OneSpaWorld Holdings Ltd. (OSW) Declined Despite Beating Expectations and Improved Guidance

Ariel Investments, an investment management company, released its “Ariel Small Cap Concentrated Value Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. US equities continued their rally in the third quarter, fueled by the Federal Reserve’s initial rate cut of the year, strong corporate earnings growth, and increased market participation. In the quarter, Ariel Small Cap Concentrated Value Composite returned +15.08% gross of fees (+14.93% net of fees) compared to +12.60% and +12.39% returns of the Russell 2000 Value Index and the Russell 2000 Index, respectively. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Ariel Small Cap Concentrated Value Strategy highlighted stocks such as OneSpaWorld Holdings Limited (NASDAQ:OSW). OneSpaWorld Holdings Limited (NASDAQ:OSW) operates health and wellness centers onboard cruise ships and at destination resorts. The one-month return of OneSpaWorld Holdings Limited (NASDAQ:OSW) was -12.56%, and its shares gained 7.32% of their value over the last 52 weeks. On November 27, 2025, OneSpaWorld Holdings Limited (NASDAQ:OSW) stock closed at $20.39 per share, with a market capitalization of $2.094 billion.

Ariel Small Cap Concentrated Value Strategy stated the following regarding OneSpaWorld Holdings Limited (NASDAQ:OSW) in its third quarter 2025 investor letter:

“Lastly, wellness services provider for cruise ships and destination resorts, OneSpaWorld Holdings Limited (NASDAQ:OSW) detracted from performance despite beating top- and bottom line estimates and raising full-year guidance. Strong demand for spa and medi-spa treatments continues to grow earnings, even amid concerns around a deterioration in consumer sentiment and related softening in discretionary spend. OSW also announced AI-driven initiatives aimed at improving yields and expanding margins through automation and cost efficiencies. Meanwhile, management continues to pay down debt and return capital to shareholders through buybacks and dividends.”

OneSpaWorld Holdings Limited (NASDAQ:OSW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held OneSpaWorld Holdings Limited (NASDAQ:OSW) at the end of the third quarter, which was 18 in the previous quarter. In the third quarter of 2025, OneSpaWorld Holdings Limited’s (NASDAQ:OSW) revenue increased 7% to $258.5 million. While we acknowledge the risk and potential of OneSpaWorld Holdings Limited (NASDAQ:OSW) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OneSpaWorld Holdings Limited (NASDAQ:OSW) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered OneSpaWorld Holdings Limited (NASDAQ:OSW) and shared Ariel Small Cap Value Strategy’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.