1 Main Capital, a boutique investment firm, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned (3.6)% net in the first quarter compared to (4.3)% and (9.5)% for the S&P 500 (SPX) and Russell 2000 (RTY). Since its inception in February 2018, the fund has returned annualized net returns of 19.5%, compared to 11.9% and 4.8% for the indexes. 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, 1 Main Capital highlighted stocks such as Arvinas, Inc. (NASDAQ:ARVN). Arvinas, Inc. (NASDAQ:ARVN) is a clinical-stage biotechnology company. The one-month return of Arvinas, Inc. (NASDAQ:ARVN) was 4.78%, and its shares lost 77.71% of their value over the last 52 weeks. On May 1, 2025, Arvinas, Inc. (NASDAQ:ARVN) stock closed at $7.23 per share with a market capitalization of $527.728 million.
1 Main Capital stated the following regarding Arvinas, Inc. (NASDAQ:ARVN) in its Q1 2025 investor letter:
“Arvinas, Inc. (NASDAQ:ARVN), a clinical-stage biotech company developing targeted protein degraders, is down more than 90% from its 2021 highs due to investor disappointment with its trials.
Pipeline struggles aside, ARVN has over $1 billion in cash and two significant license/collaboration agreements. With Pfizer, ARVN is eligible to receive up to $1.4 billion of payments upon the approval of ARV-471 and then share equally (50/50) in all profits and losses of the drug. With Novartis, ARVN is eligible to receive up to $1 billion upon the approval of ARV-766, with ongoing tiered royalites thereafter.
Despite these assets, ARVN’s market capitalization fell to $500 million in March 2025 upon a disappointing readout for ARV-471 (vepdegestrant). This valuation implies that the company will burn its cash, or that its pipeline will turn out to have minimal value. However, I believe it is unlikely that both will occur. The company’s largest holder with a 15% stake, EcoR1, is an engaged and concentrated biotech specialist that has sufficient incentive to prevent further value destruction.”
A biopharma executive in a meeting room discussing the clinical-stage of a new therapy.
Arvinas, Inc. (NASDAQ:ARVN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Arvinas, Inc. (NASDAQ:ARVN) at the end of the fourth quarter, compared to 34 in the third quarter. While we acknowledge the potential of Arvinas, Inc. (NASDAQ:ARVN) 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 Arvinas, Inc. (NASDAQ:ARVN) and shared the list of stocks under $10 that will triple. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.