The London Company, an investment management company, released its second-quarter 2026 investor letter for its "The London Company Income Equity Strategy". A copy of the letter can be downloaded here. U.S. equities rebounded in Q2, with the Russell 3000 rising 15.4% and the S&P 500 achieving its best quarter since 2020, driven by AI infrastructure spending and strong earnings.
The momentum intensified in late June following a U.S.-Iran peace deal that lowered oil prices. Technology, initially weak, emerged as a market leader thanks to a semiconductor rebound, while energy and defensive sectors lagged. Despite positive indicators around AI and economic resilience, headwinds such as negative cash flow in major tech firms, geopolitical uncertainties, and high valuations raise concerns about future market performance.
The portfolio returned 12.3% (12.1% net) during the quarter compared to a 13.9% increase in the Russell 1000 Value Index. Stock selectin was a drag on relative performance, partially offset by positive sector positioning. Looking ahead, given elevated valuations and low dividend yields, modest equity returns are anticipated.
A focus on quality and active management is suggested as a prudent investment strategy. Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026. In its Q2 2026 investor letter, The London Company Income Equity Strategy highlighted stocks like Republic Services, Inc. (NYSE:RSG) as a new holding.
Republic Services, Inc. (NYSE:RSG) is a leading environmental services company in the United States and Canada. On August 17, 2026, Republic Services, Inc. (NYSE:RSG) closed at $215.26 per share, reflecting a market capitalization of $65.92 billion. Republic Services, Inc. (NYSE:RSG) posted a one‑month return of 0.29%, while its shares lost 8.32% over the past 52 weeks.
The London Company Income Equity Strategy stated the following regarding Republic Services, Inc. (NYSE:RSG) in its Q2 2026 investor letter: "Initiated: Republic Services, Inc. (NYSE:RSG) – RSG is the second-largest U.S. waste services provider, with roughly 90% non-discretionary revenues and ownership of approximately one-third of all domestic hazardous landfills — assets that are functionally irreplaceable. The business benefits from CPI-linked contracts, fuel surcharges, and predictable capital cycles that together create durable pricing power and margin stability across economic conditions. The waste management industry has lagged the broader market this year due to cyclical volume weakness in construction, demolition, and the industrial sector.
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