The London Company released its Q1 2026 investor letter for “The London Company Small-Mid Cap Strategy”. In early 2026, US equities declined, with the Russell 3000 falling 4% and the S&P posting losses. A copy of the letter is available to download here. The year started positively with a broad rally, but sentiment reversed in March due to the Iran conflict. Crude oil prices rose, raising inflation concerns and shifting the Fed’s outlook from rate cuts to hikes. Large-cap growth suffered double-digit losses amid weakness in Big Tech and AI concerns in software, while small caps proved resilient. Sector dispersion was extreme; Energy surged over 35%, while Tech fell over 9%. Value, Momentum, and Yield drove returns from a factor perspective. In this environment, the London Company Small-Mid Cap portfolio declined 3.4% (-3.6% net) in the quarter vs. a 2.0% increase in the Russell 2500 Index. The relative underperformance was driven by both sector exposure and stock selection. Structural underweight to Energy and commodity-linked industries was a significant detractor. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, The London Company Small-Mid Cap Strategy highlighted Element Solutions Inc (NYSE:ESI) as a notable contributor. Based in Miami Beach, Florida, Element Solutions Inc (NYSE:ESI) is a US-based a specialty chemicals technology company. On June 11, 2026, Element Solutions Inc (NYSE:ESI) closed at $42.92 per share. One-month return of Element Solutions Inc (NYSE:ESI) was 10.45%, and its shares gained 104.28% over the past 52 weeks. Element Solutions Inc (NYSE:ESI) has a market capitalization of $10.46 billion.
The London Company Small-Mid Cap Strategy stated the following regarding Element Solutions Inc (NYSE:ESI) in its Q1 2026 investor letter:
“Element Solutions Inc (NYSE:ESI) – ESI rallied on strong demand for specialty chemicals across electronics and industrial coatings end markets. Quarterly results were solid, supported by strong performance in the Electronics business. Recent integrations have expanded their product offerings, providing incremental earnings from high growing businesses. ESI’s timely investments, smart capital allocation and focus on higher growth end markets should enable the company to maintain its outperformance and margin expansion.”
Element Solutions Inc (NYSE:ESI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 35 hedge fund portfolios held Element Solutions Inc (NYSE:ESI) at the end of the first quarter, compared to 38 in the previous quarter. While we acknowledge the risk and potential of Element Solutions Inc (NYSE:ESI) 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 ELEMENT SOLUTIONS INC (NYSE:ESI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Element Solutions Inc (NYSE:ESI) and shared Jim Cramer’s stock calls. In addition, please check out our hedge fund investor letters Q1 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.
