Gabelli Investment Management Firm recently released its "Focused Growth and Income Fund" second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Fund declined 1.61% in the second quarter of 2026, as pressure on telecommunications, income-producing securities, and rate-sensitive investments outweighed gains elsewhere in the portfolio.
The Fund noted that the interest-rate environment became less favorable during the quarter, with the Federal Reserve maintaining rates at 3.50%–3.75% and adopting a more hawkish stance, while inflation accelerated from 3.8% in April to 4.2% in May. Looking ahead, the Fund views the higher-for-longer rate environment as cyclical rather than structural and believes elevated yields across its investments improve its forward income proposition. It remains focused on companies with sustainable cash flows, pricing power, resilient business models, stable balance sheets, and the ability to compound value through economic cycles.
The Fund maintained a $0.08-per-share monthly distribution and had a 6.53% SEC yield as of December 31, 2025. In addition, please check the Fund's top five holdings to know its best picks in 2026. In its second-quarter 2026 investor letter, Gabelli Focused Growth and Income Fund highlighted stocks like Herc Holdings Inc. (NYSE:HRI).
Herc Holdings Inc. (NYSE:HRI) is an equipment rental company that provides a wide range of equipment and related services to construction, industrial, and other commercial customers. Herc Holdings Inc. (NYSE:HRI) had a one-month return of approximately -6.95%, while its shares traded between $88.45 and $188.35 over the last 52 weeks. On September 21, 2026, Herc Holdings Inc. (NYSE:HRI) stock closed at approximately $140.40 per share, with a market capitalization of about $4.69 billion.
Gabelli Focused Growth and Income Fund stated the following regarding Herc Holdings Inc. (NYSE:HRI) in its Q2 2026 investor letter: "Herc Holdings Inc. (NYSE:HRI) (2.5% of net assets as of June 30, 2026) (HRI – $143.34 – NYSE) was the Fund's largest contributor, surging approximately 45% during the quarter as the market re-rated the shares following first quarter results that far exceeded expectations. Equipment rental revenue rose 33% to $981 million, adjusted EBITDA increased 33% to $448 million, and adjusted earnings of $0.21 per diluted share came in well ahead of consensus estimates. Management affirmed full year 2026 guidance of $4.275–$4.4 billion in equipment rental revenue and $2.0–$2.1 billion in adjusted EBITDA, supported by strong national account activity and a growing mega-project pipeline.
Herc pays a quarterly dividend of $0.70 per share ($2.80 annualized), and we believe continued synergy capture and mega-project demand support further upside from here." Herc Holdings Inc. (NYSE:HRI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 38 hedge fund portfolios held Herc Holdings Inc. (NYSE:HRI) at the end of the first quarter, compared with 33 in the previous quarter. While we acknowledge the risk and potential of Herc Holdings Inc. (NYSE:HRI) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame.
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