Diamond Hill Capital, the flagship company of First Eagle Investment Management, has released its Q1 2026 investor prospectus for its “Large Cap Strategy”. A copy of the book is available for download here. The strategy was down 2.39% (fee value), trailing the Russell 1000 Value Index’s 2.10%. Performance had a positive effect on industrial stock selection and consumer preference, as well as an underweight of social services. While stock selection in information technology, finance, and healthcare has been a major drag on relative performance. Iran war creates uncertainty in markets. However, it has successfully supported the portfolio’s focus on oil-sensitive exploration and production companies. Tech companies are under pressure in Q1 amid concerns about the potential negative effects of AI on their businesses, but their competitive advantages remain stronger than their current valuations suggest. Despite these challenges, the market is starting to expand into attractive opportunities, especially in defense sectors and cyclicals that do not benefit from AI. In addition, please check the top five funds of the Fund to know their best choices in 2026.
In its investor letter for the first quarter of 2026, Diamond Hill Capital Large Cap Strategy highlighted stocks like Adobe Inc. (NASDAQ: ADBE). Adobe Inc. (NASDAQ:ADBE) is an international technology company that provides creative, digital media, and document management products. On May 22, 2026, Adobe Inc. (NASDAQ:ADBE) closed at $244.76 per share. One month return for Adobe Inc. (NASDAQ:ADBE) was 2.28%, and its shares lost 39.96% in the last 52 weeks. Adobe Inc. (NASDAQ:ADBE) has a market capitalization of $98.93 billion.
Diamond Hill Capital Large Cap Strategy says the following about Adobe Inc. (NASDAQ:ADBE) in its Q1 2026 investor letter:
“A design and digital marketing software company Adobe Inc. (NASDAQ:ADBE) underperformed in Q1, driven mainly by AI disruption concerns, slightly lower-than-expected revenue growth and a CEO change. Despite these headwinds, its fundamentals remain strong, with strong margins, revenue generation and customer retention. We continue to look at Adobe’s platform and position in the AI-enabled AI ecosystem, although the realization may take time. Additionally, we believe that the current price appears to be highly pessimistic.”
Adobe Inc. (NASDAQ:ADBE) is not on our list of the 40 Most Popular Stocks Among Hedge Funds Entering 2026. According to our data, 91 hedge fund portfolios were holding Adobe Inc. (NASDAQ:ADBE) at the end of the fourth quarter, up from 88 in the previous quarter. Although we acknowledge the power of Adobe Inc. (NASDAQ:ADBE) as an investment, we believe certain AI stocks offer great potential and carry little downside risk. If you’re looking for an extremely overlooked AI stock that will benefit greatly from the Trump-era costs and sea trend, check out our free report best short term AI stock.
