Investment management company Vulcan Value Partners recently released its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. Vulcan Value Partners prioritizes long-term returns and lower risk over short-term performance. In the quarter, the Large Cap Composite (Net) returned 9.5%, the Small Cap Composite (Net) returned 13.3%, the Focus Composite (Net) returned 10.4%, the Focus Plus Composite (Net) returned 10.5%, and the All-Cap Composite (Net) returned 9.0%. The firm reported strong compounding across its strategies in Q2 2026. Management highlighted that their exceptional holdings remain deeply undervalued relative to “what is working” in the market, viewing this as an excellent opportunity for patient investors. In addition, please check the Firm’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Vulcan Value Partners highlighted Badger Meter, Inc. (NYSE:BMI), a recent addition to the firm’s small‑cap strategy. Badger Meter, Inc. (NYSE:BMI) is a US-based flow measurement, quality, control, and communication solutions company with a strong focus on Utility water smart metering solutions and software technologies. On July 29, 2026, Badger Meter, Inc. (NYSE:BMI) closed at $133.54 per share, reflecting a market capitalization of $3.87 billion. Badger Meter, Inc. (NYSE:BMI) posted a one-month return of -8.61%, while its shares lost 29.38% over the past 52 weeks.
Vulcan Value Partners stated the following regarding Badger Meter, Inc. (NYSE:BMI) in its Q2 2026 investor update:
“We purchased Badger Meter, Inc. (NYSE:BMI) and TPG Inc. during the quarter. Badger Meter is the only pure-play, publicly traded manufacturer of water meters in North America. More than 120 years old, the company now supports over 50,000 water utilities across the country. It is one of three players that have controlled roughly 85% of the North American water meter market for decades. Water meters are essential tools for water utilities in generating revenue. If meter readings are outdated or inaccurate, the utility risks losing revenue by underbilling end customers. Given the cost of failure is high, it comes as no surprise that 85% of Badger Meter’s revenue is derived from replacement demand. In addition to stable unit volume growth over the long term, Badger Meter has and will continue to benefit from positive mix benefits tied to its advanced metering infrastructure and associated software offering, both of which carry higher margins. Despite slowing industry growth due to difficult post-Covid comparisons, we expect operating performance to improve as the company executes against its strong pipeline of opportunities over the coming years. Badger Meter has a long history of profitable growth, is supported by a net cash balance sheet, and is led by a management team compensated on metrics such as FCF conversion and returns on invested capital. After many years of watching the company’s success from afar, we are pleased to be owners today at a meaningful discount to our estimate of fair value.”
Badger Meter, Inc. (NYSE:BMI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 29 hedge fund portfolios held Badger Meter, Inc. (NYSE:BMI) at the end of the first quarter, up from 27 in the previous quarter. While we acknowledge the risk and potential of Badger Meter, Inc. (NYSE:BMI) 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 Badger Meter, Inc. (NYSE:BMI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Badger Meter, Inc. (NYSE:BMI) and shared a bullish thesis on the company. 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.
