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 Murphy USA Inc. (NYSE:MUSA). Murphy USA Inc. (NYSE:MUSA) is an American retailer motor fuel products and convenience merchandise. On June 10, 2026, Murphy USA Inc. (NYSE:MUSA) closed at $612.16 per share. One-month return of Murphy USA Inc. (NYSE:MUSA) was 6.24%, and its shares gained 47.50% over the past 52 weeks. Murphy USA Inc. (NYSE:MUSA) has a market capitalization of $11.31 billion.
The London Company Small-Mid Cap Strategy stated the following regarding Murphy USA Inc. (NYSE:MUSA) in its Q1 2026 investor letter:
“Murphy USA Inc. (NYSE:MUSA) – MUSA outperformed in Q1 alongside the spike in fuel prices. Higher prices support top line growth and cash flow. The company should also gain market share through its everyday low-price strategy in this environment. We expect excess cash flow generated during this period to be returned to shareholders. The company’s low-cost rural/suburban positioning and consistent capital return program continue to create shareholder value.”
Murphy USA Inc. (NYSE:MUSA) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 41 hedge fund portfolios held Murphy USA Inc. (NYSE:MUSA) at the end of the first quarter, up from 39 in the previous quarter. While we acknowledge the risk and potential of Murphy USA Inc. (NYSE:MUSA) 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 Murphy USA Inc. (NYSE:MUSA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Murphy USA Inc. (NYSE:MUSA) and shared Heartland Mid Cap Value 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.
