Hotchkis & Wiley, an investment management company, released its second-quarter 2026 investor letter for the "Hotchkis & Wiley Mid-Cap Value Fund." A copy of the letter can be downloaded here. Equity markets posted strong returns in the second quarter of 2026, with the Russell Midcap Index rising 13.8% and the Russell Midcap Value Index returning 13.4%, despite concerns about inflation, a hawkish Federal Reserve, and rising oil prices due to the Iran conflict. Narrow market leadership was evident, particularly semiconductor stocks and other stocks in the AI sector, which saw returns exceeding 100%. The Firm favors quality businesses with attractive valuations, believing that fears regarding AI's impact are overstated. The Hotchkis & Wiley Mid-Cap Value Fund lagged the Russell Midcap Value Index, achieving a 4.74% return in the second quarter, primarily due to underperformance in technology and energy sectors, while stock selection in healthcare contributed positively. In addition, please check the Fund's top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Hotchkis & Wiley Mid-Cap Value Fund highlighted APA Corporation (NASDAQ:APA). APA Corporation (NASDAQ:APA) is an energy company focused on the exploration and production of oil and natural gas in key global markets. On August 3, 2026, APA Corporation (NASDAQ:APA) closed at $36.87 per share, reflecting a market capitalization of $13.032 billion. APA Corporation (NASDAQ:APA) posted a one-month return of 8.44%, while its shares gained 98.33% over the past 52 weeks.
Hotchkis & Wiley Mid-Cap Value Fund stated the following regarding APA Corporation (NASDAQ:APA) in its Q2 2026 investor letter:
"APA Corporation (NASDAQ:APA) is an independent oil and gas E&P (exploration & production) company operating in the Permian and in Egypt. Quarterly results were in line with expectations and supportive of our investment thesis, but the stock fell as oil retreated due to optimism about a resolution to the conflict in Iran. APA offers strong free cash flow generation driven by favorable natural gas price differentials and underappreciated reinvestment opportunities in Suriname, Egypt, and potentially Alaska. Despite concerns over shorter Permian resource life, APA trades at attractive value metrics relative to its free cash flow yield and remains leveraged to a structurally undersupplied global energy market. The company has an investment grade balance sheet and trades at a valuation discount to its peers."

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