Laughing Water Capital, an investment management company, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Class A investment in Laughing Water Capital returned approximately -4.5% net of all fees and expenses in the first quarter of 2026. The SP500TR and R2000 returned -4.3% and 0.9% respectively, during the same period. Over the first ten years, since its inception, Laughing Water Capital returned approximately 410%, or 17.7% per year. Recent developments, such as AI breakthroughs and U.S. operations in Iran and Venezuela, demonstrate the enduring nature of global uncertainty. The firm believes volatility has generated possibilities that lead to portfolio modifications with recent additions reflecting shorter investment timelines, strong balance sheets, and near-term cash flows, with limited event path risk. In addition, please check the portfolio’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Laughing Water Capital highlighted Theravance Biopharma, Inc. (NASDAQ:TBPH) as a newly added position. Theravance Biopharma, Inc. (NASDAQ:x1On April 23, 2026, Theravance Biopharma, Inc. (NASDAQ:TBPH) closed at $16.31 per share. One-month return of Theravance Biopharma, Inc. (NASDAQ:TBPH) was 8.29%, and its shares gained 67.49% over the past 52 weeks. Theravance Biopharma, Inc. (NASDAQ:TBPH) has a market capitalization of $839.85 million.
Laughing Water Capital stated the following regarding Theravance Biopharma, Inc. (NASDAQ:TBPH) in its Q1 2026 investor letter:
“Theravance Biopharma, Inc. (NASDAQ:TBPH) – In American football, if the defense goes offsides but the play still starts, the offense has a tremendous advantage. If they execute a successful play, the play stands. If they are unsuccessful, they are not penalized for the attempt due to the offsides call. The offense is thus incentivized to go for the end zone.
Theravance is a special situation that fits this framework. A longer write up can be found at the end of this letter, but in brief, following a failed Phase III FDA trial the company is a pile of cash and similar attached to a royalty stream that should generate ~$65M per year for the Company, as well as $2.6B in tax assets. The company has announced that they have accelerated the work of a strategic review committee, essentially saying that the royalty stream is for sale. It is hard to know exactly what a buyer will pay, but the downside is well protected by cash and near cash, and anything from $17-$25 is well within reason. Under certain scenarios, a buyer may be willing to pay a few dollars more. We bought our shares below $14, and in my view, the downside protection and range of upside outcomes is such that we should go for the end zone in terms of position sizing. Theravance is thus a top 5 position for us. I expect this situation to resolve itself within the next 0-6 months.”
Theravance Biopharma, Inc. (NASDAQ:TBPH) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 29 hedge fund portfolios held Theravance Biopharma, Inc. (NASDAQ:TBPH) at the end of the fourth quarter, the same as in the previous quarter. While we acknowledge the risk and potential of Theravance Biopharma, Inc. (NASDAQ:TBPH) 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 Theravance Biopharma, Inc. (NASDAQ:TBPH) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Theravance Biopharma, Inc. (NASDAQ:TBPH) and shared the list of most undervalued biotech 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.
