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 Advance Auto Parts, Inc. (NYSE:AAP). Based in Raleigh, North Carolina, Advance Auto Parts, Inc. (NYSE:AAP) is an automotive replacement parts and accessories provider. The one-month return of Advance Auto Parts, Inc. (NYSE:AAP) was 34.77%, and its shares gained 21.62% of their value over the last 52 weeks. On February 12, 2026, Advance Auto Parts, Inc. (NYSE:AAP) stock closed at $58.22 per share, with a market capitalization of $3.494 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Advance Auto Parts, Inc. (NYSE:AAP) in its fourth quarter 2025 investor letter:
“Advance Auto Parts, Inc. (NYSE:AAP) is an auto parts distributor that sells to both professional repair technicians and retail customers. The company is struggling through a difficult turnaround and sits firmly in our “opportunistic value” bucket. But the balance sheet is in good shape, new management has articulated a credible restructuring plan and the company’s mid-term guidance for 7% operating margins is reasonable compared to competitors and Advance Auto’s own history. Results have been inconsistent as management works through the restructuring of Advance Auto’s distribution, inventory, merchandising and store operations.”
Morgan Stanley Updates View on Advance Auto Parts (AAP) in 2026 Retail Outlook
Advance Auto Parts, Inc. (NYSE:AAP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 32 hedge fund portfolios held Advance Auto Parts, Inc. (NYSE:AAP) at the end of the third quarter, compared to 34 in the previous quarter. While we acknowledge the potential of Advance Auto Parts, Inc. (NYSE:AAP) 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.