| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | -14.9% |
Recurve Capital underperformed significantly in the first half of 2026, down 14.9% net versus the S&P 500's 9.6% gain, driven primarily by Carvana's 22% decline which accounted for 80% of the fund's negative performance. Despite this underperformance, the manager maintains high conviction in Carvana, which represents 47% of the portfolio. The manager expects Carvana's EBITDA to triple over the next three years as the company sustains 40% unit growth, with the stock currently trading at 18.6x 2027 consensus EBITDA. Short-term volatility has been driven by weekly alternative data fluctuations and operational issues at reconditioning centers during system upgrades, but the manager views these as temporary challenges. The investment approach focuses on multi-year earnings growth rather than quarterly results, with returns expected to materialize as Carvana compounds several years of above-consensus growth. The portfolio remains highly concentrated with 11 positions, and the manager made minor rebalancing adjustments, trimming e.l.f. Beauty to add to DoorDash and Shopify. The manager emphasizes patience and long-term orientation, willing to endure near-term underperformance when the fundamental thesis remains intact.
Recurve generates returns by investing in concentrated positions in companies that can grow owner earnings per share above 15% annually over 5-year periods, targeting above 20% IRRs on a weighted-average basis, with a willingness to hold through short-term volatility when the long-term thesis remains intact.
The manager expects Carvana's EBITDA to roughly triple over the next 3 years, driven by sustained 40% growth rates that are expected to continue for several more years before decelerating. The manager is comfortable that Carvana will not suffer material multiple compression and expects the stock to roughly triple if the multiple remains constant. The reconditioning center improvements are expected to show gross profit benefits in coming quarters as production has reaccelerated in Q2 2026.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 1 2026 | 2026 Q2 | AMZN, CCOI, CVNA, DASH, ELF, GWRE, PAY, RCL, RH, SHOP | Concentration, consumer, E-Commerce, growth, long-term, Travel, Used Autos | CVNA | Recurve is down 14.9% YTD, driven by Carvana's 22% decline despite rising earnings estimates. The manager maintains 47% exposure to Carvana, expecting EBITDA to triple over three years as the company sustains 40% growth. Short-term volatility from weekly data and operational improvements at reconditioning centers is viewed as noise. The concentrated portfolio targets multi-year compounding, not quarterly results, with conviction unchanged despite near-term underperformance. |
| Apr 1 2026 | 2026 Q1 | CCOI, CVNA, RCL | Cyclical, drawdowns, Geopolitical, growth, portfolio, value, volatility | CVNA | Recurve declined 8.0% in March amid Iran war-driven oil supply shocks, bringing YTD performance to -18.2%. Manager made no trades, holding concentrated positions led by 47.7% Carvana allocation. Expects transitory inflation impacts rather than permanent earnings damage. Portfolio targets differentiated companies with operating leverage capable of growth despite macro headwinds. |
| Mar 2 2026 | 2025 Q4 | CCOI, CVNA, QQQ, RCL | AI, disruption, innovation, Quality, technology, value | - | Recurve delivered +10% net returns in 2025 despite low batting average, powered by Carvana's 100x recovery from 2022 lows. The strategy targets disruptive companies in stable industries combining physical infrastructure with proprietary technology, positioning them as AI-durable. Recent software sector weakness creates opportunities while portfolio companies leverage technology internally rather than as vulnerable end products. |
| Nov 24 2025 | 2025 Q3 | AMZN, BC.MI, CCOI, CVNA, ELF, KMX, PAY, RCL, RH | E-Commerce, growth, Luxury, opportunity, Portfolio Management, tariffs, Trade Policy | - | Recurve declined 1.5% in September but used volatility to reposition, trimming Carvana profits to add to Brunello Cucinelli and Paymentus. Carvana continues exceptional execution with 45%+ growth while competitors struggle. Trade policy uncertainty affects RH and ELF but both show best-in-class growth. Manager sees exceptional long-term opportunities despite short-term headwinds. |
