Laughing Water Capital, an investment management company, released its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The second quarter was exceptionally good for the portfolio, with Class A investment in Laughing Water Capital returning approximately 39.8% net of all fees and expenses, bringing the YTD return to approximately 33.6% net. The SP500TR and R2000 returned approximately 15.0% and 21.5%, respectively, in the second quarter. The impressive performance was driven by three of the top five positions being acquired, with its largest position nearly doubling during the quarter. The letter emphasizes that patience can often lead to profits in an inefficient market characterized by fluctuations, suggesting that investing in undervalued stocks can yield good long-term returns. In addition, please check the portfolio’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Laughing Water Capital highlighted Stride, Inc. (NYSE:LRN). Stride, Inc. (NYSE:LRN) is a US-based education management company that provides online curriculum, software systems, and educational services. On July 13, 2026, Stride, Inc. (NYSE:LRN) closed at $92.02 per share, reflecting a market capitalization of $3.91 billion. Stride, Inc. (NYSE:LRN) posted a one-month return of 10.39%, while its shares lost 31.58% over the past 52 weeks.
Laughing Water Capital stated the following regarding Stride, Inc. (NYSE:LRN) in its Q2 2026 investor update:
“Stride, Inc. (NYSE:LRN) – Stride, our K-12 virtual education business, continues on its quest to level up their technology stack, following a change last year that led to problems with enrollment and user experience. All signs suggest that they continue to make progress.
However, in the negative column, Stride lost a school in Texas that will not be renewing. Historically when this has happened the vast majority of affected students have re-enrolled in another Stride school, limiting the impact. However, the market tends to extrapolate the risk of further loss rather than the likely re-enrollment, and shares suffered on the news. Stride trades at a single digit multiple of cash flow while providing recession resilient services to a student/customer base that continues to grow. Further, the company has a large buyback in place, and I am hopeful that they are being aggressive. I continue to believe that if the company can fix their technology problems they will return to growth and shares will rapidly re-rate higher.”
Stride, Inc. (NYSE:LRN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 47 hedge fund portfolios held Stride, Inc. (NYSE:LRN) at the end of the first quarter, up from 43 in the previous quarter. While we acknowledge the risk and potential of Stride, Inc. (NYSE:LRN) 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 Stride, Inc. (NYSE:LRN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Stride, Inc. (NYSE:LRN) and shared a bullish thesis on the company. Laughing Water Capital entered a position in Stride, Inc. (NYSE:LRN) during Q1 2026. 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.
