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White Falcon Capital Management, an investment fund manager, released its first-quarter 2025 investor letter. In the tough and volatile first quarter, White Falcon delivered a net return of -6.1%, vs. the S&P 500 TR’s (CAD) -3.1%, MSCI AC TR’s (CAD) -0.6%, and the S&P TSX TR’s 4.0% returns. A copy of the letter is available to download here. In the quarter, the software and services sector faces a downturn due to AI-related risks, but the firm emphasizes long-term performance over short-term results. The White Falcon portfolio aims for positive risk-adjusted returns, diverging from market indexes. The software sector presents a long-term opportunity, leading to increased allocation to essential software companies with competitive advantages. Another significant event this quarter was the conflict in Iran. White Falcon’s investment approach during any conflict is to maintain its portfolio exposure without making drastic changes. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, White Falcon Capital Management highlighted stocks like Unity Software Inc. (NYSE:U). Unity Software Inc. (NYSE:U) is a US-based technology company focusing on developing games and interactive experiences across multiple platforms. On May 6, 2026, Unity Software Inc. (NYSE:U) closed at $27.28 per share. One-month return of Unity Software Inc. (NYSE:U) was 26.47%, and its shares gained 32.11% over the past 52 weeks. Unity Software Inc. (NYSE:U) has a market capitalization of $11.9 billion.
White Falcon Capital Management stated the following regarding Unity Software Inc. (NYSE:U) in its Q1 2026 investor letter:
"Unity Software Inc. (NYSE:U) runs two tightly linked businesses: Create Solutions, its real‑time 3D engine used to build games and interactive experiences where it has a leading share in mobile game creation; and Grow Solutions, its advertising and monetization network that helps game developers acquire users and optimize revenue. This gives Unity a dual revenue model where it earns subscriptions and usage fees from creators and then derives performance based advertising revenue from live games.
Unity sold off aggressively when Google unveiled Project Genie, an AI‑powered tool for generating virtual worlds. We see this as a net positive for Unity. AI accelerates game creation which increases the volume of content that ultimately needs Unity’s engine. The core functions of a real‑time engine - physics, interaction, performance, and playability - that actually make a game playable remain irreplaceable and form the core of Unity’s moat. …” (Click here to read the full text)
Unity Software Inc. (NYSE:U) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 80 hedge fund portfolios held Unity Software Inc. (NYSE:U) at the end of the fourth quarter, up from 74 in the previous quarter. While we acknowledge the potential of Unity Software Inc. (NYSE:U) 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 Unity Software Inc. (NYSE:U) and shared the list of stocks that will collapse because of AI. 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.