Why Graco (GGG) Was a Q2 Detractor for Gabelli Small Cap Growth Fund

Why Graco (GGG) Was a Q2 Detractor for Gabelli Small Cap Growth Fund

Tue, September 22, 2026 at 7:35 PM GMT+3 3 min read

Gabelli Investment Management Firm recently released its "Small Cap Growth Fund" second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Fund returned 14.44% in the second quarter of 2026, underperforming the Russell 2000 Index, which gained 21.49%, as well as the S&P SmallCap 600 and Lipper Small-Cap Core Funds Average. The Fund's performance reflected weaker relative results despite gains across several portfolio holdings, while the broader small-cap market delivered a particularly strong quarter. The Fund remains focused on identifying smaller companies with attractive long-term growth potential, with its investment approach centered on fundamental research and opportunities where the market price does not fully reflect the underlying value of a business. The Fund had $1.9 billion in net assets at quarter-end and has generated a 12.18% annualized return since inception, underscoring its long-term focus despite shorter-term periods of relative underperformance. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its second-quarter 2026 investor letter, Gabelli Small Cap Growth Fund highlighted stocks like Graco Inc. (NYSE:GGG). Graco Inc. is a multinational manufacturing company that supplies technology and expertise for managing fluids and coatings in industrial and commercial applications. It designs, manufactures, and markets systems and equipment to move, measure, control, dispense, and spray fluid and powder materials. The one-month return of Graco Inc. (NYSE:GGG) was -2.06% while its shares traded between $72.51 and $95.69 over the last 52 weeks. On September 21, 2026, Graco Inc. (NYSE:GGG) stock closed at approximately $76.59 per share, with a market capitalization of about $12.49 billion.

Gabelli Small Cap Growth Fund stated the following regarding Graco Inc. (NYSE:GGG) in its Q2 2026 investor letter:

"Graco Inc. (NYSE:GGG) is a multinational manufacturing company. The Company supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications. It designs, manufactures, and markets systems and equipment to move, measure, control, dispense, and spray fluid and powder materials (Click Here To Read The Letter In Detail)."

Graco Inc. (NYSE:GGG) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 35 hedge fund portfolios held Graco Inc. (NYSE:GGG) at the end of the first quarter, which was 37 in the previous quarter. While we acknowledge the risk and potential of Graco Inc. (NYSE:GGG) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 Graco Inc. (NYSE:GGG) and shared our views on the company's acquisition of Valco Melton for $447 million. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.

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This article is originally published at Insider Monkey.