Middle Coast Investing, an investment advisor firm, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The letter explores the concept of ‘meme’ introduced by Richard Dawkins and its impact on modern stock market trends. It highlights how memes, such as Large Language Models (LLMs), artificial intelligence (AI), rising gas prices, private credit, and automated driving, play a crucial role in shaping trading decisions and driving quick ideological changes. However, Investment decisions should not be driven by current news cycles or fads, but rather focus on businesses that are resilient in tough times and capable of leveraging their advantages. These principles require discipline, especially in a volatile market environment. The US portfolio returned -3.9% in the quarter vs. -4.6% for the S&P 500, Core U.S. portfolios returned -4.3% vs the Russell 2000’s 0.6% return, S&P 600’s 3.1%, and Nasdaq’s -7.1% returns. Additionally, European Portfolios returned -2.9% during the same period. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Middle Coast Investing highlighted stocks like GitLab Inc. (NASDAQ:GTLB). GitLab Inc. (NASDAQ:GTLB) develops software for the software development lifecycle that covers DevSecOps lifecycle stages. On April 16, 2026, GitLab Inc. (NASDAQ:GTLB) stock closed at $21.83 per share. One-month return of GitLab Inc. (NASDAQ:GTLB) was -0.16%, and its shares lost 48.22% over the past 52 weeks. GitLab Inc. (NASDAQ:GTLB) has a market capitalization of $3.71 billion.
Middle Coast Investing stated the following regarding GitLab Inc. (NASDAQ:GTLB) in its Q1 2026 investor letter:
“If AI tools like Claude can write code for software developers, what use paying for expensive software? That’s been the market’s essential thesis, sending software stocks down by 25% as a sector (represented by the IGV ETF) and worse in some cases, like GitLab Inc. (NASDAQ:GTLB).
A friend pitched this to me, but the idea and us being early so far is my own responsibility. Gitlab has not been a good stock since its IPO during the bubbly 2021 market. It has specifically struggled as two forces combine: the fear that use of Claude and other AI bots will render Gitlab’s business – software that enables tech teams to coordinate their development processes – less necessary or reduce the number of developers using the product; and a slowdown in Gitlab’s growth for idiosyncratic reasons (the fading effect of a former price increase, management turnover, government shutdowns, etc.)…” (Click here to read the full text)
GitLab Inc. (NASDAQ:GTLB) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 59 hedge fund portfolios held GitLab Inc. (NASDAQ:GTLB) at the end of the fourth quarter, up from 51 in the previous quarter. While we acknowledge the risk and potential of GitLab Inc. (NASDAQ:GTLB) 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 GitLab Inc. (NASDAQ:GTLB) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered GitLab Inc. (NASDAQ:GTLB) and shared the list of best new AI 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.
