Longleaf Partners, managed by Southeastern Asset Management, released its second-quarter 2026 investor letter for its “Small-Cap Fund”. A copy of the letter can be downloaded here. The letter states that the portfolio holdings are attractive now based on both P/V and P/FCF metrics; however, market winners have gone far higher than fair value. The Fund returned -2.47% in the quarter, underperforming the 21.49% return for the Russell 2000 Index and the 17.19% gain for the Russell 2000 Value Index. The underperformance in the quarter was driven by unexpected moves primarily in the IT and industrials sectors and market favor for speculative stocks. The Firm’s investment approach focuses on median, unweighted multiples, prioritizing growth in free cash flow per share, the potential for multiple expansion, and strategic initiatives. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Longleaf Partners Small-Cap Fund highlighted Alexander’s, Inc. (NYSE:ALX) as a notable contributor. Alexander’s, Inc. (NYSE:ALX) is a US-based real estate investment trust (REIT) that engages in leasing, managing, developing, and redeveloping properties. On July 13, 2026, Alexander’s, Inc. (NYSE:ALX) closed at $276.21 per share, reflecting a market capitalization of $1.44 billion. Alexander’s, Inc. (NYSE:ALX) posted a one-month return of 7.14%, and its shares gained 16.68% over the past 52 weeks.
Longleaf Partners Small-Cap Fund stated the following regarding Alexander’s, Inc. (NYSE:ALX) in its Q2 2026 investor update:
“Alexander’s, Inc. (NYSE:ALX) and Empire State Realty Trust – New York real estate companies Alexander’s and Empire State Realty Trust both contributed in the quarter. Alexander’s was the bigger contributor, as the company closed the previously announced asset sale of a non core property while signing a lease with Target to get its key shopping center in Queens fully-leased. It is getting harder for the market to ignore the steady FCF power and strong balance sheet of this company. Empire State also contributed but on a lesser scale in the quarter as the company closed a great asset sale itself that implies a value for the rest of its business that is over 2x the current share price. Both companies are on offense and able to continue closing their price to value gaps.”
Alexander’s, Inc. (NYSE:ALX) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 12 hedge fund portfolios held Alexander’s, Inc. (NYSE:ALX) at the end of the first quarter, the same as in the previous quarter. While we acknowledge the risk and potential of Alexander’s, Inc. (NYSE:ALX) 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. If you are looking for an AI stock that is more promising than Alexander’s, Inc. (NYSE:ALX) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Alexander’s, Inc. (NYSE:ALX) and shared Longleaf Partners Small-Cap Fund’s views on the company in Q1 2026. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
