Vulcan Value Partners' Large Cap portfolio declined 14.1% in Q1 2026, significantly underperforming broader market indices. The fund purchased two new positions including SAP and ServiceNow while exiting six holdings. SAP, a global enterprise resource planning leader serving 98 of the world's 100 largest companies, represents a new entry despite stock weakness driven by AI disruption concerns. The firm believes SAP's entrenched position as a system-of-record provides substantial competitive moats, as switching costs remain prohibitively high for enterprise clients. ServiceNow demonstrated exceptional growth with 21% revenue expansion and 33% free cash flow per share growth in 2025. Microsoft and Salesforce emerged as significant portfolio detractors this quarter despite strong operational performance.
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