Dodge & Cox Fund, an investment management company, released its second-quarter 2026 investor letter for “Dodge and Cox Stock Fund”. You can download a copy of the letter here. U.S. equities achieved new all-time highs in Q2 2026, driven by a rally in the technology sector, led by memory semiconductor stocks. In Q2 2026, the Dodge & Cox Stock Fund (Class I) returned 5.57% (YTD 3.78%), underperforming the S&P 500 (+15.20%) and Russell 1000 Value Index (+13.84%). Underperformance was primarily driven by an underweight position in the booming Information Technology sector. Relative gains were supported by stock selection in Consumer Staples and Health Care. In the quarter, AI disruption fears weighed on established leaders, which created bottom-up opportunities to buy high-quality companies at attractive valuations. The firm believes, the fund is well positioned given its increased exposure to high-quality businesses and diversification across various investment themes. Additionally, reviewing the Fund’s top five holdings could help identify its best picks for 2026.
In its second-quarter 2026 investor letter, Dodge and Cox Stock Fund highlighted KKR & Co. Inc. (NYSE:KKR). KKR & Co. Inc. (NYSE:KKR) is a leading private equity and real estate investment firm focusing on direct and fund-of-fund investments. On September 23, 2026, KKR & Co. Inc. (NYSE:KKR) closed at $97.21 per share, reflecting a market capitalization of $89.78 billion. Over the past month, KKR & Co. Inc. (NYSE:KKR) declined 11.08%, but its shares are down 28.34% over the past year.
Dodge and Cox Stock Fund stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its Q2 2026 investor letter:
“KKR & Co. Inc. (NYSE:KKR), a global alternative asset manager, is also a new position in the Fund. Its share price declined amid broader macroeconomic concerns and potential weakness in its private credit and software investments. We believe the company’s exposures to these areas are manageable and not overly concentrated. KKR traded at 13.6 times forward earnings, despite its diversified portfolio across private equity, real assets, and credit, and strong alignment between management and shareholders.”
KKR & Co. Inc. (NYSE:KKR) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 77 hedge fund portfolios held KKR & Co. Inc. (NYSE:KKR) at the end of the second quarter, compared to 82 in the previous quarter. While we acknowledge the potential of KKR & Co. Inc. (NYSE:KKR) 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.