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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Kennedy Capital Management Small Cap Growth. This analysis is provided for institutional research purposes only and is not investment advice.
"Kennedy Capital's Small Cap Growth composite surged 37.53% net in Q2 2026, outperforming its benchmark by 1,182 bps through concentrated exposure to AI infrastructure and onshoring themes. A memory and AI infrastructure provider quadrupled after raising guidance on AI-driven demand."
Kennedy Capital Management's Small Cap Growth composite delivered exceptional performance in Q2 2026, gaining 37.53% net and outperforming the Russell 2000 Growth Index by 1,182 bps, driven primarily by an intentional overweight in AI infrastructure and onshoring themes. The portfolio's largest contributor was a provider of integrated memory and AI infrastructure solutions whose shares more than quadrupled on strong results and raised guidance citing AI-driven demand. Small-cap equities staged a powerful recovery in the quarter, with the Russell 2000 surging 21.5% and posting its best first half since 1991, finally closing the gap with large caps. Market leadership was narrow and concentrated in technology and industrial companies benefiting from AI infrastructure spending, though this was considered low-quality by traditional metrics. Looking forward, the manager expects earnings growth rather than multiple expansion to drive returns given relatively full valuations, and anticipates the market will shift to reward earnings quality and durable growth as the cycle matures. The strategy continues finding compelling opportunities across the AI-infrastructure ecosystem and other high-quality growth businesses whose valuations have been overlooked in the market's thematically driven advance.
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