| Jul 14 2025 | 2025 Q2 | AMZN, BC.MI, CCOI, CVNA, ELF, MSFT, PAY, RCL, RH | Concentration, Decision Tree, disruption, E-Commerce, growth, Long Term, value creation, volatility |
CVNA CCOI RH CVNA CCOI RCL ELF RH AMZN PAY BC |
Recurve delivered exceptional Q2 performance (+31% gross) led by concentrated Carvana position using decision tree framework. Manager embraces volatility for alpha generation while targeting disruptive companies with secular growth and modern operating platforms. Despite near-term headwinds in Cogent and RH, portfolio positioned for continued outperformance through patient capital deployment and disciplined concentration management. |
| May 14 2025 | 2025 Q1 | AMZN, BC, CCOI, CVNA, ELF, RCL, RH, W | consumer, growth, Luxury, tariffs, technology, uncertainty, volatility |
RH CCOI W |
Recurve Capital returned -13% net in Q1 2025 amid tariff-driven volatility, with concentrated exposure led by 43.5% Carvana position. Fund opportunistically added to RH during selloff, seeing $50+ EPS potential despite tariff headwinds. Direct tariff exposure under 20% through consumer goods companies. Manager maintains long-term focus on disruptive growth companies while playing offense during market fear. |
| Jan 16 2025 | 2024 Q4 | AMZN, AWI, BC.MI, CCOI, CVNA, NCLH, RCL, RH, W | disruption, E-Commerce, growth, Luxury, Recovery, technology, Travel, value | - | Recurve delivered 55.7% net returns in 2024, recovering strongly from 2022 drawdown through concentrated investments in disruptive companies. Led by Carvana's three-phase transformation, the portfolio targets Builder Companies with significant market share growth potential in non-disruptive industries. Strong forward outlook with multiple performance drivers and disciplined valuation approach targeting 15%+ long-term returns. |
| Oct 15 2024 | 2024 Q3 | AMZN, AWI, BC, CCOI, CVNA, NCLH, RCL, RH, V, W | Concentration, disruption, growth, long-term, Process, Psychology |
CVNA CCOI |
Recurve delivered 27% Q3 gross returns driven by concentrated positions in disruptive growth companies, particularly Carvana which comprises 39% of the portfolio despite being up 230% YTD. The manager remains highly convicted on the company's long-term prospects, viewing behavioral investor biases around volatile names as opportunity sources for patient capital. |
| Jul 19 2024 | 2024 Q2 | AMZN, AWI, CCOI, CVNA, NCLH, RH, TV, W, WMS | AI, Concentration, Furniture, small caps, Telecom, Used Autos, value, volatility | - | Recurve's concentrated portfolio delivered +17% net YTD returns driven by Carvana's +143% performance, though other holdings significantly underperformed. The fund now has 60% exposure in its top two positions. Manager remains focused on market-leading Builder Companies at attractive valuations while avoiding AI speculation, expecting higher volatility but superior long-term returns from this concentrated approach. |
| Apr 25 2024 | 2024 Q1 | AMT, AWI, CCOI, CVNA, SIRI | Concentration, Cruises, E-Commerce, growth, technology, value |
CVNA AWI CCOI |
Recurve delivered +13% net returns in Q1 through concentrated positions in category-leading companies trading at single-digit multiples of normalized free cash flow. Carvana remains the largest position despite 25x gains, while Armstrong was trimmed for cruise line redeployment. The strategy focuses on share-winning businesses with competitive advantages that can compound independently of macro conditions. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
E-commerceCarvana is the dominant focus, representing 47% of the portfolio. The manager expects EBITDA to roughly triple over the next 3 years as the company sustains 40% retail unit growth. Carvana is transitioning from a growth premium to a mix of growth and quality premiums as it becomes recognized as the juggernaut in online auto retail, similar to Amazon in e-commerce. |
Carvana Used Autos Online Retail Unit Growth EBITDA |
TravelRoyal Caribbean Group is the second-largest position at 9.8% of the portfolio. The manager maintains this position as part of the concentrated portfolio strategy focused on companies with strong growth trajectories. |
Cruises Royal Caribbean Leisure | |
