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

Core Insights - The FPA Queens Road Small Cap Value Fund returned -0.36% in Q4 2025, underperforming the Russell 2000 Value Index which gained 3.26% during the same period [1] - For the full year 2025, the Fund achieved a return of 13.36%, slightly outperforming the Index's 12.59% gain [1] - The Fund's strategy focuses on quality and value to protect clients from market drawdowns, but it underperformed in the second half of 2025 due to a market preference for speculative and low-quality stocks [1] Company Analysis: Fabrinet (NYSE:FN) - Fabrinet is a contract manufacturer specializing in optical networking equipment and modules, dominating its niche with impressive historical revenue growth and increasing operating margins [3] - As of February 12, 2026, Fabrinet's stock closed at $462.05 per share, with a one-month return of -6.55% and a 12-month increase of 107.16% [2] - The company reported record revenue of $1.13 billion in Q2 fiscal 2026, reflecting a 36% year-over-year growth [5] - Fabrinet's products are in high demand in data centers, particularly for training artificial intelligence models, with Nvidia being a significant customer [3] - Despite its strong position, the Fund has been trimming its holdings in Fabrinet due to concerns that stock price expectations may have outpaced actual spending in data centers [3] Hedge Fund Interest - Fabrinet was held by 44 hedge fund portfolios at the end of Q3 2025, an increase from 32 in the previous quarter [5] - The company is not listed among the 30 most popular stocks among hedge funds, indicating a mixed sentiment in the investment community [5]