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To the companions of Optimist Fund,
Q2 marked our strongest quarter of funding efficiency since launching the fund almost 3.5 years in the past.
We achieved this by staying true to our technique: investing in underappreciated, market-leading companies led by formidable CEOs with lengthy runways for progress.
Right now, we’re excited in regards to the portfolio. We consider it’s stuffed with corporations that may drive distinctive long-term funding returns.
To everybody who’s partnered with us—thanks to your belief and perception in what we’re constructing.
% Returns | Optimist Fund* | Benchmark** |
YTD | 32.4% | 3.0% |
Q2 2025 | 39.2% | 11.3% |
Q1 2025 | -4.9% | -7.5% |
2024 | 66.5% | 34.1% |
2023 | 82.9% | 27.4% |
2022*** | -51.4% | -11.8% |
Compound Returns as of June thirtieth, 2025 | ||
1 12 months | 88.8% | 20.3% |
2 12 months | 60.5% | 22.0% |
3 12 months | 52.7% | 23.8% |
Since Inception | 22.3% | 14.1% |
***Fund begin date was March 1, 2022.
Q2 Evaluation
Prime Contributors | Contribution | Q2 TSR | Prime Detractors | Contribution | Q2 TSR |
Thredup (TDUP) | 27.0% | 211% | Revolve (RVLV) | -0.4% | -7% |
Carvana (CVNA) | 12.2% | 61% | |||
Wayfair (W) | 4.0% | 60% | |||
Prime Contributor Whole | 43.3% | Prime Detractor Whole | -0.4% |
TSR = Whole shareholder return
Q2 was a risky quarter, pushed by the shock reciprocal tariff bulletins from Donald Trump on April 2nd, which triggered a pointy unfavourable market response. As all the time, we used the market dislocation as a chance to reposition the portfolio in methods we consider will improve long-term returns.
In hindsight, the tariff-driven volatility turned out to be a significant alternative for our buyers. We added to Carvana and Wayfair throughout the sharp selloff, and since then, each shares have greater than doubled. It’s one other instance—like 2022—of how we use market dislocations to our benefit by staying targeted on proudly owning the best companies on the proper costs. Reasonably than making an attempt to time markets or forecast short-term macro occasions, our edge comes from investing with a long-term lens in corporations we consider can ship distinctive five-year returns.
Prime Contributors
ThredUp – As we famous in our Q1 letter, ThredUp is present process a big inflection level that’s quickly shifting investor notion of the enterprise. The corporate delivered sturdy Q1 outcomes, beating expectations and elevating steering for Q2 and the total 12 months. Whereas the inventory has already had a robust run year-to-date, we proceed to see significant upside over the approaching years as ThredUp scales into its present achievement middle capability.
Carvana – Carvana posted one other distinctive quarter, rising retail models by 46%, income by 38%, and reaching an all-time excessive adjusted EBITDA (Earnings earlier than curiosity, taxes, depreciation and amortization) margin of 11.5%. Administration reiterated their outlook for continued speedy progress and margin enlargement, and most notably, launched a daring new long-term goal: 3 million annual retail models at a 13.5% EBITDA margin inside 5–10 years. Figuring out this workforce, our wager is that they’re aiming for the low finish of that vary—which might indicate over 40% annualized unit progress, greater than 5% above our prior expectations. We stay very inspired by Carvana’s trajectory and proceed to view it as a compelling 5-year funding alternative.
Wayfair – Wayfair reported outcomes that have been higher than feared and has cited sturdy demand traits at current investor conferences. After ready greater than two years for income progress to inflect, it now seems—primarily based on each administration commentary and up to date outcomes—that the tide is lastly turning. One key unknown within the e- commerce panorama is the fallout from the de minimis loophole closure, which has negatively impacted Chinese language gamers like Temu and Shein. Whereas it’s too early to know for certain, Wayfair may very well be one of many key beneficiaries of that disruption.
Prime Detractors
Revolve– Revolve was the one place within the portfolio that declined throughout the quarter, largely as a result of administration’s feedback a couple of slowdown to mid-single- digit income progress in April—down from double digits the month prior—in addition to preliminary steering on tariff impacts. Since then, the corporate has indicated a return to double-digit progress and famous that price headwinds are actually extra restricted following a discount in China-related tariffs. Regardless of this, the inventory has remained below strain. We’ve taken the chance so as to add to our place at what we consider are extremely enticing valuations.