| 2025 Q4 |
OilOil represents the cheapest major asset class globally, trading at near-record lows relative to gold despite balanced fundamentals. The closure of the Straits of Hormuz has created the largest supply shock in industry history, disrupting 20 million barrels per day. Non-OPEC supply growth is slowing dramatically, with U.S. shale production plateauing outside the Permian Basin. |
Crude Oil Brent WTI Shale OPEC |
Natural GasNatural gas ranks in the 99.5th percentile of historical undervaluation relative to equities. U.S. production growth has concentrated entirely in the Permian Basin, with other shale regions declining. Once the Permian's current gas production surge runs its course, supply growth should plateau and eventually decline, setting the stage for materially higher prices. |
Henry Hub LNG Permian Shale Gas | |
SilverSilver surged 51% in Q4 and over 140% for the year, staging a dramatic catch-up rally relative to gold. This magnitude of silver outperformance has historically marked important turning points, suggesting investors should consider reducing precious metals exposure in the short term despite the strong performance. |
Silver Gold Ratio Precious Metals | |
CopperCopper markets have moved back into surplus as evidenced by rising exchange inventories reaching 1.2 million tonnes. Despite strong Q4 performance with 17% gains, modeling suggests a prolonged period of surplus ahead. Current inventory levels represent approximately 17 days of global demand, placing them in the top 20% of observations over thirty years. |
Copper Base Metals Inventories | |
Platinum Group MetalsPGMs continued their powerful advance with platinum and palladium each surging 28% in Q4. Policy reversals in both the U.S. and Europe are unwinding the aggressive push toward electric vehicles, supporting longer-term demand for internal combustion engines and auto-catalysts. The bearish narrative built on rapid EV adoption is being rewritten. |
Platinum Palladium Auto Catalysts Electric Vehicles | |
UraniumSurging uranium demand is meeting a fragile supply base, creating fundamental tightness in the market. The uranium section discusses how demand growth is outpacing supply additions, though specific details are referenced for future coverage in the letter. |
Uranium Nuclear Supply Demand | |
| 2025 Q3 |
E-commerceCarvana continues exceptional execution with over 45% year-over-year growth in September quarter, exiting above 50% unit growth. The company is rapidly expanding variable roles in reconditioning and local delivery, with job openings up 60% over six months, signaling strong growth intentions months ahead of third-party data. |
Used Autos Auto Dealers Digital Transformation Growth Disruption |
LuxuryBrunello Cucinelli faced short attack over Russia sanctions compliance but manager views this as opportunity. Russia represents less than 2% of sales and company is fully compliant with EU sanctions. All major luxury companies continue limited Russian sales similar to Cucinelli. |
Luxury Goods European Luxury Sanctions Short Attack Opportunity | |
Trade PolicyComplex global trade and tariff environment creating unpredictable changes affecting RH and ELF primarily. Both companies showing best-in-class growth despite tariff impacts and have multiple options to offset tariff effects. Manager seeks stability in tariff policies for clearer positioning. |
Tariffs Global Trade Policy Uncertainty Consumer Impact | |
| 2025 Q2 |
E-commerceCarvana represents a disruptive e-commerce platform in the used auto market with industry-leading unit economics. The company has transformed from near-bankruptcy in 2022 to a high-quality secular growth story, demonstrating the power of purpose-built modern operating infrastructure that competitors cannot replicate. |
Used Autos Auto Dealers Digital Platform Unit Economics Disruption |
VolatilityThe manager embraces market volatility as an opportunity rather than avoiding it, using volatility spikes to take advantage of dislocations. This approach creates psychological comfort in accepting short-term performance swings while targeting above-market returns over the medium to long term. |
Market Timing Risk Management Opportunity Psychology Alpha Generation | |
