive growth rather than rebounding from a depressed base, and estimate revisions have continued to trend higher. Small-cap earnings trends improved throughout the first half of 2026 after three years of contraction. |
Growth Expansion Revisions Small Caps | |
InflationInflation has proven sticky for the Federal Reserve, with energy as the primary culprit due to conflict in the Middle East and risk of disruption at the Strait of Hormuz keeping upward pressure on prices. Small-cap companies are ready and willing to raise prices in response to higher input costs from supply-chain disruptions, reflecting lessons learned from being slow to increase prices during COVID. Productivity gains could ease the Fed's dilemma, with nonfarm business productivity rising 2.8% over the year through Q1 2026. |
Energy Pricing Power Supply Chain Productivity | |
UtilitiesThe Fund added two new regulated utility positions in Q2 2026: IDACORP based in Idaho and MGE Energy based in Wisconsin. These additions are intended to provide higher-quality, lower-volatility, and value-oriented support for the portfolio as downstream beneficiaries of AI data center power demand. |
Regulated Power Demand Data Centers Defensive | |
ValuationsDespite market gains, valuations actually came down from where they began the year, with the forward 12-month P/E ratio for the S&P 500 at approximately 20 times earnings, still above 5-and-10-year averages but below year-opening highs. Small-cap valuations are now above their 5-year average but remain 24% below large-cap counterparts even as the valuation gap is narrowing. The Fund continues to find great small-cap companies trading at attractive valuations. |
P/E Ratio Small Caps Large Caps Attractive | |
ProductivityNonfarm business productivity rose 2.8% over the year through Q1 2026 and grew at a 2.1% annualized pace over the current economic cycle, above the previous cycle. As AI-driven efficiency gains spread, sustained productivity growth could serve as a powerful tailwind, allowing companies to afford higher wages without raising prices and easing the Fed's inflation dilemma. |
Efficiency AI Labor Growth | |
| 2026 Q1 |
Small CapsSmall-cap stocks outperformed large-cap stocks in the quarter, showing improved earnings growth with 16% expected for S&P 600 and 54% for Russell 2000. Valuations remain compelling after a long period of underperformance, with market rotation away from narrow megacap leadership creating opportunities. |
Small Cap Earnings Valuations Outperformance Russell 2000 |
SemiconductorsEntegris benefited from spending and expansion across the semiconductor industry with accelerated revenue growth. Ambarella was added as a leader in computer vision semiconductors leveraging growth across IoT, automotive, robotics, and emerging infrastructure applications. |
Semiconductors Computer Vision IoT Automotive Infrastructure | |
AutomationCognex builds machine vision and AI systems for factories and warehouses, benefiting from infrastructure spending on logistics and semiconductor automation. The company experienced a shift from supply cycle recovery. |
Machine Vision AI Factory Automation Logistics Infrastructure | |
OilEscalating conflict in the Middle East disrupted global energy markets, driving oil prices higher and reintroducing inflation risks. The conflict in Iran created upward pressure on energy costs, though the US is now a net exporter which reduces some impact. |
Oil Middle East Iran Energy Prices Inflation | |
InflationMarch CPI jumped to 3.3%, the highest since May 2024, driven by energy disruption from Middle East conflict. Rising energy and commodity prices pose a real threat to the inflation outlook, complicating Fed policy decisions. |
CPI Energy Commodities Fed Policy Economic Outlook | |
| 2025 Q4 |
AIAI and increasing market concentration took center stage in 2025, driving investment in technology infrastructure. McKinsey projects $7 trillion in capital expenditures needed worldwide by 2030 to build AI infrastructure. The managers believe they are entering a transition period for AI with signals that the cycle is moving into a higher risk phase given the flood of capital and unusual financing structures. |
Infrastructure Data Centers Technology Valuations Capital Expenditures |
Small CapsSmall cap companies are showing their first signs of earnings growth recovery after three years of contraction, posting 13% growth in 2025. Lower interest rates, reduced corporate tax burdens, and regulatory relief could offer further support. Small cap stocks are still trading at a significant discount to the S&P 500, presenting an attractive opportunity for long-term investors. |
Earnings Growth Valuations Interest Rates Recovery | |
EarningsThe consistency of corporate earnings is a major reason for continued stock market strength. The S&P 500 is projected to deliver 12% earnings growth in 2025. Small cap companies are showing signs of growth after three years of contraction, with 15% growth projected for the S&P 600 in 2026. |
Growth Corporate Performance Projections | |
