Investment management firm Recurve Capital has released its second-quarter 2025 investor letter, reporting a remarkable performance that stands out in a fluctuating market. The fund achieved a gross return of 31% for the quarter, significantly outperforming the S&P 500 and Nasdaq, which recorded returns of 10.6% and 17.8% respectively. Year-to-date, Recurve’s gross return is 14.8%, with a net return of 12%.
Among the key holdings highlighted in the report is RH (NYSE:RH), a prominent retailer in the home furnishings sector. Despite a one-month return of 13.37%, RH has faced challenges over the past year, seeing its share price decline by 39%. On October 2, 2025, RH’s stock closed at $203.79 per share, giving the company a market capitalization of $3.82 billion.
Recurve’s Insights on RH’s Future Prospects
In its letter, Recurve Capital expressed a mix of frustration and optimism regarding RH’s performance. The company noted, “The large negative contributions from both Cogent and RH have been frustrating. Both are down for valid reasons, but I nonetheless expect great results from these companies over the coming years and they should become meaningful positive contributors to performance.”
The investor letter elaborated on RH’s struggles with tariffs, particularly as they relate to its largest sourcing markets, China and Vietnam. Recent developments have stabilized future tariff rates, alleviating some of the worst-case scenarios that had previously been a concern. While there remain some negotiations pending, Recurve anticipates that RH can mitigate the impact of new tariff rates through a price increase of approximately 6-7%. The company had already implemented price increases across various stock-keeping units (SKUs) earlier in the year, effectively reducing the gross profit impact.
With these significant risks appearing to diminish, Recurve Capital is optimistic about RH’s ability to resume its trajectory of double-digit growth in the coming years.
Hedge Fund Sentiment and Market Position
Despite the challenges faced by RH, the company does not feature among the 30 Most Popular Stocks Among Hedge Funds. According to Recurve’s database, 49 hedge fund portfolios held RH at the end of the second quarter, a slight increase from 46 in the previous quarter. While there are inherent risks with this investment, Recurve believes that certain AI stocks present greater potential for higher returns within a shorter timeframe.
Investors looking for promising opportunities may find value in exploring alternatives within the technology sector, particularly those identified in Recurve’s analysis.
In addition, Recurve Capital has provided insights on RH in previous articles, including perspectives from the Carillon Eagle Mid Cap Growth Fund. For those interested, additional investor letters from the second quarter of 2025 are available on Recurve’s dedicated page.
As the market continues to evolve, Recurve Capital maintains a cautious yet hopeful outlook on RH’s future, emphasizing the importance of adaptability in navigating the complexities of the retail landscape.