Recurve Capital, an investment management company, released its Q4 2024 investor letter. A copy of the letter can be downloaded here. Recurve had an impressive performance in 2024, successfully bouncing back from the drawdown experienced in 2022 more quickly than anticipated. The fourth quarter proved to be particularly strong, achieving nearly +13% in gross returns, compared favorably to the S&P 500 (+2.1%), Nasdaq (+6.2%), and Russell 2000 (flat). In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.

In its fourth quarter 2024 investor letter, Recurve Capital emphasized stocks such as Carvana Co. (NYSE:CVNA). Headquartered in Tempe, Arizona, Carvana Co. (NYSE:CVNA) is an e-commerce platform for buying and selling used cars. The one-month return of Carvana Co. (NYSE:CVNA) was 29.94%, and its shares gained 388.60% of their value over the last 52 weeks. On February 5, 2024, Carvana Co. (NYSE:CVNA) stock closed at $255.98 per share with a market capitalization of $29.936 billion.

Recurve Capital stated the following regarding Carvana Co. (NYSE:CVNA) in its Q4 2024 investor letter:

"One year is too short a time frame to evaluate anything and we will never be perfect, but overall, nailing Carvana Co. (NYSE:CVNA) mattered much more than anything else.

We assess our portfolio management performance by looking at the breadth of participation across the portfolio and by comparing our actual results to two parallel scenarios: (1) our performance relative to an equal-weight portfolio of the same positions, and (2) our performance relative to the actual portfolio assuming no further trading over the evaluation period. Encouragingly, our actual performance has been better than both alternate scenarios across substantially all evaluation periods. The primary exception is at the end of 2022, when an equal-weight portfolio would have produced better forward returns by having significantly more exposure to Carvana at its record-low prices. These analyses give me comfort that we add value through our active management and optimization of the portfolio.

We care most about portfolio-level returns which largely depend on slugging percentages, but we also know that having a consistent batting average is important. As shown in the chart below, the median position in our portfolio returned +35% in 2024 on a total return basis (including dividends), below our actual performance but nicely above the returns for the major indices. Carvana’s excellent performance in 2024 pulled our actual performance well above the median, but that was our intention given our large position size. We had healthy contributions across the portfolio, but we also benefited from great slugging percentages in 2023 and 2024..." (Click here to read the full text)

A customer buying a used car with the help of a finance specialist.

Carvana Co. (NYSE:CVNA) is not on our list of 30 Most Popular Stocks Among Hedge Funds.  As per our database, 66 hedge fund portfolios held Carvana Co. (NYSE:CVNA) at the end of the third quarter which was 61 in the previous quarter. In the third quarter, Carvana Co. (NYSE:CVNA) reported $3.655 billion in revenues, an increase of 32% from Q3 2024.While we acknowledge the potential of Carvana Co. (NYSE:CVNA) 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 cheapest AI stock.

In another article we discussed Carvana Co. (NYSE:CVNA) and shared Optimist Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2024 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.