Fenimore Asset Management's Q2 2026 performance trailed the broader market, with ExlService Holdings and SiteOne Landscape Supply identified as key detractors from the fund's Small Cap Strategy.
Despite strong sales and earnings growth, the market fears EXLS could become an AI casualty if clients replace its services with internal solutions, driving shares down 18% over the past year.
SiteOne Landscape Supply was cited as a top detractor in the fund's Q2 2026 investor letter, contributing to portfolio underperformance.
Fenimore Asset Management reported a 9.51% return for its Small Cap Strategy in Q2 2026, trailing the Russell 2000's 21.49% gain. The fund's performance was hampered by top detractors ExlService Holdings (EXLS) and SiteOne Landscape Supply (SITE), as market concerns over AI-driven disruption weighed on EXLS shares.
Despite strong sales and earnings, investors fear that EXLS could become an AI casualty if clients choose to replace outsourced services with internally developed AI solutions.