Fiduciary Management Inc. (FMI), an independent money management firm, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The onset of the Iran war disrupted the stability of Global stock markets in early 2026, with the S&P 500 and MSCI World indices declining 4.33% and 3.57%, respectively, while the Russell 2000 and MSCI EAFE (local, USD) fared a bit better at 0.89%, 0.15%, and -1.24%, respectively. As oil costs rise and the war continues, risk appetites have decreased. Amid this uncertainty, FMI remains confident in its portfolio of high-quality businesses trading at discounts. Energy and defense stocks have recently outperformed, while FMI’s underweight exposure in these sectors and overweight in durables and construction have impacted relative performance. Despite challenges, FMI is committed to its long-standing investment strategy. In addition, please check the firm’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, FMI highlighted stocks like Booking Holdings Inc. (NASDAQ:BKNG). Headquartered in Norwalk, Connecticut, Booking Holdings Inc. (NASDAQ:BKNG) is a leading online travel booking platform. On April 23, 2026, Booking Holdings Inc. (NASDAQ:BKNG) closed at $176.75 per share. One-month return of Booking Holdings Inc. (NASDAQ:BKNG) was 8.78%, and its shares lost 8.67% over the past 52 weeks. Booking Holdings Inc. (NASDAQ:BKNG) has a market capitalization of $137.54 billion.
FMI stated the following regarding Booking Holdings Inc. (NASDAQ:BKNG) in its Q1 2026 investor letter:
“Booking Holdings Inc. (NASDAQ:BKNG) – Booking is the largest online travel agency in the world. This is a network effect business model, where Booking acts as an aggregator of supply (independent hotels) on one side and demand (leisure travelers) on the other. This aggregation of fragmented supply and demand allows them to charge a healthy commission when a user books a room, which in turn allows them to outspend all other players on customer acquisition while still earning good returns. Booking is best-in-class at digital marketing, earning the highest returns on acquired traffic of all the online travel agencies. Booking has tremendous scale and an asset-light business model, generating very high returns on capital and free cash flow. Most of their revenue is generated from independent hotels that depend on Booking not just to deliver incremental guests, but also for cross-currency payments, merchandising, and customer service. Recently, shares have come under pressure over fears that AI will displace online travel agencies. We believe these concerns are overblown. AI is unlikely to recreate Booking’s global network of hotels given the extreme fragmentation of supply and Booking’s on-the-ground sales force. Booking’s payments and customer service capabilities are also difficult to replicate, further protecting the business against new entrants. In our view, new AI tools are more likely to integrate Booking’s existing inventory and capabilities into their models, rather than recreating these features themselves. If travel research shifts from traditional search to LLMs, Booking’s historical expertise in digital marketing makes them well-positioned to win this traffic. Furthermore, AI should boost Booking’s margins through efficiencies in customer service and marketing. At a mid-teens forward earnings multiple, we believe Booking shares are attractive on both a relative and absolute basis.”
Booking Holdings Inc. (NASDAQ:BKNG) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 109 hedge fund portfolios held Booking Holdings Inc. (NASDAQ:BKNG) at the end of the fourth quarter, up from 95 in the previous quarter. While we acknowledge the risk and potential of Booking Holdings Inc. (NASDAQ:BKNG) 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 Booking Holdings Inc. (NASDAQ:BKNG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Booking Holdings Inc. (NASDAQ:BKNG) and shared the list of best large cap stocks to invest in. 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.
