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Hotchkis & Wiley, an investment management company, released its second-quarter 2026 investor letter for the "Hotchkis & Wiley Mid-Cap Value Fund." A copy of the letter can be downloaded here. Equity markets posted strong returns in the second quarter of 2026, with the Russell Midcap Index rising 13.8% and the Russell Midcap Value Index returning 13.4%, despite concerns about inflation, a hawkish Federal Reserve, and rising oil prices due to the Iran conflict. Narrow market leadership was evident, particularly semiconductor stocks and other stocks in the AI sector, which saw returns exceeding 100%. The Firm favors quality businesses with attractive valuations, believing that fears regarding AI's impact are overstated. The Hotchkis & Wiley Mid-Cap Value Fund lagged the Russell Midcap Value Index, achieving a 4.74% return in the second quarter, primarily due to underperformance in technology and energy sectors, while stock selection in healthcare contributed positively. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its Q2 2026 investor letter, Hotchkis & Wiley Mid-Cap Value Fund highlighted Olin Corporation (NYSE:OLN). Olin Corporation (NYSE:OLN), a leading manufacturer and distributor of chemical products that operates through Chlor Alkali Products and Vinyls, Epoxy, and Winchester segments, detracted from the fund's performance during the quarter. On August 3, 2026, Olin Corporation (NYSE:OLN) closed at $18.62 per share. The one-month return for Olin Corporation (NYSE:OLN) was -10.22%, and its shares lost 2.05% over the past 52 weeks. Olin Corporation (NYSE:OLN) has a market capitalization of $2.12 billion.

Hotchkis & Wiley Mid-Cap Value Fund stated the following regarding Olin Corporation (NYSE:OLN) in its Q2 2026 investor letter:

"Olin Corporation (NYSE:OLN) is one of the largest global producers of chlor alkali chemicals and chlorine derivatives, and also owns the Winchester ammunition brand. It is significantly underearning today due to below-normal commodity prices and demand, but a tightening five-plus year supply/demand outlook in North American chlor-alkali could drive a pricing and volume recovery— and as the swing producer in the region, Olin could capture more than its share of that improvement, with shareholder-friendly capital allocation and an investment-grade balance sheet commitment reinforcing the case. The stock's decline reflects an easing of tensions in the Middle East which will lead to a near term loosening of supply/demand dynamics in commodity chemicals. Olin also announced a merger of equals with Huntsman that we believe is strategically sound and will help reduce risk over the intermediate term due to synergy capture and deleveraging."

Olin Corporation (NYSE:OLN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 42 hedge fund portfolios held Olin Corporation (NYSE:OLN) at the end of the first quarter, compared to 46 in the previous quarter. While we acknowledge the potential of Olin Corporation (NYSE:OLN) 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 Olin Corporation (NYSE:OLN) and shared the list of most promising hydrogen and fuel cell stocks according to analysts. In its Q1 2026, Olin Corporation (NYSE:OLN) contributed to the performance of Hotchkis & Wiley Large Cap Fundamental Value Fund, as the Iran conflict has disrupted global chemical supply. 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.