L1 Capital, an investment management firm, released its “L1 Capital International Fund” (unhedged) second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The letter discusses the current investment environment as a ‘two-speed’ but resilient global economy, accompanied by an uncertain future. The letter explores the potential of an AI bubble, distinguishing between strong fundamentals and speculative momentum. Additionally, the market displays a ‘narrow’ character, marked by high exuberance and pronounced over-pessimism. Against this backdrop, the Fund returned +2.6% (net of fees) during the June 2026 quarter, compared to the benchmark return of +12.5% (all in A$). The underperformance was driven more by which investments were not held in the Fund. The Fund remains focused on quality, valuation and the avoidance of permanent capital loss, and believes the portfolio is positioned to deliver attractive risk-adjusted returns for patient investors. In addition, you can check the Fund’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, L1 Capital International Fund highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s leading contract chip manufacturer, producing advanced semiconductors for major global technology companies. On July 17, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) closed at $398.37 per share. One-month return of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was -12.50%, and its shares gained 71.32% over the past 52 weeks. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has a market capitalization of $2.07 trillion.
L1 Capital International Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2026 investor update:
“At an individual stock level, while the Fund had more positive contributors than negative detractors to returns, quarterly performance was again mixed. TSMC contributed more than 2.0% to the Fund’s returns (measured in A$). Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and to a lesser extent Nvidia, benefitted from the market favouring AI capex winners. Our valuation of both businesses continues to increase. Nvidia and TSMC are currently top 5 holdings in the Fund.”
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 6th position on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 234 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the first quarter, up from 224 in the previous quarter. In Q1 2026, Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) revenue increased 6.4% (in U.S. dollar terms) sequentially to $35.9 billion, exceeding the guidance. While we acknowledge the risk and potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) 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 Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and shared Wedgewood Partners’ views on the company. In addition, please check out our hedge fund investor letters Q2 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.
