Ariel Investments, an investment management company, released its “Appreciation Fund” Q2 2026 investor letter. A copy of the letter can be downloaded here. The fund gained 13.71% in the second quarter of 2026, slightly outperforming the Russell Midcap Value Index’s 13.40% return but trailing the Russell Midcap Index’s 13.83% gain. Strong contributions from several holdings, particularly in technology, power infrastructure, and entertainment, supported performance, while weakness in oil services and consumer healthcare stocks weighed on results. U.S. equities rallied sharply during the quarter as easing geopolitical tensions, lower oil prices, and resilient corporate earnings boosted investor confidence, with technology, semiconductors, and AI-related businesses leading the advance. Looking ahead, Appreciation Fund expects modest and uneven global growth, continued geopolitical risks, and pressure from inflation and borrowing costs, while maintaining a long-term focus on durable businesses, strong balance sheets, and sustainable competitive advantages. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its second-quarter 2026 investor letter, Appreciation Fund highlighted stocks like Houlihan Lokey, Inc. (NYSE:HLI). Houlihan Lokey, Inc. (NYSE:HLI) is a global investment bank providing financial advisory services in mergers and acquisitions, restructuring, and other corporate transactions. The one-month return of Houlihan Lokey, Inc. (NYSE:HLI) was -9.80% while its shares traded between $112.83 and $211.78 over the last 52 weeks. On August 3, 2026, Houlihan Lokey, Inc. (NYSE:HLI) stock closed at approximately $125.49 per share, with a market capitalization of about $8.77 billion.
Appreciation Fund stated the following regarding Houlihan Lokey, Inc. (NYSE:HLI) in its Q2 2026 investor letter:
“We purchased Houlihan Lokey Inc. (NYSE:HLI), a global financial advisory firm with a leading position in middle-market M&A and restructuring. While the firm operates in a competitive advisory landscape, its franchise is differentiated by its strong client relationships and diversified business model. We view the recent geopolitical uncertainty and broader market volatility that has pressured its shares as transient. Supported by its established reputation, countercyclical restructuring capabilities and consistent execution, we believe HLI is well positioned to deliver durable growth and sustain its leadership within the advisory space over the long term.”
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Houlihan Lokey, Inc. (NYSE:HLI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 38 hedge fund portfolios held Houlihan Lokey, Inc. (NYSE:HLI) at the end of the first quarter, which was 36 in the previous quarter. While we acknowledge the risk and potential of Houlihan Lokey, Inc. (NYSE:HLI) 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 Houlihan Lokey, Inc. (NYSE:HLI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Houlihan Lokey, Inc. (NYSE:HLI) and shared the list of the best stocks for a $1 million portfolio. 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.
