White Falcon Capital Management, an investment fund manager, released its second-quarter 2026 investor letter. A copy can be downloaded here. The portfolio delivered 8.5% in Q2 2026, trailing the S&P 500 TR’s (CAD) 17.3%, MSCI AC TR’s (CAD) 16.4%, and the S&P TSX TR’s 6.9% returns. The YTD’s 1.8% return also trailed the indices. The firm is underwhelmed by the portfolio’s performance in the quarter; however, the firm emphasizes long-term performance over short-term results. The firm aims to achieve positive absolute returns adjusted for risk over a complete market cycle. The underperformance is not due to the business fundamentals but the momentum-driven rallies in AI-linked stocks. The firm maintains patience and discipline in capital allocation, with valuation as crucial for long-term returns. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, White Falcon Capital Management highlighted EPAM Systems, Inc. (NYSE:EPAM). EPAM Systems, Inc. (NYSE:EPAM) is a leading digital platform engineering and software development services provider. On July 23, 2026, EPAM Systems, Inc. (NYSE:EPAM) closed at $86.14 per share, reflecting a market capitalization of $4.5 billion. EPAM Systems, Inc. (NYSE:EPAM) posted a one-month return of -6.77%, while its shares lost 49.55% over the past 52 weeks.
White Falcon Capital Management stated the following regarding EPAM Systems, Inc. (NYSE:EPAM) in its Q2 2026 investor update:
“The biggest detractor this quarter was EPAM Systems, Inc. (NYSE:EPAM). We have stubbornly held the stock for some time and as the saying goes there is sometimes no difference between being early and being wrong. While the underlying business has remained resilient and a net-cash balance sheet, the stock has now de-rated to approximately 4x EV/EBITDA and 7x P/E. The challenge in IT services is that AI is evolving so rapidly that many enterprises are delaying large digital transformation projects as they wait for the technology to mature. We believe this is a timing rather than a structural issue. In fact, AI should ultimately increase demand for sophisticated engineering as companies modernize legacy systems and integrate AI into their workflows. As AI capabilities have advanced, the leading labs have recognized that the real bottleneck is no longer model development but enterprise deployment and integration. This has driven investment in forward-deployed engineering (FDE) teams and, in some cases, acquisitions of companies with these capabilities. EPAM has spent decades building exactly this type of organization. If AI becomes ubiquitous, we believe the value of trusted engineering partners that can integrate and operationalize these technologies should increase, not decrease. If anything, the best engineers become even more valuable in an AI world, and that has long been EPAM’s competitive advantage.
We also take solace in the fact that there is substantial strategic value in EPAM. Recently, one of EPAM’s peers, Nagarro, agreed to be acquired by Persistent Systems at approximately 9.1x EV/EBITDA and 1.3x revenue – more than double EPAM’s valuation!”
EPAM Systems, Inc. (NYSE:EPAM) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 34 hedge fund portfolios held EPAM Systems, Inc. (NYSE:EPAM) at the end of the first quarter, compared to 44 in the previous quarter. While we acknowledge the risk and potential of EPAM Systems, Inc. (NYSE:EPAM) 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 EPAM Systems, Inc. (NYSE:EPAM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered EPAM Systems, Inc. (NYSE:EPAM) and shared the list of underperforming tech stocks to buy according to analysts. 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.
