The London Company, an investment management company, released its second-quarter 2026 investor letter for its “Small-Mid Cap Strategy.” The letter can be downloaded here. U.S. equities rebounded sharply in Q2, with the Russell 3000 gaining 15.4%, supported by AI infrastructure spending, strong earnings, and easing Middle East tensions. Technology led the rally as semiconductors recovered, while Energy and defensive sectors lagged. The portfolio returned 12.1% gross and 11.8% net compared with a 20.3% gain in the Russell 2500 Index. Stock selection weighed on relative performance, as high-beta and high-volatility stocks dominated returns while Quality remained weak, although results improved in June as market participation broadened. Looking ahead, resilient earnings and AI productivity support a constructive outlook, but negative hyperscaler cash flow, sticky inflation, geopolitical risks, index concentration, and elevated valuations warrant caution. The strategy continues to emphasize quality, downside protection, and active management. Additionally, reviewing the Fund’s top five holdings could also highlight its best ideas for 2026.
In its second-quarter 2026 investor letter, London Company SMID Cap Strategy highlighted Qualys, Inc. (NASDAQ:QLYS) as a leading contributor. Qualys, Inc. (NASDAQ:QLYS) provides a cloud-based platform delivering information technology (IT), security, and compliance solutions. On August 26, 2026, Qualys, Inc. (NASDAQ:QLYS) closed at $176.67 per share. Over the past month, Qualys, Inc. (NASDAQ:QLYS) returned 32.51%, while its shares have gained 38.76% in the last 52 weeks. Qualys, Inc. (NASDAQ:QLYS) has a market capitalization of $6.11 billion.
London Company SMID Cap Strategy stated the following regarding Qualys, Inc. (NASDAQ:QLYS) in its Q2 2026 investor letter:
“Qualys, Inc. (NASDAQ:QLYS) was a top contributor as investor sentiment improved across the cybersecurity sector. While concerns around AI disruption weighed on the group earlier this year, AI is increasingly viewed as strengthening demand for cybersecurity solutions. We continue to view QLYS as a high-quality business with a durable competitive position, supported by its expanding platform and strong product strategy.”
Qualys, Inc. (NASDAQ:QLYS) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Qualys, Inc. (NASDAQ:QLYS) at the end of the second quarter which was 33 in the previous quarter. While we acknowledge the potential of Qualys, Inc. (NASDAQ:QLYS) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.