First Advantage (FA) Sold Off Amid AI Disruption Concerns

Optimist Fund, an investment management company, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Fund’s objective is to achieve capital growth at a rate in the mid-teens or higher over the course of several decades. In Q1 2026, the Fund declined 27.3%, driven by a swift shift in the market narrative amid fears of AI disruption and the outbreak of war in Iran. The fund views this drawdown as an opportunity to strengthen the core holdings at more attractive prices. In addition, please check the Fund’s top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Optimist Fund highlighted stocks like First Advantage Corporation (NASDAQ:FA). First Advantage Corporation (NASDAQ:FA) is a US-based company that provides employment background screening, identity, and verification solutions. On May 15, 2026, First Advantage Corporation (NASDAQ:FA) closed at $15.29 per share. One-month return of First Advantage Corporation (NASDAQ:FA) was 15.40%, and its shares lost 15.85% over the past 52 weeks. First Advantage Corporation (NASDAQ:FA) has a market capitalization of $2.62 billion.

Optimist Fund stated the following regarding First Advantage Corporation (NASDAQ:FA) in its Q1 2026 investor letter:

"First Advantage Corporation (NASDAQ:FA) – First Advantage delivered an outstanding Q4. Organic growth accelerated meaningfully to 12% year over year, a sharp improvement from negative growth entering 2025, and management remains confident in the company’s forward trajectory.

Despite this progress, the shares have sold off materially amid concerns that AI could negatively impact the business. We believe these concerns are misplaced.

In February the company announced a $100 million share repurchase program, reflecting confidence in both the business and the current valuation. We were very encouraged by these results and added to the position during Q1. Today, we believe First Advantage is trading at under 10x 2026 EPS for a business capable of compounding earnings at 20%+ annually over the next five years."What Investors Should Know About Clear Secure’s (YOU) 2025 Dividends

First Advantage Corporation (NASDAQ:FA) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 15 hedge fund portfolios held First Advantage Corporation (NASDAQ:FA) at the end of the fourth quarter, the same as in the previous quarter. First Advantage Corporation (NASDAQ:FA) delivered revenue of $385 million in Q1 2026, an increase of 8.6% year-over-year and marking the fourth consecutive quarter of positive revenue growth. While we acknowledge the potential of First Advantage Corporation (NASDAQ:FA) 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.

Story Continues

In another article, we covered First Advantage Corporation (NASDAQ:FA) and shared the list of cheap rising stocks to buy. 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.

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