RatesThe Federal Reserve began cutting rates in the fourth quarter of 2025, with the process expected to accelerate and further cool in 2026. Lower interest rates should provide a tailwind to profitability for smaller companies, as it typically takes around a year to feel the effects from rate changes. |
Federal Reserve Monetary Policy Interest Rates Small Business | |
| 2025 Q3 |
AIAI-related stocks in the S&P 500 have accounted for around 75% of market returns since ChatGPT's 2022 launch. Investment in infrastructure to power, cool, and connect a data-intensive economy shows durable momentum. The AI and data-center buildout is fueling a multi-year capital expenditure cycle extending beyond semiconductors to power generation, transmission, distribution, nuclear capacity, and thermal management. |
Data Centers Infrastructure Spending Semiconductors Power Equipment Nuclear |
Small CapsSmall cap stocks are trading at a significant discount despite earnings growth estimate stabilization. The Russell 2000 is trading at a notable discount to the S&P 500, presenting an attractive opportunity for long-term investors. Smaller cap stocks edged out large caps during the third quarter as improved conditions are being appreciated by investors. |
Value Earnings Russell 2000 Discount Opportunity | |
GLP1GLP-1 usage increases created challenges for portfolio holdings. Inspire Medical had difficulties due to GLP-1 usage increases affecting their business. MGP Ingredients was also impacted by GLP-1s as the company continues to work through excess inventory, particularly in bourbon, amid shifts in consumer consumption levels. |
Medical Devices Pharmaceuticals Consumer Behavior Alcohol Healthcare | |
| 2025 Q2 |
AIAI-related stocks in the S&P 500 have accounted for around 75 percent of the market's return since ChatGPT's 2022 launch. Roughly 40 percent of capital expenditures are linked to AI. Investment in infrastructure required to power, cool, and connect a more data-intensive economy continues, with the AI and data-center buildout fueling a multi-year capital-expenditure cycle. |
Data Centers Infrastructure Semiconductors Capital Expenditures Technology |
Small CapsSmall cap stocks are trading at a significant discount despite signs of earnings growth estimate stabilization. The Russell 2000 is trading at a notable discount to the S&P 500, which presents an attractive opportunity for long-term investors. Smaller cap stocks edged out large caps during the third quarter. |
Valuation Discount Earnings Russell 2000 Opportunity | |
GLP1GLP-1 usage increases have created challenges for certain holdings. Inspire Medical had difficulties due to GLP-1 usage increases, and MGP Ingredients was also impacted by GLP-1s as the company works through excess inventory in bourbon and shifts in consumer consumption levels. |
Healthcare Pharmaceuticals Consumer Medical Devices Alcohol | |
| 2025 Q1 |
Trade PolicyTariff uncertainty in March caused equity declines while prospects of prolonged trade war with China raise concerns about reigniting inflation and slowing economic growth. Tariffs are viewed as a tax that businesses will likely pass to consumers, creating upward pressure on prices and potential stagflation. |
Tariffs China Inflation Stagflation Supply Chains |
Small CapsThe S&P Small Cap 600 trades at 14.3 times forward earnings, a 30% discount to the S&P 500 and well below its 10-year average of 16.7. This valuation compression represents an attractive entry point for long-term focused investors in high-quality small-cap companies. |
Valuation Discount Russell 2000 Opportunity | |
AutomationManagement teams highlight efficiencies gained from technology adoption, particularly automation, and reference the use of new technologies like AI. The fund initiated a position in Cognex Corporation, a provider of computer vision systems for industrial automation with embedded AI capabilities. |
AI Industrial Computer Vision Efficiency | |
| 2024 Q4 |
Small CapsSmall cap stocks trade at a 29% discount to the S&P 500 despite earnings growth estimates outpacing large caps. The fund sees great opportunities in small companies with above-average growth prospects trading at favorable valuations. Management notes potential for small caps to narrow the gap with large caps given less regulation and increased small business confidence. |
Valuation Discount Earnings Growth Opportunities |
IndustrialsThe fund holds positions in industrial companies like Knife River benefiting from infrastructure projects driving revenue growth and margin expansion, and John Bean Technologies experiencing a capital expenditure cycle in the protein industry. Manufacturing sector shows contraction while services sector remains strong. |
Infrastructure Manufacturing Construction Equipment Automation | |
FinancialsPiper Sandler, a mid-market investment bank providing advisory services for mergers and acquisitions, was the largest contributor to performance. Small cap banks are showing improved profit growth estimates for 2025 as an exception to broader small cap earnings revisions. |
Investment Banking Regional Banks Advisory M&A | |
