Rowan Street Capital, an investment management company, released its Q1 2026 investor letter. A copy of the letter can be downloaded here. The first quarter of 2026 left investors with plenty of concerns. Rising tensions in the Middle East have driven oil prices up, reigniting inflation concerns and delaying a shift to lower interest rates. Markets are narrative-driven, suggesting that high borrowing costs hinder growth, while skepticism grows about the immediate returns of AI. Investors are increasingly favoring energy and cyclical sectors, as they seek stable cash flows. Additionally, there are fears that AI could disrupt software companies, potentially making current leaders obsolete. In this turbulent market landscape, Rowan Street declined 19.8%, compared to a 4.3% decline for the S&P 500. The firm is not happy with the results. Rowan Street invests in a focused group of businesses expected to compound value over the long term, even amid short-term stock price volatility due to higher interest rates and a shift in investor focus. The fundamentals of these businesses remain strong, despite recent declines in stock prices, reflecting changes in price multiples rather than deteriorating business performance. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Rowan Street Capital highlighted stocks like Shopify Inc. (NASDAQ:SHOP). Shopify Inc. (NASDAQ:SHOP) is a Canada-based e-commerce technology company that provides a cloud-based platform for individuals and companies to create and manage their operations. The one-month return for Shopify Inc. (NASDAQ:SHOP) was 8.30%, and its shares gained 60.64% over the last 52 weeks. On April 17, 2026, Shopify Inc. (NASDAQ:SHOP) stock closed at $131.15 per share, with a market capitalization of $170.62 billion.
Rowan Street Capital stated the following regarding Shopify Inc. (NASDAQ:SHOP) in its Q1 2026 investor letter:
“Shopify Inc. (NASDAQ:SHOP) has been an exceptional business over time, compounding at over 40% annually since its IPO. We experienced this firsthand. After initiating our position in early 2022, the stock declined by an additional ~50%. We believed the drawdown reflected multiple compressions, not fundamental deterioration. The business continued to grow revenues, expand its merchant ecosystem, and strengthen its competitive position. The price was broken. The company was not.
It did not feel good. The best opportunities rarely do. What followed was a long and uncomfortable period of patience before payoff. The stock rebounded 124% in 2023 — and yet we were still underwater on our investment. It was not until 2024 — when Shopify generated over $1 billion in operating profit for the first time and the stock gained another 37% — that we finally got our capital back and began generating real returns. The stock then rose 51% in 2025, making it our best performer of the year…” (Click here to read the full text)
Shopify Inc. (NASDAQ:SHOP) is not on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 101 hedge fund portfolios held Shopify Inc. (NASDAQ:SHOP) at the end of the fourth quarter, up from 91 in the previous quarter. Shopify Inc. (NASDAQ:SHOP) reported its fourth quarter 2025 results, marking its first-ever quarter with revenue exceeding $3 billion. While we acknowledge the risk and potential of Shopify Inc. (NASDAQ:SHOP) 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 Shopify Inc. (NASDAQ:SHOP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Shopify Inc. (NASDAQ:SHOP) and shared the list of high growth Canadian 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.
