Hotchkis & Wiley Q1 2026 Review Highlights Market Volatility and Energy Surge

Hotchkis & Wiley has released its first-quarter 2026 investor letter for the Large Cap Fundamental Value Fund, detailing a period of significant market turbulence. The report highlights a broader downturn in equity markets, with the S&P 500 Index posting a decline of 4.4% during the first three months of the year. According to the firm, this contraction was primarily attributed to escalating geopolitical uncertainties and shifting sentiment surrounding artificial intelligence investment themes. These factors created a volatile environment for large-cap equities as investors recalibrated their expectations for AI-driven growth. A standout feature of the quarter was the extreme volatility in the energy sector. The letter notes that Brent crude oil prices surged by more than 100%, reflecting severe supply-side pressures or geopolitical shocks that impacted global energy costs. The fund's analysis suggests that while AI remains a dominant theme, the immediate impact of geopolitical instability has created a headwind for broad market indices, necessitating a more disciplined focus on fundamental value in portfolio construction.