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The Wasatch Long/Short Alpha Fund, managed by Wasatch Global Advisors, has recently published its Q1 2026 investor letter, which is available to download here. A shift in investor sentiment led to a market correction and increased volatility in U.S. small- and mid-cap stocks during the first quarter. Despite this, enthusiasm for AI continued to support companies involved in infrastructure development. The situation intensified in the quarter due to the conflict in Iran, causing investors to consider the potential for rising oil prices and their wider implications on the global economy. In this context, the Russell 2500 Index returned 2.04% in the quarter, while the Wasatch Long/Short Alpha Fund—Investor Class surpassed this performance with a rise of 4.16%, supported by the outperformance of its short positions. In addition, please check the firm’s top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Wasatch Long/Short Alpha Fund highlighted stocks like Casella Waste Systems, Inc. (NASDAQ:CWST). Casella Waste Systems, Inc. (NASDAQ:CWST) is a vertically integrated solid waste services company that offers resource management expertise and services. On June 2, 2026, Casella Waste Systems, Inc. (NASDAQ:CWST) closed at $83.00 per share. One-month return of Casella Waste Systems, Inc. (NASDAQ:CWST) was -5.28%, and its shares lost 29.12% over the past 52 weeks. Casella Waste Systems, Inc. (NASDAQ:CWST) has a market capitalization of $5.28 billion.

Wasatch Long/Short Alpha Fund stated the following regarding Casella Waste Systems, Inc. (NASDAQ:CWST) in its Q1 2026 investor letter:

"Casella Waste Systems, Inc. (NASDAQ:CWST) also detracted. Casella is a regional solid waste, recycling and resource management firm in the U.S. Earnings per share growth was a little ahead of expectations in Casella’s most recently reported financial results. But profitability declined, which might have weighed on the stock. Although Casella’s stock price declined, we continue to like the business and the management team, which has a long history of successfully integrating acquisitions."

Casella Waste Systems, Inc. (NASDAQ:CWST) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 28 hedge fund portfolios held Casella Waste Systems, Inc. (NASDAQ:CWST) at the end of the first quarter, the same as in the previous quarter. Casella Waste Systems, Inc.’s (NASDAQ:CWST) Q1 2026 revenue increased 9.6% year-over-year to $457.3 million. While we acknowledge the potential of Casella Waste Systems, Inc. (NASDAQ:CWST) 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.

In another article, we covered Casella Waste Systems, Inc. (NASDAQ:CWST) and shared Alger Weatherbie Specialized Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q1 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.