Rowan Street Capital’s Q2 2026 Investor Letter

Rowan Street Capital, an investment management company, recently released its Q2 2026 investor letter. The letter highlights the company’s approach to investing, emphasizing patience, conviction, and long-term business performance over short-term market enthusiasm. The fund’s performance remained stable in the second quarter, with the portfolio declining about $1 from the first quarter, resulting in a net return of -21% for the second half of 2026. Despite the stock prices of several holdings facing pressure in 2026, the underlying businesses have performed effectively, marking a trend where stock prices may not align with business performance.

This divergence is typical in long-term investing, as business performance ultimately drives investment returns. In the Q2 2026 investor letter, Rowan Street Capital highlights Meta Platforms, Inc. (NASDAQ:META) as a notable example of this trend. Meta Platforms, Inc. (NASDAQ:META) is a multinational technology company that develops products to connect people.

META’s Exceptional First Half of 2026

According to Rowan Street Capital, Meta Platforms, Inc. (NASDAQ:META) delivered another exceptional first half of 2026. The company’s revenue grew 33% year over year to $56.3 billion in the first quarter, followed by another 28% increase to $60.8 billion in the second quarter. First-half revenue reached approximately $117 billion, while trailing twelve-month revenue surpassed $228 billion, up 26% year over year. Meta’s Family of Apps now serves approximately 3.6 billion people each day.

One of the most encouraging developments is the company’s AI investments, which are already producing measurable results across engagement and advertising. Instagram time spent grew at a double-digit rate, while Facebook video time increased 9%, driven largely by improvements in AI-powered recommendations. At the same time, ad impressions increased 14%, and the average price per ad rose 12%, helping Family of Apps advertising revenue grow 27% during the second quarter.

Meta Platforms, Inc. (NASDAQ:META) in the Spotlight

Rowan Street Capital emphasizes the importance of understanding the underlying business performance of a company, rather than just focusing on short-term stock price movements. The company’s exceptional first-half performance is a testament to its strong fundamentals. Despite the challenges faced by the company’s stock price, the underlying business has continued to grow and thrive.

Meta Platforms, Inc. (NASDAQ:META) holds the 5th position on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 262 hedge fund portfolios held Meta Platforms, Inc. (NASDAQ:META) at the end of the first quarter, compared to 256 in the previous quarter. Meta Platforms, Inc. (NASDAQ:META) reported total Q1 2026 revenue of $56.3 billion, up 33% or 29% on a constant currency basis.

While we acknowledge the potential of Meta Platforms, Inc. (NASDAQ:META) 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.

Rowan Street Capital’s Q2 2026 investor letter highlights the importance of understanding the underlying business performance of a company, rather than just focusing on short-term stock price movements. By emphasizing patience, conviction, and long-term business performance, investors can make more informed decisions and avoid getting caught up in short-term market enthusiasm.