Minot Light Capital Partners has released its investor letter for the third quarter of 2025, revealing noteworthy insights into its performance and key holdings. The firm reported a net return of 7.6% for limited partners, although this fell short of benchmarks, particularly the micro-cap benchmark which achieved a 17.1% return. Among the highlights, the letter focused on Torrid Holdings Inc. (NYSE:CURV), a retailer specializing in apparel and accessories for curvy women.
In the past month, Torrid Holdings has seen a significant decline, with its shares dropping by -20.91%. Over the last 52 weeks, the stock has plummeted 80.27%, closing at $0.9807 per share on December 23, 2025. The current market capitalization stands at $97.282 million, raising concerns among investors.
Minot Light Capital Partners described Torrid Holdings as its “biggest negative contributor” for the quarter. The firm reiterated its previous analysis from the last quarterly update, noting that while the earnings report did not indicate a disaster, the numbers were adversely affected by tariff impacts and a weakened consumer environment. Despite these challenges, the firm remains optimistic about projected margin expansion, driven by the closure of underperforming stores and a shift towards online sales.
The letter stated, “The company continues to project meaningful EBITDA margin and free cash flow expansion into 2026 and beyond.” This outlook, however, is now based on a lower revenue base, which raises questions about the sustainability of growth given the current economic climate.
Despite the ongoing decline in stock price following a secondary offering by Sycamore Partners, Minot Light Capital maintains its belief that the underlying business fundamentals are not deteriorating as rapidly as the stock performance suggests. The firm acknowledged the difficulties of transitioning business models during a challenging macroeconomic period while carrying debt.
At present share prices near $1.50, the potential for significant upside exists if the company can approach its EBITDA and free cash flow targets in the coming years. The firm suggested that Torrid could potentially buy back its entire company or repay all its debt within four years if conditions improve.
As of the close of the third quarter, Torrid Holdings was not among the top 30 most popular stocks held by hedge funds. Data indicates that only 7 hedge fund portfolios included Torrid Holdings, a decrease from 15 in the previous quarter. While Minot Light acknowledges the risks associated with investing in Torrid, it expressed a preference for AI stocks, which it believes offer greater potential for higher returns in a shorter timeframe.
Investors seeking insights into hedge fund strategies may find further details on Q3 2025 investment letters from various hedge funds and leading investors available online.
