Investment management company Vulcan Value Partners recently released its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. Vulcan Value Partners prioritizes long-term returns and lower risk over short-term performance. In the quarter, the Large Cap Composite (Net) returned 9.5%, the Small Cap Composite (Net) returned 13.3%, the Focus Composite (Net) returned 10.4%, the Focus Plus Composite (Net) returned 10.5%, and the All-Cap Composite (Net) returned 9.0%. The firm reported strong compounding across its strategies in Q2 2026. Management highlighted that their exceptional holdings remain deeply undervalued relative to “what is working” in the market, viewing this as an excellent opportunity for patient investors. In addition, please check the Firm’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Vulcan Value Partners highlighted TPG Inc. (NASDAQ:TPG), a recent addition to the firm’s small‑cap strategy. TPG Inc. (NASDAQ:TPG) is a US-based alternative asset management company. On July 29, 2026, TPG Inc. (NASDAQ:TPG) closed at $42.16 per share. One-month return of TPG Inc. (NASDAQ:TPG) was -0.20%, and its shares lost 24.45% over the past 52 weeks. TPG Inc. (NASDAQ:TPG) has a market capitalization of $16.20 billion.
Vulcan Value Partners stated the following regarding TPG Inc. (NASDAQ:TPG) in its Q2 2026 investor update:
“We purchased two positions during the quarter: Badger Meter Inc. and TPG Inc. (NASDAQ:TPG). TPG is an alternative asset manager with a great reputation and track record. We have been following this business since their IPO in 2022. We bought TPG in our large cap strategy in the first quarter of last year during a market overreaction caused by the tariff tantrums. Their strong returns combined with their ability to consistently return capital to LPs have set them up well to continue to outperform the industry. TPG’s fee earning AUM and FRE grew 23% and 36% respectively in Q126. That is coming off a year in which TPG grew fee earning AUM and fee related earnings 21% and 25% respectively. Despite these strong results, the stock has declined approximately 35% year to date due to AI disruption fears around its software investments. We view its stock price decline as another market overreaction.
TPG’s software exposure is approximately $34 billion and represents approximately 11% of its total assets under management. TPG has been investing in software for years and has a very strong track record. Their flagship buyout fund, TPG VII, which was started in 2015, invested in several software companies. They sold all of their holdings in that fund by the end of 2021 at very good valuations. Subsequent funds have had the benefit of learnings from those successful exits. The investment period for their newer funds has had the unique benefit of occurring during the period that AI was becoming more visible. We believe that TPG will have some losers, but in the aggregate, the growth in value creation from the winners is going to more than offset the laggards. Like us, TPG is focused on identifying businesses with sustainable competitive advantages. We believe that they have allocated capital intelligently across their portfolios, including software. Some of the competitive advantages they look for include proprietary data over public data, transaction processing where precision is mission critical, and vertical market software. Factory automation is an example of vertical software. We expect another strong year of growth in 2026 and are thrilled with the opportunity to buy this outstanding, well-managed business with such an incredible margin of safety.”
TPG Inc. (NASDAQ:TPG) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 48 hedge fund portfolios held TPG Inc. (NASDAQ:TPG) at the end of the first quarter, up from 29 in the previous quarter. While we acknowledge the risk and potential of TPG Inc. (NASDAQ:TPG) 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 TPG Inc. (NASDAQ:TPG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered TPG Inc. (NASDAQ:TPG) and shared TimesSquare Capital U.S. Mid Cap Growth Strategy’s 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.
