Supply Constraints Weighed on Fabrinet (FN)

Osterweis Capital Management, an investment management firm, released its Q2 2026 investor update for its "Osterweis Opportunity Fund". You can download a copy of the letter here. The fund returned 35.34% in the quarter, significantly outperforming the Russell 2000 Growth Index's 25.71% gain. Robust corporate profits, AI investment, easing oil-shock concerns, strong labor markets, and consumer spending drove the rally. Security selection played a key role in outperformance, especially in Technology, Industrials, Health Care, and Consumer Discretionary. Conversely, smaller sectors like Consumer Staples, Financials, and Real Estate lagged but had minimal impact overall. Looking ahead, while AI is expected to continue influencing economic growth and market performance, a potential consolidation phase for AI-related stocks is anticipated. Please review the Fund's top five holdings to gain insights into its key selections for 2026.

In its second-quarter 2026 investor letter, Osterweis Opportunity Fund highlighted Fabrinet (NYSE:FN). Fabrinet (NYSE:FN) is a manufacturing services company that provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to technology companies. On September 22, 2026, Fabrinet (NYSE:FN) closed at $403.80 per share. Over the past month, Fabrinet (NYSE:FN) declined 7.77%, but its shares are up 10.13% over the past year. Fabrinet (NYSE:FN) has a market capitalization of $14.47 billion, and its stock has traded within a 52-week range of $354.41 to $748.89.

Osterweis Opportunity Fund stated the following regarding Fabrinet (NYSE:FN) in its Q2 2026 investor letter:

"One of our few IT underperformers was Fabrinet (NYSE:FN), a leading provider of advanced optical packaging and precision manufacturing services to complex technology companies, serving customers across optical communications, networking, and industrial end markets. While Fabrinet reported strong overall growth approaching 40%, ongoing commodity related supply constraints are limiting shipment volumes. We trimmed the position, favoring companies that are demonstrating strong execution in the current environment."

Fabrinet (NYSE:FN) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 64 hedge fund portfolios held Fabrinet (NYSE:FN) at the end of the second quarter, which was 56 in the previous quarter. While we acknowledge the potential of Fabrinet (NYSE:FN) 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.