Overview
- Vulcan reported weak first‑quarter results for 2026, with the Large Cap Composite at -14.1% and both Focus composites at -19.1%.
- CoStar was sold after Vulcan called its capital allocation poor, pointing to heavy spending on Homes.com that management now expects will not turn a profit until 2030.
- The letter lays out three groups for AI disruption risk to steer research and sizing: Software, Alternative Asset Managers, and businesses affected indirectly.
- Microsoft was a material drag on results, yet Vulcan noted solid fundamentals with revenue up 15%, operating profit up 19%, and Azure up 38% in constant currency.
- Ares Management dropped 31.6% in the quarter on AI worries, though Vulcan said its software exposure is small and its loans are senior with low defaults, an estimated 37% loan‑to‑value, and an average term of about 3.5 years.