Shopify (SHOP) Compounded 29% Annually. Here’s How

Rowan Street Capital, an investment management company, has recently released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund remained unchanged in the third quarter (+0.22%), making the YTD returns through September 30, 2025, to +20.4% net of fees compared to the S&P 500’s +14.8% year-to-date gain. Over the past three years, the firm’s capital compounded at approximately +54.2% annually (net), delivering a +266% cumulative return — more than doubling the S&P 500’s +24.9% annualized gain over the same period. The fund’s performance was driven by its commitment to process refined through years of experience, mistakes, and reflection. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its third-quarter 2025 investor letter, Rowan Street Capital highlighted stocks such as Shopify Inc. (NASDAQ:SHOP). Shopify Inc. (NASDAQ:SHOP) provides a cloud-based commerce platform and services. The one-month return of Shopify Inc. (NASDAQ:SHOP) was 8.86%, and its shares gained 103.38% of their value over the last 52 weeks. On October 22, 2025, Shopify Inc. (NASDAQ:SHOP) stock closed at $162.01 per share, with a market capitalization of $210.003 billion.

Rowan Street Capital stated the following regarding Shopify Inc. (NASDAQ:SHOP) in its third quarter 2025 investor letter:

“Shopify Inc. (NASDAQ:SHOP) has been in our portfolio for just over three years and has compounded at 29% annually. It has also been our best performer in 2025, driven by operating leverage, margin expansion, and renewed investor confidence in its long term growth prospects. Shopify continues to strengthen its ecosystem through prod innovation, deeper merchant integration, and new AI-driven tools — including a recent partnership with ChatGPT — all under the guidance of a founder-led management team that remains laser-focused on durable, long-term value creation.”

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Shopify Inc. (NASDAQ:SHOP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 69 hedge fund portfolios held Shopify Inc. (NASDAQ:SHOP) at the end of the second quarter, compared to 77 in the previous quarter. Shopify Inc. (NASDAQ:SHOP) delivered $2.7 billion of revenue in Q2 2025, up 31% year-over-year. While we acknowledge the risk and potential of Shopify Inc. (NASDAQ:SHOP) 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 Shopify Inc. (NASDAQ:SHOP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Shopify Inc. (NASDAQ:SHOP) and shared the list of most profitable software stocks to invest in. 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.