Soumya Eswaran
3 min read
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 Dutch Bros Inc. (NYSE:BROS), an operator and franchisor of drive-thru beverage shops. Dutch Bros Inc. (NYSE:BROS) detracted from performance during the quarter despite strong fundamentals. On October 27, 2026, Dutch Bros Inc. (NYSE:BROS) closed at $41.64 per share with a market capitalization of $7.30 billion. Reflecting the recent headwinds, Dutch Bros Inc. (NYSE:BROS) posted a 31.98% YTD decline, trading within a 52-week range of $36.51 to $74.02.
Wasatch Small Cap Growth Strategy stated the following regarding Dutch Bros Inc. (NYSE:BROS) in its Q3 2026 investor letter:
“Dutch Bros Inc. (NYSE:BROS) was another detractor. The company operates a chain of cafes focused on selling hand crafted, customizable beverages, including espresso drinks and energy drinks, with a unique, fast and personalized customer experience. The stock fell sharply during the quarter even though the company’s fundamentals remained excellent: Dutch Bros reported second-quarter revenue growth of more than 32% and same-shop sales growth of 8.3% and raised its full-year guidance. The decline appears to reflect a broader derating of restaurant stocks amid fears that a financially squeezed consumer—pressured by high gas prices and interest rates—will pull back on discretionary spending; peers across the restaurant industry sold off similarly during the period. However, we’re taking a long-term view with the company and continue to believe that Dutch Bros possesses a difficult-to replicate brand and culture and that the business’s unit economics and growth runway remain intact.”
Dutch Bros Inc. (NYSE:BROS) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held Dutch Bros Inc. (NYSE:BROS) at the end of the second quarter, which was 50 in the previous quarter. While we acknowledge the risk and potential of Dutch Bros Inc. (NYSE:BROS) 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 BROS that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.
