Royce & Associates Q1 2026 13F Holdings and Activity Report

I. Institutional Overview

The current state of the portfolio reveals an institution that is characterized by extreme diversification and a meticulous, research-driven approach. Holding a staggering 774 individual stocks , the institution’s strategy is the antithesis of the "concentrated bet" philosophy. Instead, it employs a "broad-trawl" methodology, spreading capital across hundreds of companies to mitigate idiosyncratic risk while capturing the collective growth of the small-cap universe. This level of diversification suggests that the institution functions as a sophisticated aggregator of small-cap value, where no single position—even the largest—exceeds a 1.4% weight in the total portfolio. This "ballast-heavy" structure ensures that while individual company failures have a negligible impact on the overall fund, the aggregate performance is driven by broad sector trends and the firm's ability to pick winners across a vast landscape.

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II. Sector Allocation Analysis

The heavy weighting in Industrials suggests that Royce & Associates is positioning itself for a "re-industrialization" theme. In a world of shifting supply chains and increased domestic infrastructure spending, small-cap industrial firms often provide the most direct exposure to these trends. These companies frequently occupy "mission-critical" niches—making the specialized components, tools, and systems that larger corporations rely on. By allocating over a quarter of their capital here, the institution is signaling a belief in the sustained pricing power and demand for physical goods and essential services.

While many large-cap funds are obsessed with "Magnificent Seven" style AI plays, Royce’s 18.54% allocation to Technology likely focuses on "applied technology." This includes semiconductor equipment, software for niche industrial applications, and electronic components. The institution’s approach to tech is grounded in valuation; they are looking for tech companies with proven cash flows and dominant positions in smaller markets, rather than speculative growth stories. This sector serves as the "growth engine" of the portfolio, providing a balance to the more traditional industrial holdings.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

III. Top 10 Holdings Deep Dive

Arcosa remains the crown jewel of the Royce portfolio, holding the number one spot with a market value of $132.92 million. This is a classic "conviction holding," with the institution having maintained a position for over seven years. Arcosa is a provider of infrastructure-related products and solutions, operating in markets such as construction, energy, and transportation. The institution's decision to slightly increase its shares by 1.45% this quarter, despite a marginal decrease in portfolio weight (likely due to the total portfolio value growing faster than the stock price), signals a "steady as she goes" approach. Arcosa perfectly fits the Royce mold: a leader in a niche industrial market with a strong balance sheet and exposure to long-term infrastructure tailwinds. The holding nature is clearly one of long-term strategic allocation, where the institution is content to let the company's fundamental growth drive returns over years, not quarters.

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IV. Major Buys/Additions

The total estimated capital deployed in these top 8 additions is approximately $130 million . When compared to the funds retrieved from major reductions (like the $48.9 million from MKS Inc.), it appears that Royce is engaged in a "quality rotation." They are selling off more volatile, capital-intensive technology hardware positions (MKSI, UCTT) and reallocating that capital into "asset-light" professional services and specialty insurance. This move reduces the portfolio's sensitivity to semiconductor cycles while increasing its exposure to the steady, high-margin world of technical consulting.

These operations have collectively decreased the portfolio's volatility while maintaining an offensive posture. By buying into companies like Exponent and RLI, Royce is acquiring "low-beta growth." These companies tend to hold up better during market downturns due to their essential service nature and strong balance sheets, yet they offer significant upside through market share gains and margin expansion. This is a classic "value-plus-quality" move, typical of a mature institution looking to protect its $10 billion base while still seeking alpha in the small-cap universe.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

V. Major Sells and Exits

The exit operations this quarter are characterized by high-quality profit-taking . The reductions in Cirrus Logic (CRUS) and Ultra Clean (UCTT) —both semiconductor-related—further reinforce the theme of "de-risking" from the high-flying tech hardware sector. These are not panic sells; they are calculated trims of positions that have likely reached their price targets. By realizing nearly $200 million from these top 8 operations alone, the institution has created a massive "war chest" to fund its new convictions in professional services and specialty insurance.

The aggressive trimming of semiconductor-related stocks (MKSI, CRUS, UCTT) should serve as a warning signal. When a seasoned value investor like Royce, who has held these names for over a decade in some cases, decides to cut their exposure by 25-35% in a single quarter, it suggests that the valuation-to-growth ratio in the semi-cap space has become stretched. Investors should take note that "smart money" is moving toward the exits in these high-momentum areas.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

VI. Investment Insights and Risk Warnings

Sold: High-momentum, cyclical technology hardware and commodity-linked assets (MKSI, UCTT, SII). 2. Why: To harvest gains from stretched valuations and reduce exposure to potential cyclical peaks. 3. Bought: Niche professional services and specialty insurance (EXPO, TRNS, RLI). 4. Why: To capture high-margin, recurring revenue streams from companies that are "essential enablers" of modern industry but carry lower capital intensity. 5. Result: A portfolio that is more "asset-light," less volatile, and more focused on the "quality" factor of the small-cap value equation.

Disclaimer: This analysis report is provided for informational and educational purposes only. It does not constitute investment advice, financial advice, or a recommendation to buy or sell any security. All investment decisions involve risk, and past performance is no guarantee of future results. Investors should conduct their own research or consult with a qualified financial advisor before making any investment decisions. The author and the data provider are not responsible for any financial losses resulting from the use of this information.

This section shows only part of the complete report. View the app for the full analysis, position-level detail, and quarter-over-quarter tracking.

Sources and limitations

This report uses public U.S. Securities and Exchange Commission Form 13F disclosures and structured data maintained by 13F Hub. A 13F filing is a quarter-end snapshot of reportable long positions, is normally published with a delay, and does not disclose every short position, cash balance, bond, derivative, or non-U.S. asset.

Narrative content is prepared from the same-period SEC disclosure and 13F Hub structured data, then checked before publication. This material is for research and education, not personalized investment advice.