e.l.f. Beauty (ELF) Sold Off Due to the Potential Impact of the Tariffs

Polen Capital, an investment management company, released its “Polen U.S. Small Company Growth Strategy” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q1 2025, optimism fueled by the Trump election shifted to fear and uncertainty due to apprehension about cost-cutting measures and emerging trade policies. In the first quarter, the fund delivered -10.53% gross, and -10.83% net of fees, compared to a -11.12% return for the Russell 2000 Growth Index. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its first-quarter 2025 investor letter, Polen U.S. Small Company Growth Strategy highlighted stocks such as E.l.f. Beauty, Inc. (NYSE:ELF). E.l.f. Beauty, Inc. (NYSE:ELF) is a beauty company that offers cosmetic and skin care products.  The one-month return of E.l.f. Beauty, Inc. (NYSE:ELF) was 59.52%, and its shares lost 52.66% of their value over the last 52 weeks. On May 13, 2025, E.l.f. Beauty, Inc. (NYSE:ELF) stock closed at $78.21 per share with a market capitalization of $4.494 billion.

Polen U.S. Small Company Growth Strategy stated the following regarding E.l.f. Beauty, Inc. (NYSE:ELF) in its Q1 2025 investor letter:

“The most significant quarterly detractors from performance, both relative and absolute, were Globant, E.l.f. Beauty, Inc. (NYSE:ELF), and Revolve Group.

e.l.f. Beauty sold off during the quarter on concerns over the impact of potential U.S. tariffs on China, given the company’s supply chain exposure there. We have contemplated this for some time. While tariffs undeniably impact the business, at this time, we believe e.l.f. is positioned to manage through this with pricing power and shifting manufacturing away from China.”

Jim Cramer on e.l.f. Beauty (ELF): ‘Stay Away From Cosmetics - e.l.f. Is No Exception’

A close up of the lip and eye products from the company on a model in a fashion and beauty shoot.

E.l.f. Beauty, Inc. (NYSE:ELF) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held E.l.f. Beauty, Inc. (NYSE:ELF) at the end of the fourth quarter which was 40 in the previous quarter. While we acknowledge the potential of E.l.f. Beauty, Inc. (NYSE:ELF) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered E.l.f. Beauty, Inc. (NYSE:ELF) and shared the list of stocks that should double in 3 years. In addition, please check out our hedge fund investor letters Q1 2025 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.