Here’s Why Night Watch Investment Management Sold Its Stake in Remitly (RELY) in Q2

Night Watch Investment Management, an investment management firm, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund LP appreciated by 23.31% net of fees, and YTD, its performance stood at 20.71%. The portfolio demonstrated resilience in the quarter, despite volatility in March and April. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Night Watch Investment Management highlighted stocks such as Remitly Global, Inc. (NASDAQ:RELY). Remitly Global, Inc. (NASDAQ:RELY) offers digital financial services for immigrants, their families, and other citizens. The one-month return of Remitly Global, Inc. (NASDAQ:RELY) was -11.40%, and its shares gained 48.59% of their value over the last 52 weeks. On July 3, 2025, Remitly Global, Inc. (NASDAQ:RELY) stock closed at $18.50 per share, with a market capitalization of $3.771 billion.

Night Watch Investment Management stated the following regarding Remitly Global, Inc. (NASDAQ:RELY) in its Q2 2025 investor letter:

“We follow a diverse set of industries and are able to rapidly reposition in case an external factor such as politics changes the winners and the losers. The proposed tariffs, as well as the tax legislation that is currently being negotiated by the US Senate, will impact some industries and we have repositioned accordingly.

As an example, a potential loser from changes to the remittance tax is Remitly Global, Inc. (NASDAQ:RELY). As a provider of digital remittance services, which helps immigrants send money back to their home country, RELY is largely exposed to documented immigrants. After all, you need a bank account in order to transact with them. The new tax legislation proposed a 3.5% remittance tax on all non-citizens, including legal immigrants. Even though it is likely that exceptions will be made for legal residents, this can still severely impair RELY’s business, so we sold our entire position in RELY.”

Remitly (RELY) Rallies on New One Big Beautiful Bill Proposal

A senior banker shaking hands with migrant customers in a corporate boardroom.

Remitly Global, Inc. (NASDAQ:RELY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held Remitly Global, Inc. (NASDAQ:RELY) at the end of the first quarter, which was 35 in the previous quarter. The first quarter revenue of Remitly Global, Inc. (NASDAQ:RELY) increased 34% year-over-year to $361.6 million. While we acknowledge the potential of Remitly Global, Inc. (NASDAQ:RELY) 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 undervalued AI stock set for massive gains.

In another article, we covered Remitly Global, Inc. (NASDAQ:RELY) and shared the list of stocks expected to beat the market by 20 Percentage points this year. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of RELY 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.

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Disclosure: None. This article is originally published at Insider Monkey.