GrowthThe portfolio focuses on disruptors with strong secular, share-gaining growth opportunities that deliver attractive growth in normalized earnings per share over medium to long-term horizons. Companies are selected based on their ability to generate significant customer surpluses and dependable growth. |
Secular Growth Share Gains Earnings Growth Customer Value Long Term | |
| 2025 Q1 |
Trade PolicyThe administration has launched a massive global tariff campaign utilizing executive branch emergency powers to unprecedented levels. The nature of these unilateral tariff policy changes, implemented with almost no notice, creates higher volatility and uncertainty. The fund has about 22% exposure to consumer goods companies with less than 20% direct tariff exposure, primarily through RH and ELF which have elevated exposure to China and Vietnam supply chains. |
Tariffs China Supply Chain Consumer Goods Policy |
E-commerceThe portfolio includes significant exposure to e-commerce and consumer-facing companies including Carvana at 43.5%, Amazon at 5.4%, and formerly Wayfair which was fully exited. The manager notes that Wayfair does not have a differentiated enough value proposition to be a secular winner and can only be an alpha winner by slightly outperforming its end market but is not disruptive enough to grow through choppier periods. |
Online Retail Marketplaces Consumer Digital Commerce | |
LuxuryThe portfolio includes positions in luxury companies RH at 9.7% and Brunello Cucinelli at 4.9%. RH is viewed as having potential for over $50 per share of earnings power as its product refresh and footprint expansion drive revenue growth. Brunello Cucinelli will see negligible tariff impacts due to enormous product margins where a 20% tariff on 10% product COGS can be offset with a 2% price increase, as the ultra-luxury consumer can absorb this with no negative elasticity effects. |
High-End Premium Margins Pricing Power | |
BeautyThe fund has a 4.8% position in e.l.f. Beauty, which is one of two new core additions to the portfolio since 2023. ELF is identified as one of the companies most directly impacted by tariff policies due to supply chain exposure to China and Vietnam, representing part of the fund's 14% exposure to companies in the crosshairs of tariff policies. |
Cosmetics Consumer Products Supply Chain | |
Data ServicesCogent Communications represents 16.5% of the portfolio and operates a utility-like business model that almost completely dodges tariffs. The company has accomplished something remarkable and unprecedented in building a new wavelength network that operates and scales as advertised, with real large customers using it and more onboarding daily. However, the sequencing of revenue generation has been slower than originally communicated, with meaningful revenues now expected in 2025 and beyond as the growth platform is built. |
Wavelength Network Infrastructure Telecommunications | |
| 2024 Q4 |
E-commerceCarvana is disrupting auto retailing with 1% market share in a fragmented market where the largest player has 2% share. The company offers superior retail experience and delivery services compared to 40,000 independent dealers. Wayfair is building a disruptive platform in home furnishings, bringing global suppliers to retail customers through its marketplace model with verticalized logistics capabilities. |
Auto Retail Marketplace Logistics Disruption Platform |
TravelCruise companies are disrupting the vacation market by offering extraordinary experiences at great value compared to land-based alternatives. With only 2% market share in vacations and less than 10% of Americans having taken a cruise, the sector has significant runway for growth as operators continue elevating asset quality and experiences. |
Cruises Vacation Experience Market Share Growth | |
LuxuryRH is disrupting the premium furniture market by curating tasteful collections and creating direct retail relationships for designer goods, eliminating expensive designer intermediaries. Brunello Cucinelli represents underpenetration in key markets like China, where it contributes only 12% of revenue compared to other luxury brands generating nearly 50% in the region. |
Premium Designer Brand China Underpenetration | |
| 2024 Q3 |
