Mar Vista Investment Partners, LLC, an investment management company, released its “Mar Vista U.S. Quality Strategy” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. U.S. equities entered 2026 with sustained momentum, despite market leadership evolving significantly over the first quarter. Initial support in equities was hampered by tariff uncertainty, doubts about AI-driven growth sustainability, and emerging private credit concerns, before geopolitical challenges. The quarter saw the lowest performance for U.S. equities in this volatile environment, influenced by rising oil prices due to the Middle East conflict, altering inflation and interest rate expectations. The Mar Vista U.S. Quality strategy returned -7.24% net-of-fees in the quarter vs the Russell 1000® Index’s -4.18% and the S&P 500® Index’s -4.33% returns. The firm believes the market is transitioning towards high-quality businesses with strong competitive advantages. Please review the Strategy’s top five holdings to gain insights into their key selections for 2026.
In its first-quarter 2026 investor letter, Mar Vista U.S. Quality Strategy highlighted stocks like SAP SE (NYSE:SAP). Headquartered in Walldorf, Germany, SAP SE (NYSE:SAP) is a leading enterprise application and business solutions provider. On April 13, 2026, SAP SE (NYSE:SAP) stock closed at $169.57 per share. One-month return of SAP SE (NYSE:SAP) was -10.81%, and its shares lost 35.27% over the past 52 weeks. SAP SE (NYSE:SAP) has a market capitalization of $199.4 billion.
Mar Vista U.S. Quality Strategy stated the following regarding SAP SE (NYSE:SAP) in its Q1 2026 investor letter:
“We also sold our remaining position in SAP SE (NYSE:SAP) during the quarter, as the range of outcomes expanded amid growing perceived risk of disruption to traditional software from AI. Solutions enabled by large language models, such as Anthropic’s Claude Code, are introducing new economic models that challenge the durability of software-as-a-service (SaaS) incumbents like SAP.
We believe that as enterprises continue to adopt generative AI solutions, including agentic computing, traditional SaaS revenue models will shift from a per-seat pricing structure to a consumption-based model. This transition is likely to introduce greater volatility in out-year revenue streams, potentially pressure gross margins, and shift the user interface from the application layer (controlled by SaaS providers) to the agentic layer, which may be supported by third-party vendors, including large language model providers. Given these dynamics, we exited our remaining stub position and redeployed the capital into opportunities with a more attractive risk-reward profile.”
SAP SE (NYSE:SAP) 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 SAP SE (NYSE:SAP) at the end of the fourth quarter, up from 34 in the previous quarter. While we acknowledge the risk and potential of SAP SE (NYSE:SAP) 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 SAP SE (NYSE:SAP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered SAP SE (NYSE:SAP) and shared the list of best growth stocks to buy for the next decade. 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.
