Praetorian Capital, an investment management company, released its second-quarter 2026 investor letter. The letter can be downloaded here. The Praetorian Capital Fund fell 0.29% net in Q3 2026, bringing year-to-date net performance to 11.01%. Gains from refinery investments were offset by losses in Lincoln Educational Services and Universal Technical Institute, which the fund increased to roughly 20% of capital on the belief that trade schools will benefit from AI-driven workforce displacement and reskilling demand. The fund exited Brazilian positions and reduced overall exposure, building cash and government-bond positions in anticipation of a major slowdown in AI spending. The letter argues that AI investment is economically unsustainable and could trigger bankruptcies, falling equities, and a deep recession; the fund plans to preserve capital, buy bonds during the downturn, and later rotate into inflation-sensitive assets. In addition, please check the Fund’s top five holdings to identify its best picks in 2026.
In its Q3 2026 investor letter, Praetorian Capital highlighted Valero Energy Corporation (NYSE:VLO). Valero Energy Corporation (NYSE:VLO) is a petroleum refining and marketing company that manufactures and markets petroleum-based and low-carbon liquid transportation fuels and petrochemical products. On October 22, 2026, Valero Energy Corporation (NYSE:VLO) closed at $426.28, with a $122.74 billion market capitalization. Reflecting the recent momentum, Valero Energy Corporation (NYSE:VLO) reported 160.74% YTD gain trading within a 52-week range of $159.90 t0 $461.52.
Praetorian Capital stated the following regarding Valero Energy Corporation (NYSE:VLO) in its Q3 2026 investor letter:
“Despite a lot of movement under the hood, our net results were rather inconsequential during Q3. To the upside, we experienced really strong performance from our two core positions in refiners (MPC – Marathon Petroleum and Valero Energy Corporation (NYSE:VLO)) as crack spreads broke out to all-time highs. I initially purchased these refiners at substantial discounts to replacement cost with the view that there would be a supply and demand imbalance in the near future as I anticipated that demand would grow more rapidly than refiner supply. Instead, Ukrainian attacks on Russian refiners, along with the Hormuz blockade of Middle Eastern refined products, served to dramatically tighten the market due to supply destruction.
As these refiners traded up near to replacement cost, I chose to exit both positions as demand destruction is seemingly accelerating, and I have zero visibility into how long the supply side will remain subdued for. Additionally, the refiners are now pricing in roughly two consecutive years of crack spreads staying at currently elevated levels, which seems like a bold prediction, especially as two years is a long time in such a volatile world. Identifying a tight supply and demand situation clearly set the stage for this trade, though we then profited from something completely unforeseen that served to further tighten the market. Sometimes in inflection investing, luck carries the day…” (Click here to read the full text)
Jim Cramer Notes “Valero (VLO)’s Already Had Too Much of a Run”
Valero Energy Corporation (NYSE:VLO) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 81 hedge fund portfolios held Valero Energy Corporation (NYSE:VLO) at the end of the second quarter, which was 67 in the previous quarter. While we acknowledge the risk and potential of Valero Energy Corporation (NYSE:VLO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Valero Energy Corporation (NYSE:VLO) and that has 10,000% upside potential, check out our report about thischeapest AI stock.
We previously covered Valero Energy Corporation (NYSE:VLO), highlighting Morgan Stanley’s bullish stance as it lifted its price target to an all-time high. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.
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This article is originally published at Insider Monkey.
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
