Wasatch Global Investors , an asset management company, released its "Small Cap Growth Strategy" Q3 2026 investor letter. The letter can be downloaded here . The Wasatch Small Cap Growth strategy declined in Q3 2026 but outperformed the Russell 2000 Growth Index, which fell 9.39%. Strong company fundamentals and limited exposure to speculative AI-related stocks supported performance, while Paymentus, Repligen, and Global-e were top contributors. AI infrastructure holdings and Dutch Bros detracted despite solid fundamentals. The managers remain optimistic because portfolio companies are largely self-funded, earnings expectations are improving, no holdings saw reduced revenue estimates, and attractive relative valuations support continued outperformance. Also, check the Fund's top five holdings to see its best picks for 2026.
In its Q3 2026 investor letter, Wasatch Small Cap Growth Strategy highlighted Nova Ltd. (NASDAQ: NVMI ). Nova Ltd. (NASDAQ:NVMI) is an Israeli company that designs and develops process control systems used in the manufacture of semiconductors. On October 27, 2026, Nova Ltd. (NASDAQ:NVMI) closed at $327.60 per share with a market capitalization of $10.42 billion. Nova Ltd. (NASDAQ:NVMI) shares reflect a slight 0.24% YTD pullback while trading within its 52-week range of $266.43 to $615.99.
Wasatch Small Cap Growth Strategy stated the following regarding Nova Ltd. (NASDAQ:NVMI) in its Q3 2026 investor letter:
"Some of the strategy's largest detractors were companies tied to the AI infrastructure build-out. Those include AAON, Inc. (AAON), which designs and manufactures heating, ventilation and air-conditioning (HVAC) equipment for industrial and data-center customers, and Nova Ltd.(NASDAQ:NVMI), a supplier of metrology platforms and other process control systems used in semiconductor manufacturing. As we mentioned earlier, stocks tied to the AI build-out sold off broadly in the first half of the third quarter. The strategy didn't own some of the more speculative companies tied to the build-out, and our lack of exposure to those businesses was a source of outperformance relative to the benchmark. However, we still hold companies tied to the AI theme that we view as higher quality. Those companies were caught in the same broad sell-off and detracted from strategy performance. While AAON and Nova both experienced share price declines, the companies' fundamentals remain solid, in our view, and we continue to see strong growth potential ahead for both firms.
Nova Ltd. (NASDAQ:NVMI) is not on our list of the 40 Most Popular Stocks Among Hedge Funds . As per our database, 25 hedge fund portfolios held Nova Ltd. (NASDAQ:NVMI) at the end of the second quarter, which was 22 in the previous quarter. While we acknowledge the risk and potential of Nova Ltd. (NASDAQ:NVMI) as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than NVMI that operates as a critical AI tollboothand stands as the most important company in the world, check out our report about this must-own AI stock .
In another article , we discussed Nova Ltd. (NASDAQ:NVMI) and shared a list of the best performing stocks over the last 20 years. In addition, please check out our hedge fund investor letters Q3 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 .
