Crossroads Capital LLC, an investment management firm, published its first-quarter 2026 investor letter. You can download a copy here. The Fund increased by 4.2% net of fees and expenses during the quarter. Since its founding, the fund has compounded at a gross rate of 21.3% and a net rate of 17.1%. By the end of March 20206, the fund’s overall non-delta adjusted gross and net exposures were 114.1% and 73.3%, respectively. The letter noted that the stable market trends from 20205 were broken by geopolitical tensions linked to Trump’s increasingly unpredictable foreign policy, causing the S&P 500 to fall about 4.3%. Nonetheless, Q1’s fundamentals aligned with broader trends. Overall, the firm is pleased with its portfolio, maintaining its position as special situations begin to accelerate. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Crossroads Capital highlighted Merlin, Inc. (NASDAQ:MRLN). Merlin, Inc. (NASDAQ:MRLN) is an aerospace and defense company known for its AI-powered autonomous flight software and systems for aircraft. On May 22, 2026, Merlin, Inc. (NASDAQ:MRLN) closed at $7.09 per share. One-month return of Merlin, Inc. (NASDAQ:MRLN) was -37.81%, and its shares lost 30.29% over the past 52 weeks. Merlin, Inc. (NASDAQ:MRLN) has a market capitalization of $684.36 million.
Crossroads Capital stated the following regarding Merlin, Inc. (NASDAQ:MRLN) in its Q1 2026 investor letter:
“Our largest contributor was Merlin, Inc. (NASDAQ:MRLN) , contributing to 40% of our Q1 net gains,2 as it started trading as a public company in mid-March and we both closed out the short position on the common as our rights converted and took advantage of the early-days volatility. We detailed our thesis extensively in a published research report,3 but the early price action is consistent with what we expected: a “tiny public float, locked-up insiders,” and a market that hasn’t done the work yet on a name that entered through the SPAC channel—the one channel institutional investors have been trained to ignore. We suspect the repricing has barely started, so the company is firmly in both our special situations bucket and our emerging compounder bucket if milestones are met.”
Merlin, Inc. (NASDAQ:MRLN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. While we acknowledge the risk and potential of Merlin, Inc. (NASDAQ:MRLN) 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 Merlin, Inc. (NASDAQ:MRLN) 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.
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Disclosure: None. This article is originally published at Insider Monkey.
