Victory Capital, overseeing the RS Large Cap Value Strategy, released its Q2 2026 investor letter. A copy of the letter can be downloaded here. The RS Large Cap Value Strategy underperformed the Russell 1000 Value Index in the second quarter of 2026 as unfavorable stock selection and sector allocation weighed on relative performance. U.S. equities remained resilient despite the Iran conflict, elevated inflation, labor market concerns and uncertainty around Federal Reserve leadership, with the S&P 500 gaining 15% and the Russell 1000 Value returning 13.9%. Market leadership broadened beyond the Magnificent Seven toward semiconductor, memory, power and other AI infrastructure beneficiaries, while investors also moved down the cap spectrum, helping the Russell 2000 Value rise 17.2%. Information Technology returned 80.63%, while Energy fell 13.77%; stock selection in Technology and Industrials and an underweight Technology position were key detractors. Looking ahead, the firm remains focused on risk management, valuation discipline and identifying financially strong, out-of-favor or misunderstood companies with capable management, improving ROIC, attractive reinvestment opportunities and share prices below estimated intrinsic value. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its second-quarter 2026 investor letter, RS Large Cap Value Strategy highlighted CVS Health Corporation (NYSE:CVS). CVS Health Corporation (NYSE:CVS) is a leading diversified healthcare services company in the United States. On July 21, 2026, CVS Health Corporation (NYSE:CVS) closed at $110.60 per share. One-month return of CVS Health Corporation (NYSE:CVS) was 8.57% and its shares gained 78.82% over the past 52 weeks. CVS Health Corporation (NYSE:CVS) has a market capitalization of $141.12 billion with a 52-week trading range between $58.50 – $110.62.
RS Large Cap Value Strategy stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q2 2026 investor letter:
“CVS Health is a diversified healthcare services company with leading positions in pharmacy benefits management, retail pharmacy, and health insurance (via its Aetna franchise). We initiated our investment in early 2025 after shares had fallen, driven largely by prior management’s “growth at any cost” strategy in Medicare Advantage. That aggressive expansion coincided with a sharp rebound in post-COVID medical utilization, leading to significant margin compression. From 2022 to 2024, the Health Care Benefits (HCB) segment’s medical benefit ratio (medical costs / premium revenue) increased from 84.0% in 2022 to 92.5% in 2024. This weighed heavily on CB operating margins, which fell from 6.9% in 2022 to 0.2% in 2024. During the second quarter, CVS benefited from both company-specific execution and improving industry fundamentals. company reported strong first-quarter results, raised full-year guidance, and saw S&P revise its credit outlook from negative to stable. Additionally, Medicare Advantage insurers meaningful tailwind when The Centers for Medicare & Medicaid Services (CMS) finalized a 2.5% rate increase for 2027, well above the initially proposed 0.1%, while recent utilization data point to moderating medical cost trends. The combination of higher reimbursement and easing cost pressures should support a meaningful recovery in payer margins, and we continue to see a credible path to an earnings increase over the next two to three years. That said, we have trimmed the position opportunistically to fund other attractive ideas within the portfolio.”
CVS Health Corporation (NYSE:CVS) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 84 hedge fund portfolios held CVS Health Corporation (NYSE:CVS) at the end of the first quarter which was 88 in the previous quarter. While we acknowledge the risk and potential of CVS Health Corporation (NYSE:CVS) 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 CVS Health Corporation (NYSE:CVS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered CVS Health Corporation (NYSE:CVS) 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.
Co-Founder and Research Director at Insider Monkey
When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.
Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.
At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.
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107 Amazons
140 Metas
84 Googles
65 Microsofts
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In fact, Verge argues this company’s supercheap AI technology should concern rivals.
Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.
Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.
When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.
Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…
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Co-Founder and Research Director at Insider Monkey
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