Will Fabrinet (FN) Become a Compounder Over Many Years?

Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund returned -0.36% in Q4 2025, compared to the Russell 2000 Value Index’s 3.26%. In 2025, the Fund has returned 13.36% compared to 12.59% gain for the Index. The Fund outperformed in the first half of 2025, when markets were weak and volatile. However, in the second half of 2025, markets favored speculative and low-quality stocks, leading to the Fund’s underperformance. The portfolio is designed to protect clients from market drawdowns by focusing on quality and value. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, FPA Queens Road Small Cap Value Fund highlighted stocks like Fabrinet (NYSE:FN). Fabrinet (NYSE:FN) is a manufacturing services company that provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services. On February 12, 2026, Fabrinet (NYSE:FN) stock closed at $462.05 per share. One-month return of Fabrinet (NYSE:FN) was -6.55%, and its shares are up 107.16% over the past twelve months. Fabrinet (NYSE:FN) has a market capitalization of $16.554 billion.

FPA Queens Road Small Cap Value Fund stated the following regarding Fabrinet (NYSE:FN) in its fourth quarter 2025 investor letter:

"Fabrinet (NYSE:FN) is a contract manufacturer specializing in optical networking equipment and modules. This is complex work at small scales, and Fabrinet dominates its niche. The company has experienced impressive historical revenue growth and growing operating margins. Fabrinet’s highest bandwidth products are finding increasing demand in data centers, especially those data centers used to train artificial intelligence models. In 2023, Fabrinet disclosed that Nvidia is a 10% customer. FN’s stock price has more than doubled since April on rising expectations for data center spending. We believe such spending, as capitalized in FN’s stock price, may have gotten ahead of itself and have been trimming. But the need for high bandwidth networking will continue, Fabrinet dominates its core telecom and data center markets and has prudently diversified into a handful of other niches that reward precise assembly at small scale. “compounder” for many years, and we continue to hold a position."

Fabrinet (NYSE:FN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 44 hedge fund portfolios held Fabrinet (NYSE:FN) at the end of the third quarter, up from 32 in the previous quarter. In the second quarter of fiscal 2026, Fabrinet (NYSE:FN) announced record revenue of $1.13 billion, reflecting a 36% year-over-year growth. While we acknowledge the potential of Fabrinet (NYSE:FN) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Fabrinet (NYSE:FN) and shared a list of best Russell 2000 stocks to buy. In its Q3 2025 investor letter FPA Queens Road Small Cap Value Fund highlighted Fabrinet's (NYSE:FN) potential for growth independent of AI momentum. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.