The London Company released its Q1 2026 investor letter for “The London Company Small-Mid Cap Strategy”. In early 2026, US equities declined, with the Russell 3000 falling 4% and the S&P posting losses. A copy of the letter is available to download here. The year started positively with a broad rally, but sentiment reversed in March due to the Iran conflict. Crude oil prices rose, raising inflation concerns and shifting the Fed’s outlook from rate cuts to hikes. Large-cap growth suffered double-digit losses amid weakness in Big Tech and AI concerns in software, while small caps proved resilient. Sector dispersion was extreme; Energy surged over 35%, while Tech fell over 9%. Value, Momentum, and Yield drove returns from a factor perspective. In this environment, the London Company Small-Mid Cap portfolio declined 3.4% (-3.6% net) in the quarter vs. a 2.0% increase in the Russell 2500 Index. The relative underperformance was driven by both sector exposure and stock selection. Structural underweight to Energy and commodity-linked industries was a significant detractor. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, The London Company Small-Mid Cap Strategy highlighted stocks like Churchill Downs Incorporated (NASDAQ:CHDN). Churchill Downs Incorporated (NASDAQ:CHDN) is a US-based racing, online wagering, and gaming company. On June 10, 2026, Churchill Downs Incorporated (NASDAQ:CHDN) stock closed at $88.66 per share. One-month return of Churchill Downs Incorporated (NASDAQ:CHDN) was 2.01%, and its shares lost 11.95% over the past 52 weeks. Churchill Downs Incorporated (NASDAQ:CHDN) has a market capitalization of $6.18 billion.
The London Company Small-Mid Cap Strategy stated the following regarding Churchill Downs Incorporated (NASDAQ:CHDN) in its Q1 2026 investor letter:
Churchill Downs Incorporated (NASDAQ:CHDN) – CHDN fell as regional gaming revenue softened and legislation concerns about i-gaming continued. We believe these concerns are overdone and note that CHDN has responded rationally, buying back shares on weakness. CHDN has strong tailwinds ahead of the upcoming Derby, and the company has the optionality to create value through the potential sale of its regional casino portfolio.”
Churchill Downs Incorporated (NASDAQ:CHDN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 52 hedge fund portfolios held Churchill Downs Incorporated (NASDAQ:CHDN) at the end of the first quarter, up from 50 in the previous quarter. While we acknowledge the risk and potential of Churchill Downs Incorporated (NASDAQ:CHDN) 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 CHURCHILL DOWNS INCORPORATED (NASDAQ:CHDN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Churchill Downs Incorporated (NASDAQ:CHDN) and shared Meridian Growth Fund’s views on the company. 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.
