Maple Tree Capital, an investment management company, released its Q1 2025 investor letter. A copy of the letter can be downloaded here. Q1 2025 saw a strong start but turned sour due to tariff concerns and macroeconomic fears, leading to a sharp market pullback, with the Nasdaq falling nearly 22% from its highs and the S&P 500 down 20%. Despite the challenges, the firm made significant progress this quarter by averaging in the top-conviction stocks, utilizing covered calls, and exercising patience. Maple’s growth-oriented fund, Jonagold, has become a standout performer, greatly surpassing all major benchmarks since its launch in 2023. While Heartwood is still facing difficulties. Maple Tree Capital’s Jonagold returned -13.64% in Q1 compared to the Nasdaq’s -10.26% return and the Russel 2000’s -9.48% return. Maple Tree Capital’s Heartwood returned -18.04% in Q1 vs. the S&P 500’s -4.27% and the Dow Jones’ -0.87% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Maple Tree Capital highlighted stocks such as Krispy Kreme, Inc. (NASDAQ:DNUT). Krispy Kreme, Inc. (NASDAQ:DNUT) is a doughnut company based in Charlotte, North Carolina. The one-month return of Krispy Kreme, Inc. (NASDAQ:DNUT) was -29.02%, and its shares lost 71.25% of their value over the last 52 weeks. On May 28, 2025, Krispy Kreme, Inc. (NASDAQ:DNUT) stock closed at $2.91 per share with a market capitalization of $497.028 million.
Maple Tree Capital stated the following regarding Krispy Kreme, Inc. (NASDAQ:DNUT) in its Q1 2025 investor letter:
“We have undoubtedly been wrong on Krispy Kreme, Inc. (NASDAQ:DNUT). Since we started our position in March, the stock has gone down, vertically. And, on top of that, we initiated this in size. A pure double whammy to the downside, and the most significant negative impact on our performance. While the McDonald’s rollout has been slower than expected, Krispy Kreme still has that deal in place, with a very strong national brand. The stock is caught up in recession fears, high debt and ozempic fears adding fuel to the fire. Short sellers have gotten particularly interested in this stock, and a cyber-attack that occurred in Q4 caused Krispy Kreme to miss its sales and profitability estimates, further sinking shares. We think that while these headwinds are real, the stock has been punished far too much. This is a kitchen sink.
At face value, Krispy Kreme still has a balance sheet that is solvent, with a strong national brand, growing domestic and international presence, and a huge deal lined up with McDonald’s. They continue to see heavy brand engagement and deliver a superior product that consumers love. The stock currently trades at roughly 20x 2026 earnings estimates. While the story has soured since we purchased the stock, we believe it has corrected too far to the downside. We may exit the position at a loss in the future if 2025 does not bear fruit from the McDonald’s partnership.”
An employee of the grocery store happily decorating doughnuts with colorful icing.
Krispy Kreme, Inc. (NASDAQ:DNUT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Krispy Kreme, Inc. (NASDAQ:DNUT) at the end of the first quarter, which was 14 in the previous quarter. In the first quarter of 2025, Krispy Kreme, Inc. (NASDAQ:DNUT) reported net revenue of $375.2 million, which aligns with the guidance provided last quarter. While we acknowledge the potential of Krispy Kreme, Inc. (NASDAQ:DNUT) 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 Krispy Kreme, Inc. (NASDAQ:DNUT) and shared Jim Cramer’s successful stock predictions. 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.
