Investment management firm Minot Light Capital Partners released its third-quarter investment letter for 2025, revealing mixed results. While the firm achieved a net return of 7.6% for its limited partners, this performance fell short of benchmarks, particularly the micro-cap benchmark’s impressive 17.1% return.
Among the stocks discussed in the letter was Torrid Holdings Inc. (NYSE:CURV), a retailer specializing in apparel and accessories for curvy women. Torrid’s stock faced significant challenges during the quarter, experiencing a one-month decline of -20.91% and a staggering 80.27% drop over the past 52 weeks. As of December 23, 2025, Torrid’s shares closed at $0.9807, resulting in a market capitalization of $97.282 million.
In the letter, Minot Light expressed concerns about Torrid’s performance, noting it as their “biggest negative contributor” for the quarter. The firm revisited its investment thesis on Torrid, which had been outlined in a previous report. Although the earnings report did not indicate a disaster, it highlighted challenges, including tariff impacts and a weakening consumer base.
Despite these hurdles, Minot Light maintained that the essential elements of its investment thesis remain intact. Key factors such as projected margin expansion, revenue retention from closed stores transitioning to adjacent locations or online sales, and growth in sub-brand sales are expected to contribute positively to Torrid’s outlook. The company anticipates significant growth in EBITDA margins and free cash flow into 2026 and beyond.
Minot Light acknowledged the troubling stock price trend following a secondary offering by Sycamore, which they initially believed would only cause a temporary decline. As the share price continued to drop, concerns escalated. The firm noted, “Though we have a hard time believing the fundamentals of the business are deteriorating as fast as the stock price is indicating, we do have to concede when leverage is involved on micro-cap retailers, things can deteriorate quickly in a worst-case scenario.”
At the current price around $1.50, Minot Light suggested that if Torrid meets its EBITDA and free cash flow targets in the coming years, the potential upside could be substantial. The company could either repurchase its shares or pay off its debt in less than four years.
Torrid Holdings is no longer among the 30 Most Popular Stocks Among Hedge Funds. At the end of the third quarter, only seven hedge fund portfolios held Torrid shares, down from fifteen in the previous quarter. This shift reflects growing caution among investors. Although Minot Light recognizes the risks associated with Torrid, it believes that some AI stocks currently present more lucrative investment opportunities with higher potential returns.
For further insights into hedge fund investments, Minot Light encourages readers to explore its database for additional investor letters from various funds.
