Investment management company Vulcan Value Partners recently released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The firm focuses on improving long-term returns and lowering risk, rather than short-term results. In the quarter, the Large Cap Composite (Net) returned -14.1%, the Small Cap Composite (Net) returned -6.8%, the Focus Composite (Net) returned -19.1%, the Focus Plus Composite (Net) returned -19.1% as well as the All-Cap Composite (Net) returned -13.5%. Throughout 2025 and escalating to the first quarter of 2026, the market is experiencing heightened volatility related to AI’s potential, leading to mispricing of some strong companies. The current market turbulence presents opportunities for long-term investors willing to accept short-term volatility in stable-valued companies and improve the margin of safety. The letter identified businesses into three groups with perceived /real AI disruption risk: Software, Alternative Asset Managers, and indirectly impacted businesses. The firm highlights that its investment strategy aims to leverage this volatility to reduce risk and increase returns in the long term. In addition, please check the Firm’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Vulcan Value Partners highlighted stocks such as StandardAero, Inc. (NYSE:SARO). Vulcan Value Partners added StandardAero, Inc. (NYSE:SARO) to its Small Cap Strategy during the quarter. StandardAero, Inc. (NYSE:SARO) is an aerospace engine aftermarket services provider for fixed and rotary wing aircraft. On April 22, 2026, StandardAero, Inc. (NYSE:SARO) closed at $24.36 per share. One-month return of StandardAero, Inc. (NYSE:SARO) was -7.34%, and its shares lost 7.24% over the past 52 weeks. StandardAero, Inc. (NYSE:SARO) has a market capitalization of $8.10 billion.
Vulcan Value Partners stated the following regarding StandardAero, Inc. (NYSE:SARO) in its Q1 2026 investor letter:
“StandardAero, Inc. (NYSE:SARO) provides maintenance, repair, and overhaul (MRO) services for aircraft engines. 60% of revenue is generated from commercial markets, 20% from business aviation, and 20% from the military. 80% of profit is generated from core MRO activities and 20% from Component Repair Services which provide engine piece part and accessory repair. StandardAero generates 77% of its revenue from long-term agreements and serves approximately 5,000 customers, including airlines, fleet operators, engine OEMs, and the U.S. military. 80% of revenue is generated from platforms where StandardAero has the #1 or #2 market position. The company maintains a network of 55 test cells, the largest among independent MROs, which serves as a significant barrier to entry. Its relationships with OEMs span 20-60 years. Engine MRO is highly regulated and non-discretionary. Engine maintenance is highly regulated at prescribed intervals or following specific operational events.
StandardAero’s revenues are primarily driven by Global Commercial Air Traffic which has grown at a resilient 5.6% annually for the past 40 years. In addition, the company enjoys strong pricing power. We are thrilled to own this outstanding business with a substantial margin of safety.”
StandardAero, Inc. (NYSE:SARO) 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 StandardAero, Inc. (NYSE:SARO) at the end of the fourth quarter, compared to 44 in the previous quarter. While we acknowledge the risk and potential of StandardAero, Inc. (NYSE:SARO) 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 StandardAero, Inc. (NYSE:SARO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered StandardAero, Inc. (NYSE:SARO) and shared Middle Coast Investing’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.