| 2024 Q3 |
Small CapsSmall cap stocks currently trade at a 29% discount to the broader market and 6% discount to their long-term average, despite analysts expecting small cap earnings growth to outpace large caps. The fund sees great opportunities in small companies with above-average growth prospects at favorable valuations. Lower interest rates should disproportionately benefit smaller companies over time. |
Valuation Discount Outperformance Growth Rates |
RatesThe Federal Reserve cut rates by 50 basis points in September, which should ease conditions for smaller businesses that typically issue variable rate debt. Lower rates could boost earnings growth for smaller companies and make it easier for them to plan and execute growth strategies. The fund expects this to aid operating visibility for small companies. |
Fed Variable Debt Earnings Visibility | |
Regional BanksThe fund trimmed bank holdings including Wintrust, Cullen-Frost, and QCR Holdings as bank stock valuations rebounded. Management remains guarded on potential rising credit expenses related to commercial real estate lending. Despite positive performance from the Financials sector, they reduced these holdings due to credit concerns. |
Valuations Credit Commercial Real Estate Expenses | |
| 2024 Q2 |
Small CapsSmall cap stocks currently trade at a 40% discount to the broader market as measured by the S&P 500, a 13% discount to the S&P 500 Equal-Weighted Index, and at a 15% discount to small cap stocks' long-term average. Analysts' earnings growth estimates for small cap companies outpace large cap companies for the next several years. The fund continues to see great opportunities to invest in small companies with above-average growth prospects that are trading at favorable valuations. |
Valuation Discount Earnings Growth Opportunities |
Regional BanksThe fund trimmed regional bank holdings including Wintrust, QCR Holdings, Associated Bancorp, Cullen-Frost, Glacier Bancorp, and Alerus. While valuations have rebounded somewhat, the managers are guarded on potential rising credit expenses related to commercial real estate lending. Glacier Bancorp was impacted by volatile interest rates and broader concerns regarding commercial real estate trends. |
Credit Commercial Real Estate Valuations Interest Rates | |
RatesCurrent high interest rates have elevated borrowing costs for smaller companies, cutting into their earnings and explaining weaker market performance. Interest rate cuts could boost earnings growth for smaller companies, leading to better performance for all stocks and sectors. The Fed's progress on inflation increases the likelihood of rate cuts in coming months. |
Interest Rates Borrowing Costs Fed Inflation | |
| 2024 Q1 |
Small CapsSmall cap stocks continue to trade at a significant discount to their larger cap peers, with small caps trading at a 32% discount to the broader market as measured by the S&P 500, and at a 14% discount to small cap stock's average as measured by the S&P 600. This is despite the average of analysts' earnings growth estimates for small cap companies outpacing large cap companies for the next several years. The fund sees great opportunities to invest in small companies with above-average growth prospects that are trading at favorable valuations. |
Valuation Discount Growth Opportunities |
AIAI and its exciting transformative possibilities have driven the market in the last year. The fund believes there's potential for a more durable AI-powered productivity boom, as AI could help companies in numerous industries relieve labor shortages, boost capital utilization, and make more efficient use of raw materials and supply chains. The fund has made investments in companies serving as pick and shovel providers of AI that are crafting tools for businesses of all kinds to utilize. |
Productivity Technology Infrastructure Tools | |
FinancialsThe Financials sector was the leading contribution to both relative outperformance and stock selection during the quarter, where there was particular stress and volatility at this time last year. The fund added to Minnesota-based midmarket investment bank Piper Sandler, which is benefiting from years of investing in people and relationships which should continue to aid the company as mergers & acquisitions activity inevitably reopens. |
Banking Recovery M&A Investment | |
| 2023 Q4 |
Infrastructure SpendingIndustrial companies are positioned to benefit from significant multi-year state and federal government infrastructure projects which will likely play out in the coming decade. Knife River is viewed as ideally positioned to address multiple significant state and federal infrastructure stimulus programs spanning many years. |
Infrastructure Government Construction Stimulus |
AIThe advent of AI is seen as a secular tailwind for the economy and enabling companies. Altair Engineering has performed well due to proximity to generative design and the related halo effect from AI, showing growth, share gains, and margin expansion. |
Artificial Intelligence Software Technology Secular | |
