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KamiPhotos/iStock via Getty Images To the partners of Optimist Fund, The first quarter was marked by heightened volatility, driven by geopolitical tensions and uncertainty around global trade policy. While these macro headwinds created short-term market dislocations, they do not impact our long-term investment philosophy or our return expectations. At Optimist, we invest in exceptional businesses, led by outstanding management teams, with long runways for growth that we believe are underappreciated by the market.
Volatility, while uncomfortable in the moment, often presents opportunity—as it did in 2022. These dislocations can be used to our advantage, setting the stage for strong future returns. Today, we are as excited about the opportunity set as we’ve been since launching the Fund over three years ago.
We believe the portfolio is well positioned to deliver meaningful long-term returns. % Returns Optimist Fund* Benchmark** 2022*** -51.4% -11.
8% 2023 82.9% 27.4% 2024 66.
5% 34.1% Q1 2025 -4.9% -7.
5% Click to enlarge Compound Returns as of March 31st, 2025 1 Year 32.9% 10.5% 2 Year 51.
9% 19.0% 3 Year 12.9% 11.
3% Since Inception 11.7% 11.3% Click to enlarge ***Fund start date was March 1, 2022.
Q1 Review Top Contributors Contribution Q1 TSR Top Detractors Contribution Q1 TSR Thredup ( TDUP ) 4.5% 73% HelloFresh ( OTCPK:HLFFF )( OTCPK:HELFY ) -5.6% -34% Carvana ( CVNA ) 2.
2% 3% Revolve ( RVLV ) -1.9% -36% Uber ( UBER ) 1.7% 21% Wayfair ( W ) -1.
8% -28% Top Contributor Total 8.4% Top Detractor Total -9.3% Click to enlarge TSR = Total shareholder return Top Contributors ThredUp – As highlighted in our Q4 letter, ThredUp preannounced strong results in January, pointing to a meaningful acceleration in both revenue growth and margin expansion.
In March, the company issued conservative 2025 guidance, which we believe positions it well to continue to outperform market expectations. Due to having a market cap of just $400 million, ThredUp remains largely under the radar—but we expect that to change over the next 12–18 months as its improving fundamentals attract broader investor attention. It’s currently a top three position in the portfolio, and we believe its best days remain ahead.
Carvana – Carvana posted an outstanding fourth quarter, with retail cars sold up 50% year-over-year and revenue rising 46%, making it the company’s second-best quarter ever for sales. Profitability reached record levels, with net income of $159 million and an adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) margin of 10.1%—capping off 2024 as Carvana’s first year of consistent quarterly net income.
While some investors remain cautious due to its leveraged balance sheet, we believe those concerns will diminish as profitability continues to scale. In our view, Carvana is well on its way to becoming a widely recognized, high-quality business with meaningful long-term upside. Uber – Uber posted its strongest quarter yet, with gross bookings rising 18% year-over- year to $44.
2 billion and revenue growing 20% to $12.0 billion. Adjusted EBITDA jumped 44% to $1.
8 billion, fueled by record demand across both Mobility and Delivery, while free cash flow reached $1.7 billion. Exceeding its three-year financial targets, the company heads into 2025 with accelerating momentum and emerging upside from autonomous vehicles.
Uber’s growing free cash flow profile is attracting broader investor attention—including a recent investment from renowned value investor Bill Ackman. Our investment thesis remains intact. Top Detractors In Q1, shares of consumer discretionary companies came under pressure as concerns around economic softness and a potential recession weighed on sentiment.
As long- term investors, we view these short-term dislocations as noise, and remain focused on fundamentals over a five-year horizon. HelloFresh – HelloFresh reported FY 2024 adjusted EBITDA of €399 million on €7.7 billion in revenue, highlighting the strong early results of its strategic pivot toward efficiency, higher-value customers, and disciplined marketing.
In Q4, revenue grew modestly in constant currency (+0.9%) as the company intentionally moved away from low- quality volume growth, leading to notable Adjusted EBITDA margin expansion— especially in the Meal Kit segment. For 2025, HelloFresh is guiding to a ~65% increase in adjusted EBIT, even as revenue is expected to decline by 5%, reflecting a continued focus on long-term profitability over top-line growth.
The increased revenue decline was not taken positively by the market, but we believe this disciplined approach is positioning HelloFresh for sustained value creation and makes it a compelling long- term investment. Revolve – Revolve Group delivered a strong Q4 2024, with net sales up 14% year-over- year to $293.7 million and net income more than tripling to $11.
