Osterweis Opportunity Fund returned 35.34% in the second quarter of 2026, significantly outperforming the Russell 2000 Growth Index, which gained 25.71% over the same period. The fund’s outperformance was driven by robust corporate profits, AI investment, and strong consumer spending, with security selection playing a key role in Technology, Industrials, Health Care, and Consumer Discretionary sectors. Hinge Health, Inc. (NYSE: HNGE), a digital healthcare company specializing in automated care delivery, was highlighted as one of the fund’s best performers due to exceptional financial results and investor recognition that the company is not prone to AI disruption.
In its Q2 2026 investor letter, Osterweis Capital Management noted that Hinge Health’s second-quarter billings increased 52% year-over-year, driven by new members and higher utilization. The company also raised its Q2 guidance intra-quarter during an analyst day in June. Despite these strong trends, the fund stated it does not believe Hinge Health’s current growth rates are sustainable and has been trimming its position. Hinge Health closed at $94.15 per share on September 22, 2026, with a market capitalization of $7.59 billion. Over the past year, the stock is up 73.61%, trading within a 52-week range of $30.08 to $96.66.
| Metric | Value |
|---|---|
| Fund Q2 2026 Return | 35.34% |
| Russell 2000 Growth Return | 25.71% |
| HNGE Q2 Billings Growth | 52% |
| HNGE Market Cap | $7.59 billion |
| HNGE 52-Week Range | $30.08 to $96.66 |
The fund’s broader outlook anticipates that AI will continue to influence economic growth and market performance, though a consolidation phase for AI-related stocks is expected. While smaller sectors like Consumer Staples, Financials, and Real Estate lagged in the quarter, their impact on overall performance was minimal. According to database records, 48 hedge fund portfolios held Hinge Health shares at the end of the second quarter, unchanged from the previous quarter. Hinge Health is not on a list of the 40 most popular stocks among hedge funds, and certain other AI stocks are viewed as offering greater upside potential with less downside risk.