Semiconductor CycleInventory destocking in end markets like PCs, cell phones, and communications equipment drove disappointing fundamentals and stock underperformance. The near-term headwinds driven by inventory destocking are viewed as temporary, with these patterns having sharply reversed in prior cycles. |
Semiconductors Inventory Cycle Technology | |
GLP1Recent significant excitement around repurposing diabetes drugs to treat obesity has fueled fear of disruption in healthcare and life sciences focused on obesity symptoms. This has created volatility in healthcare stocks as safety, efficacy, and reimbursement policies are studied. |
Obesity Diabetes Healthcare Disruption | |
| 2023 Q3 |
AIThe fund views artificial intelligence as crucial for creating workforce efficiencies amid changing labor market dynamics. They see investment opportunities in technology companies utilizing AI to create efficiencies in the workforce. The fund favors companies likely to benefit from recent advancements in AI. |
Artificial Intelligence Workforce Efficiency Technology Automation Labor |
Regional BanksThe fund holds six bank stocks that faced pressure from rising interest rates competing for deposits and forcing banks to raise rates, pressuring margins. Despite current challenges, they believe these banks have track records for weathering cycles and view valuations as attractive at near cycle lows. |
Banking Interest Rates Deposits Margins Valuations | |
Small CapsSmall cap companies are currently trading at a discount, which often occurs during this stage of an economic cycle when excess inventories are being reduced and inflation pressures begin to wane. The fund believes their long-term approach is well-suited for current conditions where many high-quality companies' shares are trading at a discount. |
Small Cap Discount Valuations Economic Cycle Quality | |
| 2023 Q2 |
AIThe manager discusses artificial intelligence as a key driver of Technology sector performance, noting investor excitement over AI has boosted large tech names like Alphabet, Amazon, Microsoft, and Nvidia. They maintain a favorable long-term view on Technology given growth in AI, automation, and cloud computing but are cautious near-term due to over-extended valuations. |
Technology Automation Cloud Valuations Growth |
Small CapsThe fund focuses exclusively on small-cap investing, noting that small caps traded at a 29% discount to the S&P 500 and 21% discount to their 10-year average as of quarter-end. The manager believes these valuation discounts present opportunities for long-term investors during turbulent economic cycles. |
Valuations Discount Opportunity Cycle Long-term | |
Regional BanksBanking sector performance was a meaningful drag on relative performance year-to-date, with rising interest rates pressuring bank margins as they compete for deposits. The manager selectively added to two bank holdings based on positive fundamentals and compelling valuations at cycle-low levels. |
Interest Rates Margins Deposits Fundamentals Cycle |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 29, 2026 | Fund Letters | Mairs & Power - Small Cap Fund | ENTG | Entegris, Inc. | Semiconductor Equipment & Materials | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | advanced materials, Capital equipment, Contamination Control, semiconductors, technology infrastructure | Login |
| Apr 29, 2026 | Fund Letters | Mairs & Power - Small Cap Fund | PLXS | Plexus Corp. | Electronic Components | Electronic Manufacturing Services | Bull | NASDAQ | Electronic Manufacturing, Manufacturing Services, Outsourced Engineering, Regulated Industries, supply chain | Login |
| Apr 29, 2026 | Fund Letters | Mairs & Power - Small Cap Fund | CGNX | Cognex Corp. | Scientific & Technical Instruments | Electronic Equipment, Instruments & Components | Bull | NASDAQ | Artificial Intelligence, Factory Automation, Industrial automation, Logistics Infrastructure, Machine vision | Login |
| Apr 29, 2026 | Fund Letters | Mairs & Power - Small Cap Fund | AMBA | Ambarella, Inc. | Semiconductor Equipment & Materials | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | automotive technology, Computer Vision, Internet of Things, robotics, semiconductors | Login |
| Apr 29, 2026 | Fund Letters | Mairs & Power - Small Cap Fund | APG | APi Group Corp. | Engineering & Construction | Commercial Services & Supplies | Bull | New York Stock Exchange | Fire Safety, Life Safety, recurring revenue, regulatory compliance, Service Business | Login |
| Apr 29, 2026 | Fund Letters | Mairs & Power - Small Cap Fund | HWKN | Hawkins, Inc. | Specialty Chemicals | Chemicals | Bull | NASDAQ | buy-and-build strategy, chemical distribution, margin expansion, specialty chemicals, water treatment | Login |
| Apr 29, 2026 | Fund Letters | Mairs & Power - Small Cap Fund | SFM | Sprouts Farmers Market, Inc. | Grocery Stores | Food & Staples Retailing | Bull | NASDAQ | Health-Conscious Consumers, Natural Foods, Organic Foods, Specialty Grocery, store expansion | Login |
