Rowan Street Capital, an investment management company, released its Q1 2026 investor letter. A copy of the letter can be downloaded here. The first quarter of 2026 left investors with plenty of concerns. Rising tensions in the Middle East have driven oil prices up, reigniting inflation concerns and delaying a shift to lower interest rates. […]
Soumya Eswaran
3 min read
Rowan Street Capital, an investment management company, released its Q1 2026 investor letter. A copy of the letter can be downloaded here. The first quarter of 2026 left investors with plenty of concerns. Rising tensions in the Middle East have driven oil prices up, reigniting inflation concerns and delaying a shift to lower interest rates. Markets are narrative-driven, suggesting that high borrowing costs hinder growth, while skepticism grows about the immediate returns of AI. Investors are increasingly favoring energy and cyclical sectors, as they seek stable cash flows. Additionally, there are fears that AI could disrupt software companies, potentially making current leaders obsolete. In this turbulent market landscape, Rowan Street declined 19.8%, compared to a 4.3% decline for the S&P 500. The firm is not happy with the results. Rowan Street invests in a focused group of businesses expected to compound value over the long term, even amid short-term stock price volatility due to higher interest rates and a shift in investor focus. The fundamentals of these businesses remain strong, despite recent declines in stock prices, reflecting changes in price multiples rather than deteriorating business performance. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Rowan Street Capital highlighted stocks like Tesla, Inc. (NASDAQ:TSLA). Tesla, Inc. (NASDAQ:TSLA) is an American company that manufactures electric vehicles and energy generation and storage systems. On April 17, 2026, Tesla, Inc. (NASDAQ:TSLA) closed at $400.62 per share. One-month return of Tesla, Inc. (NASDAQ:TSLA) was 5.19%, and its shares gained 76.10% over the past 52 weeks. Tesla, Inc. (NASDAQ:TSLA) has a market capitalization of $1.50 trillion.
Rowan Street Capital stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q1 2026 investor letter:
"Tesla, Inc. (NASDAQ:TSLA) provides an even more striking example—not just of volatility, but of how disproportionate long-term outcomes can be relative to the experience along the way.
Since its IPO in 2010, the stock has delivered a cumulative return of approximately 22,000%, or about 41% annually. Looking at that result today, the path can appear almost inevitable. In reality, it was anything but….” (Click here to read the full text)
Tesla, Inc. (NASDAQ:TSLA) ranks 15 on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 137 hedge fund portfolios held Tesla, Inc. (NASDAQ:TSLA) at the end of the fourth quarter, up from 120 in the previous quarter. While we acknowledge the potential of Tesla, Inc. (NASDAQ:TSLA) 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.