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 Credit Acceptance Corporation (NASDAQ:CACC). Credit Acceptance Corporation (NASDAQ:CACC) engages in the provision of financing programs and related products and services in the United States. On August 26, 2026, Credit Acceptance Corporation (NASDAQ:CACC) closed at $593.64 per share. Over the past month, Credit Acceptance Corporation (NASDAQ:CACC) returned 8.39%, while its shares have gained 18.09% in the last 52 weeks. Credit Acceptance Corporation (NASDAQ:CACC) has a market capitalization of $6.16 billion.
London Company SMID Cap Strategy stated the following regarding Credit Acceptance Corporation (NASDAQ:CACC) in its Q2 2026 investor letter:
"Credit Acceptance Corporation (NASDAQ:CACC) outperformed following signs of improving credit performance, while lower fuel prices eased concerns surrounding subprime borrowers. Credit trends continue to improve, and the company remains disciplined in repurchasing shares. We believe the investment thesis remains on track as fundamentals continue to strengthen."
Credit Acceptance Corporation (NASDAQ:CACC) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Credit Acceptance Corporation (NASDAQ:CACC) at the end of the second quarter which was 31 in the previous quarter. While we acknowledge the potential of Credit Acceptance Corporation (NASDAQ:CACC) 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.

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