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Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. In a volatile but positive quarter, the FPA Queens Road Small Cap Value Fund (“Fund”) returned 6.07%, beating the Russell 2000 Value Index’s 4.96%. The Fund expects better performance in down markets and underperformance in speculative ones due to its disciplined approach. Amid ongoing global commodity shocks, political issues, and economic fallout from the Iran conflict, the letter discusses small-caps and the firm's long-term investment strategy. In Q1, the fund continued to rebalance the portfolio towards higher-quality holdings, focusing on balance sheet strength, earnings consistency, and returns on capital. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, FPA Queens Road Small Cap Value Fund highlighted First American Financial Corporation (NYSE:FAF) as a newly added position. First American Financial Corporation (NYSE:FAF) is a leading financial services company that operates through Title Insurance and Services and Home Warranty segments. On May 8, 2026, First American Financial Corporation (NYSE:FAF) closed at $71.04 per share. One-month return of First American Financial Corporation (NYSE:FAF) was 12.94%, and its shares gained 17.25% over the past 52 weeks. First American Financial Corporation (NYSE:FAF) has a market capitalization of $7.24 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding First American Financial Corporation (NYSE:FAF) in its Q1 2026 investor letter:
"In Q1, we added two new positions – First American Financial Corporation (NYSE:FAF) and Dorman Products (DORM). First American Financial is a title insurer that also facilitates escrow and closing services. Title insurance is relatively consolidated and, crucially, First American also owns a leading data repository of transactions called the “title plant”. Revenues are currently depressed with residential existing home sales averaging about 4m vs. a more normal rate of about 5.5m.4 FAF is currently overcapitalized, pays a ~4% dividend yield and has historically, opportunistically bought back shares."
First American Financial Corporation (NYSE:FAF) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 38 hedge fund portfolios held First American Financial Corporation (NYSE:FAF) at the end of the fourth quarter, compared to 40 in the previous quarter. While we acknowledge the potential of First American Financial Corporation (NYSE:FAF) 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 First American Financial Corporation (NYSE:FAF) and shared the list of best property & casualty insurance stocks that are currently offering attractive upside potential to investors. 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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Disclosure: None. This article is originally published at Insider Monkey.