Fenimore Asset Management’s Q2 2026 investor letter said U.S. equity markets posted broad gains, with major indices reaching all-time highs, while the energy sector declined and technology, particularly semiconductors, led performance. The Fenimore Small Cap Strategy returned 9.51% in the quarter, lagging the Russell 2000 Index’s 21.49% gain, largely due to avoiding lower-quality tech stocks linked to data center expansions. Fenimore highlighted ExlService Holdings, Inc. (NASDAQ:EXLS), a data and artificial intelligence company, as a top detractor. On September 17, 2026, EXLS closed at $35.48 per share; over the past month it declined 5.46%, and over the past year it fell 18.19%. Its market capitalization was $5.38 billion, with a 52-week range of $24.85 to $44.32. Fenimore said that despite strong sales and earnings growth, the market was concerned EXLS could become an AI casualty if clients replace its business-process-outsourcing services for insurance, healthcare, and financial services companies with internally developed solutions. According to the database, 41 hedge fund portfolios held EXLS at the end of the second quarter, compared to 38 in the previous quarter.