Sycamore Capital Management, a division of Victory Capital Management, recently released its investment letter for the second quarter of 2026, detailing the performance of its Mid Cap Value Equity Strategy. The strategy saw a net return of 9.6%, which lagged behind the Russell Midcap Value Index's 13.83% return. This underperformance was attributed to a combination of stock selection and sector allocation decisions. During this period, small-cap equities outpaced both large- and mid-cap segments, and market trends shifted significantly towards a select group of artificial intelligence-related stocks, which propelled major U.S. indices like the S&P 500 Index to considerable gains. The letter also highlighted increasing market concentration and the influence of passive investment vehicles, prompting investors to re-evaluate their exposure to AI, advocating for a prudent assessment of current holdings in light of these emerging risks.

A key focus of Sycamore Capital's Q2 2026 letter was FTI Consulting, Inc., a business advisory services provider headquartered in Washington, D.C. The company's shares closed at $152.68 on August 12, 2026, with a market capitalization of approximately $4.22 billion. FTI Consulting experienced a one-month return of -8.37% and a 52-week loss of 9.98%. Sycamore Capital noted that FTI Consulting was a significant detractor from their portfolio, primarily due to a disappointing first-quarter 2026 earnings release. While revenue remained stable, earnings per share fell below analyst expectations, largely because of persistent increases in selling, general, and administrative (SG&A) expenses. Furthermore, the Economic Consulting segment faced a notable loss of market share in the U.S. antitrust consulting sector, with management indicating that a recovery could take several quarters. Despite these setbacks, the company's board demonstrated confidence by authorizing an additional $307 million for its share repurchase program and reconfirming its full-year 2026 guidance. However, Sycamore Capital's investment thesis for FTI Consulting is currently under review.

Despite FTI Consulting's presence in many portfolios, it did not feature on Insider Monkey's list of the "40 Most Popular Stocks Among Hedge Funds Heading Into 2026"; records indicate that 25 hedge funds held positions in FCN at the close of the first quarter, consistent with the preceding quarter. While acknowledging FTI Consulting's potential as an investment, certain AI stocks are believed to offer more substantial upside and reduced downside risk. The broader market dynamics underscore the importance of vigilance and adaptability in investment strategies. Investors are encouraged to look beyond traditional sectors and consider areas with strong growth potential, particularly in rapidly evolving technological landscapes, while maintaining a cautious outlook on overall market stability.