Wayfair (W) Failed to Regain Despite Extended Support

Recurve Capital, an investment management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The first quarter was a volatile start to the year for the company. In Q1 2025, the fund returned -12.7% gross and -13% for Class A investors compared to -4.6% returns for the S&P 500 and -10.4% returns for the Nasdaq. 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, Recurve Capital highlighted stocks such as Wayfair Inc. (NYSE:W). Headquartered in Boston, Massachusetts, Wayfair Inc. (NYSE:W) is an online home furnishing store. The one-month return of Wayfair Inc. (NYSE:W) was 23.16%, and its shares lost 41.04% of their value over the last 52 weeks. On May 22, 2025, Wayfair Inc. (NYSE:W) stock closed at $36.22 per share with a market capitalization of $4.65 billion.

Recurve Capital stated the following regarding Wayfair Inc. (NYSE:W) in its Q1 2025 investor letter:

“We fully exited Wayfair Inc. (NYSE:W) in May after owning it for about four years. We had given the company plenty of rope to right the ship and return to growth, but it has been unable to do so. It is hard to pin down exactly why they’ve been able to gain share (i.e. grow faster than the market, i.e. shrink less than the market), but not grow in absolute terms. The succinct summary is that we believe Wayfair does not have a differentiated enough value proposition to be a secular winner. It can be an “alpha” winner by slightly outperforming its end market, but it is not disruptive enough to grow through choppier periods. We were extra patient with Wayfair because of the exceptionally severe industry headwinds it faced, but enough time has passed to convince us that it is more “alpha” than “secular.”

We sold Wayfair at what was likely an inopportune price during the recent tariff-induced drawdown. However, our approach is to exit whenever we lose faith instead of hoping to sell at a higher price. In truth, this process of losing faith began in the second half of 2024 and it took me a disappointingly long time to arrive here. Even though we lost money on the Wayfair investment, we certainly earned some precious scar tissue that will surely help our idea filtering and portfolio sizing processes in the future.”

Why Wayfair Inc. (W) Soared Today

An elegant home décor with a stunning furniture piece, showcasing the company’s premium online selections.

Wayfair Inc. (NYSE:W) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 49 hedge fund portfolios held Wayfair Inc. (NYSE:W) at the end of the fourth quarter which was 52 in the previous quarter. While we acknowledge the potential of Wayfair Inc. (NYSE:W) 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 Wayfair Inc. (NYSE:W) and shared Optimist Fund’s views on the company. 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.