UGI Corp in focus as FPA Queens Road makes significant add at ~11x earnings

FPA Queens Road Small Cap Value Fund disclosed a significant addition to its UGI Corporation (NYSE: UGI) position in the second quarter of 2026, citing the stock's roughly 11x earnings multiple as the entry rationale. Shares closed at approximately $38.01 on August 28, 2026, inside a 52-week range of $31.62 to $41.34, with a market capitalization of about $8.25 billion.

The positioning behind the add

The fund's Q2 letter described UGI as a regulated gas utility serving Pennsylvania and West Virginia, holding a pipeline portfolio and unregulated propane distribution businesses across the U.S. and Europe. The Amerigas propane segment ran into difficulty in recent years, pushing debt metrics higher. FPA stated the company has done an impressive job resetting from those problems, and the fund framed the 11x multiple as attractive against that recovery backdrop.

Forty-three hedge fund portfolios held UGI at the end of the first quarter of 2026, up from 41 in the prior quarter. The stock does not appear on the list of 40 most popular hedge fund names heading into 2026. Ownership is accumulating without the name sitting on the crowded side of the trade.

What the tape says to watch

Small-cap earnings growth accelerated relative to large caps in the first half of 2026. FPA Queens Road returned 27.02% over that period, ahead of the Russell 2000 Value Index at 22.99% and the S&P 600 at 23.90%. The fund's tech holdings gained 72.39% and contributed 14.87 percentage points to performance, though it trailed the benchmark's tech sector, which returned 95.27% and contributed 7.10 points. Excluding technology and cash, the fund contributed 12.73% against 15.89% for the index on the same basis.

The fund trimmed appreciated technology positions throughout and steered away from beaten-down SaaS names, citing the widening range of AI-related outcomes. It ended Q2 with 10.2% in cash after eliminating roughly $62 million in capital gains during the quarter and approximately $140 million year-to-date through July. A manager carrying that cash and still adding to a regulated utility at 11x earnings is a pointed statement about where value sits in the current tape.

UGI's one-month return stood at 6.13% as of the letter's publication. The print to watch is the next earnings release, where progress on the Amerigas debt reset and any updated guidance will confirm or complicate FPA's read.

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