Sound Shore Management, an investment management firm, has released its investor letter for the second quarter of 2026. The letter can be downloaded here. The Sound Shore Fund's Investor Class (SSHFX) and Institutional Class (SSHVX) rose 10.48% and 10.58% in the second quarter of 2026, trailing the Russell 1000 Value Index's 13.87% and the S&P 500's 15.20% returns. Over three years, SSHFX and SSHVX posted annualized gains of 19.41% and 19.66%, outperforming the Russell Value (17.79%) but underperforming the S&P 500 (20.61%). The powerful rebound of stocks in the quarter was driven by strong performances in AI and semiconductor sectors, amidst easing inflation fears and a stable labor market. The portfolio also benefited from the AI wave in the second quarter. The ongoing AI revolution is creating significant investment opportunities in multiple sectors, and Sound Shore remains committed to long-term assessments of a company's earning power, targeting stocks with durable management strategies. Also, check the fund's top five holdings to see its best picks in 2026.
In its Q2 2026 investor letter, Sound Shore Fund highlighted Elevance Health, Inc. (NYSE:ELV) as a notable contributor. Elevance Health, Inc. (NYSE:ELV) is a US-based health benefits company. On August 24, 2026, Elevance Health, Inc. (NYSE:ELV) closed at $402.63 per share, reflecting a market capitalization of $87.32 billion. Elevance Health, Inc. (NYSE:ELV) posted a one-month return of 3.64%, while its shares gained 28.94% over the past 52 weeks.
Sound Shore Fund stated the following regarding Elevance Health, Inc. (NYSE:ELV) in its Q2 2026 investor letter:
"Importantly, we had more breadth in our return than the indices. Away from tech, health benefits leader Elevance Health, Inc. (NYSE:ELV) was a strong contributor. Elevance offers network-based managed care plans to large and small employer, individual, Medicaid, and Medicare markets. We identified the stock after it had sold off on investor concerns over regulatory risk and weak margins in its Medicaid and Medicare businesses. Trading below normal at 13 times earnings with double digit earnings growth, we feel the market is underestimating the strength of the franchise. Management is focused on improving margins in the near term and the company consistently returns capital to shareholders via stock repurchases and dividends. Of note, CEO Gail Boudreaux has highlighted that internal artificial intelligence tools have slashed prior authorization denials by nearly 70% and optimized payment integrity. This translates directly into lower administrative overhead and expanding operating margins, proving that the productivity benefits of AI are reverberating far beyond the technology sector itself."
Elevance Health, Inc. (NYSE:ELV) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 84 hedge fund portfolios held Elevance Health, Inc. (NYSE:ELV) at the end of the second quarter, compared to 87 in the previous quarter. While we acknowledge the potential of Elevance Health, Inc. (NYSE:ELV) 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.
Our coverage of Elevance Health, Inc. (NYSE:ELV) in another article included commentary from Greenskeeper Asset Management, another investment advisor. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.