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WestEnd Capital Management, an investment advisor, released its Q2 2026 investor letter. The letter can be downloaded here. WestEnd Capital Management's Core Strategy achieved a 16.3% net return in the quarter, surpassing the S&P 500's 15.0%. This performance stemmed from strong earnings generators and upward earnings revisions, showcasing U.S. companies' efficiency in converting sales into profits. S&P 500 net profit margins reached a decade-high of 14.8% in Q1 and are expected to remain above 14% in Q2 despite challenges like higher interest rates and geopolitical uncertainty. Technology remains a key focus in WestEnd's portfolio, along with investments in infrastructure, demographic shifts, financial innovation, and selective consumer opportunities. Also, check the fund's top five holdings to see its best picks in 2026.

In its second-quarter 2026 investor letter, WestEnd Capital Management highlighted WaterBridge Infrastructure LLC (NYSE:WBI). WaterBridge Infrastructure LLC (NYSE:WBI) is a pure-play water infrastructure company. On September 2, 2026, WaterBridge Infrastructure LLC (NYSE:WBI) closed at $32.26 per share. Over the past month, WaterBridge Infrastructure LLC (NYSE:WBI) declined 1.31%, while YTD its shares are up 61.37%. WaterBridge Infrastructure LLC (NYSE:WBI) has a market capitalization of $3.98 billion.

WestEnd Capital Management stated the following regarding WaterBridge Infrastructure LLC (NYSE:WBI) in its Q2 2026 investor letter:

"WaterBridge Infrastructure LLC (NYSE:WBI) owns and operates the largest independent produced-water infrastructure network in the Delaware Basin, providing services that are essential to energy production throughout one of North America's most productive oil basins.

The scale and density of this network would be extremely difficult and expensive to replicate. WaterBridge also generates most of its revenue through long-term contracts that include minimum-volume commitments and inflation-linked pricing.

Why We Like It

We believe WaterBridge is positioned to benefit from:

Our investment thesis is grounded in the company's existing water infrastructure business, but we also see potential upside from growing industrial demand for water, including recycling and cooling requirements associated with large-scale AI data centers. We view that opportunity as incremental rather than essential to the thesis, providing another possible source of long-term earnings growth."

WaterBridge Infrastructure LLC (NYSE:WBI) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 22 hedge fund portfolios held WaterBridge Infrastructure LLC (NYSE:WBI) at the end of the second quarter, down from 29 in the previous quarter. While we acknowledge the potential of WaterBridge Infrastructure LLC (NYSE:WBI) 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 a prior article, we noted WaterBridge Infrastructure LLC's (NYSE:WBI) record revenue, raised guidance, and Delaware Basin acquisitions, yet it fell 1.73% around release. 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.