Combination Portfolio Composition
Listed below are the highest 10 holdings in our fund, comprising roughly 80% of the portfolio as of June thirtieth, 2025.
Defining an Optimist Firm
We didn’t have any new additions to our prime 10 holdings this quarter, so we thought it could be an excellent alternative to focus on the type of companies we search out.
Each firm we spend money on might be outlined by a single guiding sentence:
These companies share a typical thread: they’re underappreciated by the market, making them undervalued and providing the potential for outsized funding returns. They’re leaders of their respective classes, led by founder-like CEOs who’ve clearly outlined the technique and personal vital fairness. And importantly, they’re nonetheless within the early innings—what we’d name the 2nd or third inning—of their progress journey.
That mentioned, not each market-leading enterprise led by an formidable CEO seems the identical. Some are reinventing their industries by breakthrough buyer experiences and natural progress. Others develop by disciplined, strategic acquisitions. Whereas these fashions might seem fairly totally different on the floor, we view them as essentially alike: each are class leaders with high-performing groups, deploying capital to speed up progress and maximize long-term income.
That mentioned, we’ve distilled the important thing variations into the next slides, which we’ve titled Compounders in Disguise and Inflecting Compounders.
We’ve a transparent understanding of the kind of corporations we’re searching for, find out how to discover them, and why they supply the chance for extra funding returns.
Optimist’s First Annual Investor Assembly
Since launching Optimist, we’ve all the time envisioned bringing our investor neighborhood collectively every year—to share updates on the fund, talk about our holdings, and join in particular person. I’m excited to announce that our first annual assembly will happen the morning of September 4th in Toronto.
We’ll present an replace on the Optimist Fund, stroll by our funding course of and portfolio, and host a fireplace chat with James Reinhart, Founder and CEO of ThredUp, certainly one of our largest and most fun holdings.
Formal invites will probably be despatched within the coming weeks—we hope to see you there.
Closing Remarks
Total, our portfolio corporations proceed to carry out effectively, and our conviction in them stays sturdy. Whereas macro uncertainty might persist, our focus is firmly on proudly owning companies with the potential to compound worth and ship significant returns for Optimist Fund over the subsequent 5 years.
If there’s one takeaway from our efficiency since launching the fund in March 2022, it’s that we’ve operated by a variety of market environments—each good and unhealthy—and constantly navigated them with a long-term mindset. This self-discipline has resulted in best-in-class returns for our buyers. Our objective is easy: to maintain doing precisely that for years to come back.
Thanks to your continued belief and partnership. As all the time, please be happy to succeed in out with any questions.
Communicate quickly,
Jordan McNamee, Founder & Chief Funding Officer
*Charges of return are for Class E lead collection web of all charges and bills for Optimist Fund for example the historic efficiency of our funding technique. **The Benchmark has a 50% weighting within the MSCI World Development Index and a 50% weighting within the Russell Midcap Development Index multiplied by the USDCAD trade fee. The Benchmark is supplied for data solely and comparisons to benchmarks and indexes have limitations. Investing in international equities is the first technique for Optimist Fund however Optimist Fund doesn’t spend money on all or essentially any of the securities that compose the Benchmark or the market indexes. Reference to the Benchmark and the market indexes doesn’t indicate that Optimist Fund will obtain comparable returns. ***Fund begin date was March 1, 2022. This report is neither a proposal to promote nor a solicitation of a proposal to purchase any securities in any fund managed by us. Any providing is made solely pursuant to the related providing memorandum along with the related subscription settlement, each of which ought to be learn of their entirety. No provide to promote securities will probably be made previous to receipt of those paperwork by the offeree, and no provide to buy securities will probably be accepted previous to completion of all acceptable documentation. The discussions on this report are usually not supposed to be funding recommendation to any particular investor. A number of the discussions are primarily based on the perfect data obtainable to us, publicly or in any other case, however due consideration ought to be given to the truth that a lot of it’s forward-looking or anticipatory in nature, which is inherently unsure. Previous efficiency of a fund isn’t any assure as to its efficiency sooner or later. This report is just not an commercial, and it’s not supposed for public use or distribution. |
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Editor’s Be aware: The abstract bullets for this text have been chosen by Searching for Alpha editors.