E-commerceCarvana represents one of the best disruptive growth stories in the market, disrupting the used auto industry with powerful flywheel effects and operating leverage from future growth. The company has no serious risk of competitive disruption on the horizon and is actually the disruptor in its industry. Despite being up significantly, the manager remains exuberantly positive about its future returns and risk/reward profile. |
Used Autos Auto Dealers Disruption Growth Flywheel |
Telecom InfrastructureCogent Communications is positioned as a complex but fascinating opportunity in a notoriously terrible industry for equity value creation. The manager believes it will not fall victim to the same poor outcomes as other wireline telecom companies. It requires significant analytical effort to understand but represents an amazing opportunity that will be a great investment for many years to come. |
Wireline Data Services Infrastructure Complexity Value Creation | |
| 2024 Q2 |
AIManager views AI as a speculative, capital-intensive paradigm shift similar to the internet boom, requiring massive upfront investments without clear mass adoption or revenue models. Compares it to Field of Dreams investing where companies spend as if outcomes are foregone conclusions. Expects competitive dynamics to lead to value leaking to customers rather than generating monopolistic returns. |
Infrastructure Capex Speculation Competition Electricity |
Used AutosCarvana represents the fund's largest position at nearly 40% weight, having generated 143% YTD returns and 2,800 bps of performance attribution. The company has restarted growth after focusing on internal efficiencies, now generating industry-leading profitability and unit economics while growing volumes 30% year-over-year in a flat market. |
Market Share Unit Economics Profitability Growth Inventory | |
Telecom InfrastructureCogent is undergoing massive network transformation to optimize for its Wavelength business, which could become its largest segment over 3-5 years. The company offers unique risk/reward dynamics with predictable Sprint synergies and downside protection from non-core asset value while targeting disruptive growth in the upside scenario. |
Network Wavelength Synergies Assets Integration | |
Home FurnishingsRH and Wayfair investments lagged significantly, falling 15-20% YTD and detracting 400 bps of performance. The furniture category continues experiencing GFC-like conditions, though the manager notes their companies are outgrowing the broader sector despite the challenging environment. |
Furniture Consumer Cyclical Underperformance Recovery | |
| 2024 Q1 |
E-commerceCarvana is positioned as the market-leading pure-play e-commerce used auto retailer with only 1% market share in a large stable market. The company has significant future growth ahead with under-utilized fixed infrastructure that can leverage and grow into with additional labor. Carvana has embedded advantages across multiple dimensions because of its large-scale vertical production and logistics infrastructure. |
Auto Retail Used Autos Marketplaces Logistics Auto Dealers |
CruisesThe manager increased exposure to cruise lines after they started the year poorly, seeing them as having cheaper valuations and higher EPS CAGRs than Armstrong World Industries. The cruise companies were hitting YTD lows while AWI was hitting post-earnings highs, creating a compelling rebalancing opportunity. The cruise companies have since recovered over 20% of performance. |
Travel Cruises Value Entertainment |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 1, 2026 | Fund Letters | Recurve Capital | CVNA | Carvana Co. | Auto & Truck Dealerships | Specialty Retail | Bull | New York Stock Exchange | e-commerce, EBITDA Expansion, Equity, High Growth, Operational Leverage, Process automation, Reconditioning Centers, turnaround, Unit growth, used car retail, vertical integration | Login |
| Apr 8, 2026 | Fund Letters | Recurve Capital | CVNA | Carvana Co. | Auto & Truck Dealerships | Specialty Retail | Bull | New York Stock Exchange | Automotive Retail, e-commerce, EBITDA multiple, growth, Low Cyclicality, Mass Consumer, Used cars | Login |
| Jul 14, 2025 | Fund Letters | Aaron Chan | CVNA | Carvana Co. | Consumer Discretionary | Automotive E-Commerce | Bull | NASDAQ | Autos, deleveraging, ecommerce, Operatingleverage, turnaround | Login |
