Miller Value Partners, an investment management company, released its “Deep Value Strategy” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Strategy started the year on a strong note, returning +8.39% (net of fees) compared to the S&P 1500 Value Index’s +0.19% and the S&P 600 Value Index’s +4.32% returns. The strategy gained from ongoing rotation to small-cap value stocks and investments made in the energy sector. The year began with broadening market trends favoring lower-valued, smaller-capitalization equities, though this Value outperformance cycle remains overlooked by investors focused on AI and tech firms. The February onset of war in Iran led to increased energy prices, rising bond yields, and market volatility. The firm believes attractive investment opportunities persist in lower-valued securities and smaller market caps, highlighting companies with robust earnings and cash-flow yields. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Miller Value Deep Value Strategy highlighted stocks like Conduent Incorporated (NASDAQ:CNDT). Conduent Incorporated (NASDAQ:CNDT) is a US-based digital business solutions and services company serving the commercial, government, and transportation spectrum. On April 16, 2026, Conduent Incorporated (NASDAQ:CNDT) closed at $1.59 per share. One-month return of Conduent Incorporated (NASDAQ:CNDT) was 32.50%, and its shares lost 22.44% over the past 52 weeks. Conduent Incorporated (NASDAQ:CNDT) has a market capitalization of $246.60 million.
Miller Value Deep Value Strategy stated the following regarding Conduent Incorporated (NASDAQ:CNDT) in its Q1 2026 investor letter:
“Our two largest detractors during the quarter were JELD-WEN (JELD) and Conduent Incorporated (NASDAQ:CNDT), which were down 49% and 33% during the quarter, respectively. Both companies’ share prices are at deep discounts to what we believe is their long-term fundamental value; we have recently increased our positions in both holdings.
Conduent delivers digital business solutions and services to 50% of Fortune 100 clients and 46 of 50 states. The company is in the midst of a multi-year transformation. During Q1, the company announced a new CEO, Harsha Agadi, with historical transformation success. Harsha plans on accelerating cost reductions, enhancing core client economics and new business pipeline conversion. He is looking for structural changes to enhance company free cash flow generation, using non-core asset sales and better cash generation to further accelerate future debt reduction. We also believe his incentives are aligned with the transformation plan with 1M shares that fully vest in three years subject to a share price in excess of $5/share. Success on the transformation supports Conduent revenues >$3B and double-digit EBITDA margins over time. Conduent has a sizable government business which could experience near-term disruption from additional government closings. In addition, with the recent management change there are some near term risks that transformation plan changes will take some time to scale which could cause some short term headwinds for profitability. However, we believe that current share price discounts this market fear. Conduent shares look significantly mispriced, less than 2x normalized EV/EBITDA, versus publicly traded peers at 8 to 10x.”
Conduent Incorporated (NASDAQ:CNDT) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 21 hedge fund portfolios held Conduent Incorporated (NASDAQ:CNDT) at the end of the fourth quarter, compared to 23 in the previous quarter. While we acknowledge the risk and potential of Conduent Incorporated (NASDAQ:CNDT) 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 Conduent Incorporated (NASDAQ:CNDT) 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.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
