FPA Queens Road Small Cap Value Fund on Sprouts Farmers Market, Inc.

Sprouts has strong operating margins, attractive returns on capital and favorable economics on newly opened stores. The fund trimmed aggressively when the valuation became elevated in late 2024 and early 2025. Subsequent growth deceleration caused a substantial share-price decline and reset the valuation. At a low-teens multiple of forward earnings, the team is again comfortable maintaining a mid-sized position. The thesis therefore rests on the durability of Sprouts' store economics rather than a return to the previously elevated valuation.