| Jul 14, 2025 | Fund Letters | Aaron Chan | CCOI | Cogent Communications Holdings, Inc. | Communication Services | Alternative Carriers | Bull | NASDAQ | Bandwidth, FCF, Integration, Internet, Telecom | Login |
| Jul 14, 2025 | Fund Letters | Aaron Chan | RH | RH | Consumer Discretionary | Homefurnishings | Bull | New York Stock Exchange | Brand, Luxury, Pricingpower, retail, tariffs | Login |
| Jul 14, 2025 | Fund Letters | Recurve Capital | CVNA | Carvana Co. | Consumer Discretionary | Specialty Retail | Bull | NYSE | Consumer Surplus, debt restructuring, deleveraging, e-commerce, Free Cash Flow, Platform business, secular growth, turnaround, Unit economics, used car retail | Login |
| Jul 14, 2025 | Fund Letters | Recurve Capital | CCOI | Cogent Communications Holdings Inc. | Communication Services | Alternative Carriers | Bull | NASDAQ | Communications, data centers, infrastructure, Internet Infrastructure, Network Services, secular growth, telecommunications | Login |
| Jul 14, 2025 | Fund Letters | Recurve Capital | RCL | Royal Caribbean Group | Consumer Discretionary | Hotels, Restaurants & Leisure | Bull | NYSE | Consumer Discretionary, Cruise lines, Leisure, market leader, Post-Pandemic Recovery, Tourism, Travel | Login |
| Jul 14, 2025 | Fund Letters | Recurve Capital | ELF | e.l.f. Beauty Inc. | Consumer Staples | Personal Products | Bull | NYSE | Beauty, Consumer products, Cosmetics, direct-to-consumer, market share gains, Millennial Demographics, value proposition | Login |
| Jul 14, 2025 | Fund Letters | Recurve Capital | RH | RH | Consumer Discretionary | Specialty Retail | Bull | NYSE | China exposure, double-digit growth, home furnishings, Luxury Retail, Premium Brand, Pricing power, tariffs | Login |
| Jul 14, 2025 | Fund Letters | Recurve Capital | AMZN | Amazon.com Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | AWS, Cash Flow Reinvestment, Cloud computing, data centers, e-commerce, Platform business, technology infrastructure | Login |
| Jul 14, 2025 | Fund Letters | Recurve Capital | PAY | Paymentus Holdings Inc. | Information Technology | Data Processing & Outsourced Services | Bull | NYSE | B2B software, Bill Payment, Cloud Technology, digital payments, Electronic Payments, Fintech, SaaS | Login |
| Jul 14, 2025 | Fund Letters | Recurve Capital | BC | Brunello Cucinelli S.p.A. | Consumer Discretionary | Textiles, Apparel & Luxury Goods | Bull | BIT | Artisanal, Cashmere, Global Luxury Market, Italian Fashion, Luxury goods, Premium Brand, Sustainable Luxury | Login |
| May 14, 2025 | Fund Letters | Recurve Capital | RH | RH | Consumer Discretionary | Home Furnishing Retail | Bull | NYSE | China Exit, Earnings Power, home furnishings, Luxury Retail, supply chain, tariff impact, value opportunity | Login |
| May 14, 2025 | Fund Letters | Recurve Capital | CCOI | Cogent Communications | Communication Services | Alternative Carriers | Bull | NASDAQ | Complexity discount, data centers, dividend yield, infrastructure, leverage, secular growth, telecommunications, Wavelength Network | Login |
| May 14, 2025 | Fund Letters | Recurve Capital | W | Wayfair | Consumer Discretionary | Internet & Direct Marketing Retail | Bear | NYSE | Alpha vs Secular, Differentiation, e-commerce, exit strategy, Home goods, Industry Headwinds, market share | Login |
| Oct 15, 2024 | Fund Letters | Recurve Capital | CVNA | Carvana Co. | Consumer Discretionary | Specialty Retail | Bull | NYSE | Disruptor, e-commerce, Equity, Flywheel Effects, growth, operating leverage, Used Auto, vertical integration | Login |
| Oct 15, 2024 | Fund Letters | Recurve Capital | CCOI | Cogent Communications Holdings, Inc. | Communication Services | Alternative Carriers | Bull | NASDAQ | Complex Business, contrarian, Equity, founder-led, small-cap, telecommunications, Wireline | Login |
| Apr 25, 2024 | Fund Letters | Recurve Capital | CVNA | Carvana Co. | Consumer Discretionary | Specialty Retail | Bull | NYSE | e-commerce, EBITDA multiple, market share growth, network effects, Operational Leverage, Scalable Infrastructure, turnaround, used car retail | Login |
