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 Trex Company, Inc. (NYSE:TREX). Trex Company, Inc. (NYSE:TREX) is a leading manufacturer of composite decking and railing products. On June 11, 2026, Trex Company, Inc. (NYSE:TREX) stock closed at $46.34 per share. One-month return of Trex Company, Inc. (NYSE:TREX) was 23.77%, and its shares lost 16.28% over the past 52 weeks. Trex Company, Inc. (NYSE:TREX) has a market capitalization of $4.81 billion.
The London Company Small-Mid Cap Strategy stated the following regarding Trex Company, Inc. (NYSE:TREX) in its Q1 2026 investor letter:
“Exited: Trex Company, Inc. (NYSE:TREX) – Sold after reassessing competitive positioning following James Hardie’s acquisition of AZEK. Increased competition may pressure market share and require higher marketing spend.”
Trex Company, Inc. (NYSE:TREX) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 36 hedge fund portfolios held Trex Company, Inc. (NYSE:TREX) at the end of the first quarter, compared to 48 in the previous quarter. While we acknowledge the risk and potential of Trex Company, Inc. (NYSE:TREX) 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 TREX COMPANY, INC. (NYSE:TREX) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Trex Company, Inc. (NYSE:TREX) and shared Alpha Wealth Insiders 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.
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.
