Middle Coast Investing, an investment advisor firm, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The letter explores the concept of ‘meme’ introduced by Richard Dawkins and its impact on modern stock market trends. It highlights how memes, such as Large Language Models (LLMs), artificial intelligence (AI), rising gas prices, private credit, and automated driving, play a crucial role in shaping trading decisions and driving quick ideological changes. However, Investment decisions should not be driven by current news cycles or fads, but rather focus on businesses that are resilient in tough times and capable of leveraging their advantages. These principles require discipline, especially in a volatile market environment. The US portfolio returned -3.9% in the quarter vs. -4.6% for the S&P 500, Core U.S. portfolios returned -4.3% vs the Russell 2000’s 0.6% return, S&P 600’s 3.1%, and Nasdaq’s -7.1% returns. Additionally, European Portfolios returned -2.9% during the same period. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Middle Coast Investing highlighted stocks like Duolingo, Inc. (NASDAQ:DUOL). Duolingo, Inc. (NASDAQ:DUOL) is an education technology company that specializes in language learning. On April 16, 2026, Duolingo, Inc. (NASDAQ:DUOL) stock closed at $103.45 per share. One-month return of Duolingo, Inc. (NASDAQ:DUOL) was 4.85%, and its shares lost 68.32% over the past 52 weeks. Duolingo, Inc. (NASDAQ:DUOL) has a market capitalization of $4.86 billion.
Middle Coast Investing stated the following regarding Duolingo, Inc. (NASDAQ:DUOL) in its Q1 2026 investor letter:
“Duolingo, Inc. (NASDAQ:DUOL) is a language app. Download it on your phone and take gamified lessons in dozens of languages, as well as math, music, and chess.
I am a power user for Duolingo and have been for the past 3-4 years, and I’ve also followed the company since IPO. Not investing in it in late 2022 was one of my biggest regrets. I believe we are close to a similar opportunity.
The stock has become reasonably priced after soaring to ridiculous levels. The headline reason it has dropped is that, with the LLMs, people feel less of a need to learn a language. Why bother when you can just do this through your phone and your air Pods?..” (Click here to read the full text)
Duolingo, Inc. (NASDAQ:DUOL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 51 hedge fund portfolios held Duolingo, Inc. (NASDAQ:DUOL) at the end of the fourth quarter, up from 50 in the previous quarter. While we acknowledge the risk and potential of Duolingo, Inc. (NASDAQ:DUOL) 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 Duolingo, Inc. (NASDAQ:DUOL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Duolingo, Inc. (NASDAQ:DUOL) and shared Baron Opportunity Fund’s views on the company. 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.
