Laughing Water Capital, an investment management company, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Class A investment in Laughing Water Capital returned approximately -4.5% net of all fees and expenses in the first quarter of 2026. The SP500TR and R2000 returned -4.3% and 0.9% respectively, during the same period. Over the first ten years, since its inception, Laughing Water Capital returned approximately 410%, or 17.7% per year. Recent developments, such as AI breakthroughs and U.S. operations in Iran and Venezuela, demonstrate the enduring nature of global uncertainty. The firm believes volatility has generated possibilities that lead to portfolio modifications with recent additions reflecting shorter investment timelines, strong balance sheets, and near-term cash flows, with limited event path risk. In addition, please check the portfolio’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Laughing Water Capital highlighted Stride, Inc. (NYSE:LRN) as a newly added position. Stride, Inc. (NYSE:LRN) is an education management company that provides online education. On April 23, 2026, Stride, Inc. (NYSE:LRN) closed at $98.36 per share. One-month return of Stride, Inc. (NYSE:LRN) was 14.88%, and its shares lost 30.24% over the past 52 weeks. Stride, Inc. (NYSE:LRN) has a market capitalization of $4.19 billion.
Laughing Water Capital stated the following regarding Stride, Inc. (NYSE:LRN) in its Q1 2026 investor letter:
“Stride, Inc. (NYSE:LRN) – Stride entered our portfolio as a mid-sized position. The company is the largest operator of virtual schools for grades K-12 in the U.S., serving more than 240,000 students across 30 states. Virtual schools are enjoying secular tail winds as advances in technology (Zoom, Google Meet etc.) and changes to the way online education is perceived following the Covid experience have led to what I believe is a sustainable increase in demand.
The company had been growing at mid to low teens percent for several years and traded at ~14x EBIT when they guided to 10-15% growth in enrollment for fiscal ’26. However, prior to the 2025-2026 school year the company attempted to upgrade the software that governs their enrollment process as well as their learning management software. The implementation did not go smoothly, and in late October of 2025 management announced they would be cutting guidance. In brief, the new software was disjointed to the point that parents could not successfully navigate the enrollment process, and if successful, students faced problems with logging in and finding the right classes and curriculum. This cost the company upwards of 10,000 enrollments and led to a more than 50% decline in share price, where we began to buy stock. In response to these events, management initiated a $500M buyback and moved quickly to fix the software problems….” (Click here to read the full text)
Stride, Inc. (NYSE:LRN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 43 hedge fund portfolios held Stride, Inc. (NYSE:LRN) at the end of the fourth quarter, up from 39 in the previous quarter. While we acknowledge the risk and potential of Stride, Inc. (NYSE:LRN) 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 Stride, Inc. (NYSE:LRN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Stride, Inc. (NYSE:LRN) and shared Renaissance Small Cap Growth Strategy’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.
