Laughing Water Capital, an investment management company, released its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The second quarter was exceptionally good for the portfolio, with Class A investment in Laughing Water Capital returning approximately 39.8% net of all fees and expenses, bringing the YTD return to approximately 33.6% net. The SP500TR and R2000 returned approximately 15.0% and 21.5%, respectively, in the second quarter. The impressive performance was driven by three of the top five positions being acquired, with its largest position nearly doubling during the quarter. The letter emphasizes that patience can often lead to profits in an inefficient market characterized by fluctuations, suggesting that investing in undervalued stocks can yield good long-term returns. In addition, please check the portfolio’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Laughing Water Capital highlighted Liquidia Corporation (NASDAQ:LQDA). Liquidia Corporation (NASDAQ:LQDA) is a biopharmaceutical company that focuses on the development and commercialization of various products for rare cardiopulmonary diseases. On July 13, 2026, Liquidia Corporation (NASDAQ:LQDA) closed at $71.21 per share, reflecting a market capitalization of $6.33 billion. Liquidia Corporation (NASDAQ:LQDA) posted a one-month return of 4.71%, while its shares gained 390.76% over the past 52 weeks.
Laughing Water Capital stated the following regarding Liquidia Corporation (NASDAQ:LQDA) in its Q2 2026 investor update:
“Liquidia Corporation (NASDAQ:LQDA) – Liquidia makes YUTREPIA, a drug that launched one year ago to treat Pulmonary Arterial Hypertension (PAH) and Pulmonary Hypertension Interstitial Lung Diseases (PH ILD). The launch has been nothing short of fantastic, and more recently the company has shared that they plan to pursue additional indications, which will greatly increase the addressable market and revenue potential. However, the company remains mired in litigation with United Therapeutics (UTHR), who has alleged patent infringement.
The litigation concluded almost a year ago, but the judge has still not issued his ruling. Several details of the case – as well as the long-delayed ruling – suggest that a worst-case outcome where the drug could be pulled from the market for treatment of PH-ILD is off the table. In brief, if the judge wanted to pull the drug he would do so before thousands of people were benefiting from it…” (Click here to read the full text)
Liquidia Corporation (NASDAQ:LQDA) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 41 hedge fund portfolios held Liquidia Corporation (NASDAQ:LQDA) at the end of the first quarter, compared to 44 in the previous quarter. While we acknowledge the potential of Liquidia Corporation (NASDAQ:LQDA) 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 thebest short-term AI stock.
In another article, we covered Liquidia Corporation (NASDAQ:LQDA) and shared a bullish thesis on the company. In Q1 2026, Laughing Water Capital highlighted Liquidia Corporation (NASDAQ:LQDA), citing its patent disputes with United Therapeutics. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
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