| Apr 25, 2024 | Fund Letters | Recurve Capital | AWI | Armstrong World Industries Inc. | Industrials | Building Products | Neutral | NYSE | Building Products, Ceiling Systems, duopoly, Fair value, margin expansion, portfolio rebalancing, Pricing power, valuation multiple | Login |
| Apr 25, 2024 | Fund Letters | Recurve Capital | CCOI | Cogent Communications Holdings Inc. | Communication Services | Alternative Carriers | Bull | NASDAQ | asset monetization, fiber network, High Margin Revenue, IPv4 addresses, network infrastructure, Pricing power, Securitization, Wavelengths | Login |
| TICKER | COMMENTARY |
|---|---|
| CVNA | Carvana is -22% YTD through June 30th and has driven about 80% of our negative performance YTD. An otherwise slightly negative performance YTD looks quite a bit worse because our most important position is underperforming the indices by over 3,000 bps in 1H 2026. For Carvana, we generated significant positive returns when cash flow flipped from materially negative (2021, 2022) to materially positive (2023, 2024, 2025). Today in 2026, owner earnings are continuing to grow substantially. We can see expectations for 2026 rising from $600M in early 2023 to roughly $3B today. Because it was a highly levered situation at that time, the stock rose from <$2 in early 2023 to now ~$65, a ~33x return on a 5x increase in expectations. Looking forward, we expect EBITDA (as a proxy for owner earnings) to roughly 3x in the next 3 years. All else equal, we would expect the stock to roughly 3x as well if the multiple were to remain constant. Currently, the stock trades at 24.5x 2026 EBITDA and 18.6x consensus 2027 EBITDA. It is cheaper than those multiples on our above-consensus estimates and becomes even cheaper over time. These valuations are not expensive in relation to Carvana's +40% retail unit growth today and our view of how sustainable high growth rates are over the medium- and long-term. The multiple 3 years from now will depend on what the growth outlook is from that point forward, but I feel comfortable that we won't suffer from material multiple compression. We don't need the multiple to rise to make our returns. When most companies experience a deceleration from 40% to 25% we would expect the multiple to compress, but in this case we do not expect much from current levels given the recent underperformance – especially as more investors come to appreciate the earnings power and stability of the business. 25% growth with a long remaining runway is still incredibly strong and by then Carvana should be recognized as the juggernaut in the industry, similar to Amazon in e-commerce today. The multiple should remain healthy as it shifts from having major growth premium today to having a mix of growth and quality premiums in the future. Carvana likely will sell more than 800k units in 2026 and based on alternative data, it will sell ~200k units in Q2. At year-end 2024, consensus estimates called for 623k units in 2026. At year-end 2025, consensus was at 745k units. Today, consensus is at 797k units. This is what we want to see – estimates going higher. Rising estimates helped generate significant performance for Carvana in 2025. Even in 2026, estimates have been revised up across the year. And yet, the stock is down about -22% YTD. For us to generate the returns I expect out of Carvana, we need the company to grow faster-than-expected for at least several more years. Across the first half of 2026, Carvana has maintained about a 40% y/y growth rate, but the pace of growth has varied from 50%+ to flat (due to winter storms in Jan/Feb). The week-to-week variance of growth has caused meaningful volatility. Carvana experienced reconditioning issues across a handful of sites in 2H 2025 which caused a gross profit miss in Q4 results. These issues were caused by Carvana's site expansion which caused a redistribution of key local talent, combined with the company not yet deploying systems to properly monitor site-by-site variance during that process. The issues in 2H 2025 pushed the company to assess the drivers of underperformance and to implement new internal systems that are monitored closely from centralized dashboards. Previously, the company had relied heavily on local site managers to run a solid operation. Now, the company is centralizing and automating significant components of those processes. With those systems now in the process of being