| Oct 24, 2025 | Fund Letters | Mike C. Marzolf | PATK | Patrick Industries Inc. | Consumer Discretionary | Building Products | Bull | NASDAQ | Housing, manufacturing, Outsourcing, recovery, RV, tariffs, valuation | Login |
| Sep 30, 2025 | Fund Letters | Mairs & Power - Small Cap Fund | PATK | Patrick Industries | Consumer Discretionary | Leisure Products | Bull | NASDAQ | Components, construction, Equity, Housing, Manufacturer, Marine, materials, Outsourcing, RV | Login |
| Sep 30, 2025 | Fund Letters | Mairs & Power - Small Cap Fund | TREX | Trex Company, Inc. | Materials | Building Products | Bull | NYSE | Brand, Building Products, Composite, Decking, Equity, Housing, Recycled Materials, Secular Shift | Login |
| Sep 30, 2025 | Fund Letters | Mairs & Power - Small Cap Fund | JHX | James Hardie Industries | Materials | Building Products | Bull | NYSE | acquisition, Building Solutions, construction, cross-selling, Equity, fiber cement, innovation, Siding | Login |
| Mar 31, 2025 | Fund Letters | Mairs & Power - Small Cap Fund | CGNX | Cognex Corporation | Information Technology | Electronic Equipment, Instruments & Components | Bull | NASDAQ | AI technology, automotive, Computer Vision, healthcare, Industrial automation, Logistics, manufacturing, Semiconductor, technology | Login |
| TICKER | COMMENTARY |
|---|---|
| ENTG | Entegris, which provides advanced materials, contamination control, and handling systems, benefited from spending and expansion across the semiconductor industry. |
| PLXS | Plexus, an outsourced engineering, supply-chain, and manufacturing partner for original equipment manufacturers, saw improved demand from industrial and data center buildout. |
| CGNX | Cognex supplies the machine-vision 'eyes and brain' that help factories and warehouses inspect, measure, and automate, benefiting from renewed automation and semiconductor-logistics spending. |
| LFUS | Littelfuse, a leader in circuit protection and electrical components, is a downstream beneficiary of electrification and AI data-center power demand. |
| AIR | AAR benefited from robust spending in commercial and defense aerospace parts and maintenance, repair, and overhaul markets, along with related services and software. |
| WK | Workiva, which provides cloud-based reporting and compliance software, was swept up in the broader software selloff as customers remained cautious on spending, though we remain constructive on the durable, data-centric value of the franchise. |
| BSY | Bentley Systems, an infrastructure-engineering software provider, was swept up in the broader software selloff as customers remained cautious on spending, though we remain constructive on the durable, data-centric value of the franchise. |
| PATK | Patrick Industries, a supplier of components to the recreational-vehicle, marine, and manufactured-housing markets, was pressured by soft cyclical end-markets and higher interest rates. |
| RDNT | RadNet, one of the largest providers of outpatient diagnostic imaging services, faced persistent labor-cost inflation that pressured margins even as it ramps up AI adoption to offset those costs. We believe the company still stands to benefit from the shift of imaging to outpatient facilities. |
| JBTM | JBT Marel, a provider of food-and-beverage processing technology, detracted during the period because of tariff uncertainty and software integration issues. |
| AMBA | Over the first half of 2026, the Fund established a new position in Ambarella, a low-power edge-AI vision semiconductor company. |
| APG | Over the first half of 2026, the Fund established a new position in API Group, a global life-safety and specialty services contractor based in Minnesota. |
| HWKN | Over the first half of 2026, the Fund established a new position in Hawkins, a Minnesota-based water-treatment chemicals and specialty ingredients supplier. |
| SFM | Over the first half of 2026, the Fund established a new position in Sprouts Farmers Market, a health-focused natural and organic grocery retailer. |
| IDA | In the second quarter, the Fund added IDACORP, a regulated utility based in Idaho. We believe the Utilities sector addition provides higher-quality, lower-volatility, and value-oriented support for the portfolio. |
| MGEE | In the second quarter, the Fund added MGE Energy, a regulated utility based in Wisconsin. We believe the Utilities sector addition provides higher-quality, lower-volatility, and value-oriented support for the portfolio. |
| THRM | The Fund exited Gentherm, an automotive thermal-comfort and medical temperature-management systems provider facing competitive pressures. |
| MGPI | The Fund exited MGP Ingredients, which was struggling with inventory and demand trends in the spirits industry. |
| CVRX | The Fund exited CVRx, a provider of implantable neuromodulation devices for heart-failure treatment due to execution issues and a weak balance sheet. |
| EXAS | The Fund exited Exact Sciences, a cancer-screening and precision-oncology diagnostics company, which was acquired by Abbott Laboratories. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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