Fundsmith, an investment management firm based in London, has released its second-quarter 2026 investor letter for its “Fundsmith Equity Fund.” A copy of the letter can be downloaded here. The Fund returned -2.9% in the first half of 2026, underperforming the MSCI World Index by 14.1 percentage points, driven by challenges from a momentum-driven market dominated by passive index funds and AI-related exuberance. The letter discusses the rise of passive investing, noting that index funds now resemble active funds, concentrating heavily in a few sectors and stocks. Due to increased market volatility and a 51% portfolio turnover in the first half of the year, the firm plans to adopt a more active approach, incorporating momentum while maintaining its core mantra: buy good companies, don’t overpay, and do little. In addition, please check the Firm’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Fundsmith Equity Fund highlighted Nextpower Inc. (NASDAQ:NXT) as a newly added position. Nextpower Inc. (NASDAQ:NXT) is an energy technology company that provides solar tracking systems and software. On July 31, 2026, Nextpower Inc. (NASDAQ:NXT) closed at $89.87 per share, reflecting a market capitalization of $13.80 billion. Nextpower Inc. (NASDAQ:NXT) posted a one-month return of -21.87%, while its shares gained 59.61% over the past 52 weeks.
Fundsmith Equity Fund stated the following regarding Nextpower Inc. (NASDAQ:NXT) in its Q2 2026 investor update:
“Nextpower Inc. (NASDAQ:NXT) – Nextpower manufactures mechanical systems and software that enable utility-scale solar panels to track the sun throughout the day. Its competitive ‘moat’ combines a flexible, outsourced manufacturing setup that keeps fixed costs low with proprietary tracking software that makes switching to a competitor’s system difficult once installed. Nextpower technology increases the energy yield of a solar installation by 20% to 30% compared to traditional panels bolted in a fixed position. Growth is directly tied to the growing global demand for renewable energy, especially clean energy generation that can be built next to data centres. To further expand into data centres, Nextpower acquired battery maker Prevalon Energy for $365m in May 2026. ROIC: ~50%, FCF yield: 3.2%.”
Nextpower Inc. (NASDAQ:NXT) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 44 hedge fund portfolios held Nextpower Inc. (NASDAQ:NXT) at the end of the first quarter, up from 42 in the previous quarter. While we acknowledge the risk and potential of Nextpower Inc. (NASDAQ:NXT) 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 Nextpower Inc. (NASDAQ:NXT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Nextpower Inc. (NASDAQ:NXT) and shared the list of best up and coming tech stocks to buy. 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.
