Overview
- Several value and active managers published Q2 2026 letters in mid-July reporting that benchmarks were driven by a small group of AI beneficiaries while their diversified, free‑cash‑flow approaches lagged those gains.
- Longleaf Partners reported its Partners Fund returned 3.87% in Q2 versus a 15.20% gain for the S&P 500, and several funds said underweight positions in high‑flying AI names were a main reason for underperformance.
- Managers pointed to concrete company catalysts that could unlock value, including Fortune Brands’ strategic review of its Fiberon unit and the recruitment of Jesse Singh to lead the company.
- Funds highlighted other recent corporate developments they see as proof points: Alphabet’s accelerating Search monetization and 63% Google Cloud growth tied to AI compute demand, Tripadvisor’s sale of TheFork to American Express that will boost cash on the balance sheet, and Littelfuse’s surge from rising data‑center and grid infrastructure sales.
- Portfolio moves emphasize patience and selectivity; managers are defending value‑first discipline while selectively increasing stakes where visible operational changes, asset sales or stronger AI‑related end markets create clearer paths to higher free cash flow and multiple expansion.