Longleaf Partners, managed by Southeastern Asset Management, released its first-quarter 2026 investor letter for its “Small-Cap Fund”. A copy of the letter can be downloaded here. The Fund returned -2.72% in the quarter, outperforming the Russell 3000’s -3.96% return and lagging the Russell 2000 Index’s 0.89% and the Russell 2000 Value Index’s 4.96% gains. The market experienced significant sector-wide movements in the quarter driven by perceptions surrounding AI outcomes, alongside complications from the conflict in Iran and escalating private credit risks. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Longleaf Partners Small-Cap Fund highlighted Empire State Realty Trust, Inc. (NYSE:ESRT). Empire State Realty Trust, Inc. (NYSE:ESRT) is a NYC-focused REIT that owns and operates office, retail, and multifamily assets. On June 29, 2026, Empire State Realty Trust, Inc. (NYSE:ESRT) closed at $5.32 per share, reflecting a market capitalization of $1.63 billion. Empire State Realty Trust, Inc. (NYSE:ESRT) posted a one-month return of -6.67%, and its shares lost 34.96% over the past 52 weeks.
Longleaf Partners Small-Cap Fund stated the following regarding Empire State Realty Trust, Inc. (NYSE:ESRT) in its Q1 2026 investor letter:
“Empire State Realty Trust, Inc. (NYSE:ESRT) and Alexander’s – We wrote about these two New York real estate companies together in a previous note and will now do so again. Their stock prices moved in different directions this quarter. To the positive, Alexander’s announced a great sale of a non-core, non-income-generating asset in Queens that puts the company further on offense. While ESRT is also actively looking to sell assets, they did not have any news on that front in the quarter and therefore declined with other real estate companies as fears about AI-driven job losses hit the sector. International travel trends also continued to impact their Observatory business. In spite of these headwinds, ESRT reported solid leasing results and should be able to grow cash flow this year. Both companies still have irreplaceable assets driven by aligned partners. Their divergent stock price moves led to us trimming Alexander’s and adding to ESRT as the quarter went on.”
Empire State Realty Trust, Inc. (NYSE:ESRT) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 16 hedge fund portfolios held Empire State Realty Trust, Inc. (NYSE:ESRT) at the end of the first quarter, compared to 17 in the previous quarter. While we acknowledge the risk and potential of Empire State Realty Trust, Inc. (NYSE:ESRT) 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 Empire State Realty Trust, Inc. (NYSE:ESRT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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.
