Hotchkis & Wiley, an investment management company, released its second-quarter 2026 investor letter for the “Hotchkis & Wiley Mid-Cap Value Fund.” A copy of the letter can be downloaded here. Equity markets posted strong returns in the second quarter of 2026, with the Russell Midcap Index rising 13.8% and the Russell Midcap Value Index returning 13.4%, despite concerns about inflation, a hawkish Federal Reserve, and rising oil prices due to the Iran conflict. Narrow market leadership was evident, particularly semiconductor stocks and other stocks in the AI sector, which saw returns exceeding 100%. The Firm favors quality businesses with attractive valuations, believing that fears regarding AI’s impact are overstated. The Hotchkis & Wiley Mid-Cap Value Fund lagged the Russell Midcap Value Index, achieving a 4.74% return in the second quarter, primarily due to underperformance in technology and energy sectors, while stock selection in healthcare contributed positively. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Hotchkis & Wiley Mid-Cap Value Fund highlighted Kosmos Energy Ltd. (NYSE:KOS). Kosmos Energy Ltd. (NYSE:KOS), a deepwater oil and gas exploration and production company, detracted from the Fund’s performance during the quarter due to crude oil price weakness. On August 3, 2026, Kosmos Energy Ltd. (NYSE:KOS) closed at $2.53 per share. One-month return of Kosmos Energy Ltd. (NYSE:KOS) was 14.48%, and its shares gained 37.50% over the past 52 weeks. Kosmos Energy Ltd. (NYSE:KOS) has a market capitalization of $1.50 billion.
Hotchkis & Wiley Mid-Cap Value Fund stated the following regarding Kosmos Energy Ltd. (NYSE:KOS) in its Q2 2026 investor letter:
“Kosmos Energy Ltd. (NYSE:KOS) is an independent offshore E&P company with producing assets in the US Gulf of Mexico and Ghana. We own it because its offshore operating expertise, quality assets, attractive reinvestment economics, and compelling valuation create a favorable risk/reward profile. The stock declined during Q2 due to broader crude oil price weakness following the reopening of the Strait of Hormuz. We believe oil undersupply could continue for months and that prices could remain above normal levels, even if the reopening progresses smoothly. Given the company’s strong assets, high returns on investment, attractive valuation, and reduced liquidity concerns, our investment thesis remains intact.”
Kosmos Energy Ltd. (NYSE:KOS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 43 hedge fund portfolios held Kosmos Energy Ltd. (NYSE:KOS) at the end of the first quarter, up from 21 in the previous quarter. While we acknowledge the risk and potential of Kosmos Energy Ltd. (NYSE:KOS) 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 Kosmos Energy Ltd. (NYSE:KOS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Kosmos Energy Ltd. (NYSE:KOS) and shared Pzena Investment Management’s insight on the company. In Q1 2026, Kosmos Energy Ltd. (NYSE:KOS) was a material contributor to Hotchkis & Wiley Mid-Cap Value Fund’s performance. 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.
