Greenlight Capital, an investment management firm specializing in value-oriented strategies, recently released its second-quarter 2026 investor letter. The letter reported a 4.3% decline for the Partnerships and a 1.9% year-to-date gain, net of fees and expenses. This performance was compared with gains of 15.2% and 10.2% for the S&P 500 Index. The firm entered the quarter conservatively but costly trading decisions and macro positions, particularly in gold and U.S. interest rates, weighed on results. Long positions contributed roughly 9%, offset by similar losses from shorts. Greenlight also highlighted concerns over speculative market conditions, citing examples such as SpaceX’s $1.75 trillion IPO valuation and investment-grade rating as signs of excess.
Looking ahead, Greenlight is more constructive on Fed Chairman Kevin Warsh’s inflation stance and expects positions to recover if inflation moderates and rates remain unchanged. The firm also suggested reviewing the Strategy’s top holdings to identify its best ideas for 2026.
In the letter, Greenlight Capital highlighted Victorias Secret & Co. (NYSE:VSXY), a specialty retailer of women’s intimate apparel and other apparel and beauty products worldwide. The company closed at $90.97 per share on August 26, 2026, with a one-month return of 1.58% and a 295.37% gain over the past 52 weeks. Victorias Secret & Co. has a market capitalization of $7.22 billion and has traded within a 52-week range of $21.39 to $102.46.
Greenlight Capital mentioned in its investor letter that it exited its position in Victorias Secret & Co. with a 157% IRR over a 1-year holding period. Under new management, the company refreshed its brand, returned to a “sexy” image in marketing, and saw improved financial performance, leading to renewed customer interest.
Despite the positive performance of Victorias Secret & Co., the company is not among the 40 Most Popular Stocks Among Hedge Funds. However, 43 hedge fund portfolios held Victorias Secret & Co. at the end of the second quarter. While the company has potential as an investment, some AI stocks may offer greater upside potential with less downside risk. For those interested in an undervalued AI stock that could benefit from Trump-era tariffs and the onshoring trend, a free report on the best short-term AI stock is available.
