Strong Results Lifted CTS Corporation (CTS) in Q2

The London Company's Q2 2026 Small Cap Strategy investor letter revealed strong performance for CTS Corporation (NYSE:CTS), a technology firm specializing in sensors, connectivity components, and actuators. Despite a rebound in U.S. equities driven by AI infrastructure spending and positive earnings, rate outlook uncertainty remained.

The technology sector, particularly semiconductors, led the market, while energy declined due to falling oil prices. Small-cap stocks outperformed large-cap ones, with momentum and volatility factors contributing to the growth, though quality and yield posed challenges. The London Company's portfolio grew 12.9% during the quarter, trailing the 21.5% gain of the Russell 2000 Index, mainly due to stock selection.

The firm remains confident in durable, high-quality businesses for long-term compounding. CTS Corporation, which closed at $58.67 per share on September 21, 2026, showed a 3.49% return in the past month and a 40.83% increase over the past year. With a market capitalization of $1.68 billion and trading between $36.03 and $69.55 over the past 52 weeks, the company's strong quarterly results were highlighted.

Despite being on the list of the 40 Most Popular Stocks Among Hedge Funds, CTS Corporation was not among the 40 Most Popular Stocks Among Hedge Funds, with 27 hedge fund portfolios holding the stock at the end of Q2 2026, up from 23 in the previous quarter. While acknowledging CTS's potential, the London Company believes AI stocks offer greater upside and less downside risk.