8 million, driven by improved marketing and logistics efficiency, lower return rates, and expanded gross margins. While Q1 guidance was slightly below expectations due to a temporary marketing pause related to wildfires in its core LA market, our long-term thesis remains intact. Wayfair – Wayfair’s Q4 revenue was flat year-over-year, and its Q1 outlook called for modest improvement, which was slightly below expectations, reflecting continued softness in the home goods market.
Despite near-term headwinds, we remain confident in Wayfair’s long-term potential and see significant upside as the category gradually normalizes. Aggregate Portfolio Composition Here are the top 10 holdings in our fund, comprising approximately 80% of the portfolio as of March 31st, 2025. Carvana Wayfair ThredUp Monday.
com HelloFresh First Advantage ( FA ) Uber Fiverr ( FVRR ) DoorDash ( DASH ) Latham Group ( SWIM ) Click to enlarge Featured Holding: First Advantage A quality compounder undergoing transformational M&A First Advantage is the leading provider of employment background checks. In 2024, it acquired Sterling Check, the second-largest player, creating a market leader with ~25% share—twice the size of the next competitor. We believe this is a good business in a steady-growth industry, with three compelling idiosyncratic drivers which make it an unusually attractive investment: Cyclical Recovery Ahead The industry has been in a downturn tied to reduced hiring volumes for 2 years.
As hiring trends normalize and eventually return to growth, First Advantage will begin to experience multi-year tailwinds. We believe we’re near a cyclical trough meaning we have minimal downside and disproportionate upside. Underappreciated Synergies Management initially guided to $50M in synergies from the Sterling deal, which has since been revised upward to $60–70M.
We believe the cost synergy opportunity exceeds $100M, representing an incremental 10%+ EPS uplift. The logic of combining both businesses to unlock material synergies is sound and we believe will drive more shareholder value than the market currently expects. Material EPS Growth via Deleveraging FA funded the acquisition with $2.
2B of debt (current leverage: ~5x net debt to EBITDA) and 27M new shares. With roughly half the debt floating at 7.5%, deleveraging to 3x over the next few years will significantly increase EPS.
Today, First Advantage trades at just 10x our estimate of 2026 EPS. We believe the business can grow earnings over 20% annually without any incremental M&A or share buybacks, which should lead to multiple expansion. Our 5-year target of ~$75 implies a ~400% return from current levels and is based on a 25x multiple on 2030 EPS of $3.
00. Closing Remarks Overall, the companies in the portfolio are performing well, and our conviction remains strong. While macro uncertainty may persist, our focus remains squarely on owning businesses with the potential to compound value and drive meaningful investment returns for Optimist Fund over the next five years.
Thank you for your continued trust and partnership. As always, please feel free to reach out with any questions. Speak soon, Jordan McNamee, Founder & Chief Investment Officer *Rates of return are for Class E lead series net of all fees and expenses for Optimist Fund to illustrate the historical performance of our investment strategy.
**The Benchmark has a 50% weighting in the MSCI World Growth Index and a 50% weighting in the Russell Midcap Growth Index multiplied by the USDCAD exchange rate. The Benchmark is provided for information only and comparisons to benchmarks and indexes have limitations. Investing in global equities is the primary strategy for Optimist Fund but Optimist Fund does not invest in all or necessarily any of the securities that compose the Benchmark or the market indexes.
Reference to the Benchmark and the market indexes does not imply that Optimist Fund will achieve similar returns. Benchmark Adjustment – Previous to this quarterly letter, we had not shown our benchmark in CAD which we have decided to amend given our fund is priced in CAD. All historical benchmark performance is now converted to CAD and will be on a go forward basis.
***Fund start date was March 1, 2022. This report is neither an offer to sell nor a solicitation of an offer to buy any securities in any fund managed by us. Any offering is made only pursuant to the relevant offering memorandum together with the relevant subscription agreement, both of which should be read in their entirety.
No offer to sell securities will be made prior to receipt of these documents by the offeree, and no offer to purchase securities will be accepted prior to completion of all appropriate documentation. The discussions in this report are not intended to be investment advice to any specific investor. Some of the discussions are based on the best information available to us, publicly or otherwise, but due consideration should be given to the fact that much of it is forward-looking or anticipatory in nature, which is inherently uncertain.
Past performance of a fund is no guarantee as to its performance in the future. This report is not an advertisement, and it is not intended for public use or distribution. Click to enlarge Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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