Investment management company Vulcan Value Partners recently released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The firm focuses on improving long-term returns and lowering risk, rather than short-term results. In the quarter, the Large Cap Composite (Net) returned -14.1%, the Small Cap Composite (Net) returned -6.8%, the Focus Composite (Net) returned -19.1%, the Focus Plus Composite (Net) returned -19.1% as well as the All-Cap Composite (Net) returned -13.5%. Throughout 2025 and escalating to the first quarter of 2026, the market is experiencing heightened volatility related to AI’s potential, leading to mispricing of some strong companies. The current market turbulence presents opportunities for long-term investors willing to accept short-term volatility in stable-valued companies and improve the margin of safety. The letter identified businesses into three groups with perceived /real AI disruption risk: Software, Alternative Asset Managers, and indirectly impacted businesses. The firm highlights that its investment strategy aims to leverage this volatility to reduce risk and increase returns in the long term. In addition, please check the Firm’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Vulcan Value Partners highlighted stocks like Diageo plc (NYSE:DEO). Headquartered in London, the United Kingdom, Diageo plc (NYSE:DEO) is a leading alcoholic beverage company. On April 22, 2026, Diageo plc (NYSE:DEO) stock closed at $79.95 per share. One-month return of Diageo plc (NYSE:DEO) was 8.42%, and its shares lost 28.38% over the past 52 weeks. Diageo plc (NYSE:DEO) has a market capitalization of $44.44 billion.
Vulcan Value Partners stated the following regarding Diageo plc (NYSE:DEO) in its Q1 2026 investor letter:
“We sold Diageo plc (NYSE:DEO) in the first quarter to take advantage of opportunities to improve the portfolio’s overall price to value ratio. Diageo still qualifies, but it was a disappointing investment for us while we held it. We are optimistic about Diageo’s long term prospects and we would have continued to hold it had we not had so many other compelling opportunities with substantially lower price to value ratios come our way during the quarter.”
Diageo plc (NYSE:DEO) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 30 hedge fund portfolios held Diageo plc (NYSE:DEO) at the end of the fourth quarter, compared to 34 in the previous quarter. While we acknowledge the risk and potential of Diageo plc (NYSE:DEO) 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 Diageo plc (NYSE:DEO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Diageo plc (NYSE:DEO) and shared the list of topconsumer defensive stocks to buy. 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.