deployed across the network of reconditioning centers, different sites are at different levels of efficiency. If a given site is earlier in the deployment process (thereby producing lower-margin units), Carvana is not eager to ramp up volume yet. They keep volumes relatively lower at those sites until the expected improvements are observed – and then they will push more volume to it. This is what a rational owner would do – delay ramping up when they are only a few weeks away from more profitable units being produced. If another site has the full suite of new internal systems and the staff is fully trained on it, they will push that site to keep ramping. Carvana's dozens of reconditioning sites are at various stages of deployment, each with its unique cadence of slowing down and speeding up around the migration to new processes and systems. This is not just pushing software updates – it requires training and onboarding for the many thousands of workers across the network. A bad weekly comp in alternative data can be generated from a handful of key sites slowing down for a few weeks while new systems are deployed, but that is nothing to be concerned about. In summary, weekly sales and productivity volatility during a period of process improvements that we know are underway should not be surprising. I am encouraged that Carvana's inventory appears to have reaccelerated from the end of Q1 to the end of Q2, resulting in y/y inventory growth of ~40% (vs. Q1 2026 inventory growth of ~25%), while retail sales grew a touch under 40% y/y based on our data sources. This reacceleration of inventory growth suggests the majority of Carvana's reconditioning centers have improved enough for Carvana to return to production growth mode in aggregate, with most of that growth showing up in the last half of the quarter. We read the production reacceleration itself as the encouraging signal: Carvana held volume back at various sites until they were efficient and profitable enough to scale. Their willingness to ramp tells us those sites have cleared that bar. Units produced in the second half of Q2 (when the ramp occurred) will be sold predominantly in Q3, so the gross profit benefit should be observable in the coming quarters. We do not expect perfection from Carvana or any of our companies, but we expect over time they will be able to course-correct as necessary to generate a favorable path to the long-term view we have. Carvana has proven its ability to do this (particularly in the 2023/2024 turnaround) and has earned credibility on this front. The company is always upgrading its systems and processes, as we should expect it to. That doesn't mean it won't have a bad quarter here or there along this long-term journey – especially when it is scaling such an operationally intensive, vertically-integrated business while growing ~40%. I did not expect Carvana to be down -22% YTD while estimates rose across the year, but the volatility in weekly data caused the multiple to compress – a reminder that simply growing the numbers doesn't translate one-for-one into equity appreciation in the short term. |
| RCL | Royal Caribbean Group is the second-largest position at 9.8% of the portfolio as of June 30, 2026. |
| PAY | Paymentus represents 7.6% of the portfolio as of June 30, 2026. |
| RH | RH represents 6.5% of the portfolio as of June 30, 2026. |
| CCOI | Cogent Communications represents 5.2% of the portfolio as of June 30, 2026. |
| DASH | We made some small rebalancing changes, including trimming ELF after a solid month to buy a little more DoorDash. Doordash represents 4.7% of the portfolio as of June 30, 2026. |
| AMZN | Amazon represents 4.4% of the portfolio as of June 30, 2026. Carvana should be recognized as the juggernaut in the industry, similar to Amazon in e-commerce today. |
| ELF | We made some small rebalancing changes, including trimming ELF after a solid month. e.l.f. Beauty represents 3.9% of the portfolio as of June 30, 2026. |
| GWRE | Guidewire represents 3.0% of the portfolio as of June 30, 2026. |
| SHOP | We made some small rebalancing changes, including trimming ELF after a solid month to buy a little more Shopify. Shopify represents 1.5% of the portfolio as of June 30, 2026. |
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