Minot Light Capital Partners released its third-quarter investment letter for 2025, revealing significant challenges for one of its holdings, Torrid Holdings Inc. (NYSE:CURV). The investment management firm reported a net return of 7.6% for its limited partners, though this figure fell short of the benchmarks, particularly the micro-cap benchmark, which achieved a return of 17.1%.
Torrid Holdings, a retailer specializing in apparel and accessories for curvy women, has experienced a turbulent period. Over the past month, the stock has plummeted by 20.91%, and in the past year, it has lost an alarming 80.27%. As of December 23, 2025, shares closed at $0.9807, bringing the company’s market capitalization to approximately $97.282 million.
In its letter, Minot Light highlighted Torrid as its largest negative contributor for the quarter. The firm noted that it had previously reassessed its investment thesis on Torrid and found the foundational elements intact despite recent challenges. The retailer reported earnings that were impacted by tariff issues and a weaker consumer environment. Minot Light remains cautiously optimistic, citing potential margin expansion through the elimination of underperforming stores and increased revenue from both adjacent store sales and online channels.
Minot Light’s analysis indicates that Torrid could achieve meaningful growth in EBITDA margin and free cash flow by 2026 and beyond. However, these projections are now based on a lower performance baseline. The firm expressed concern over the continued decline in stock price, particularly following a secondary offering by Sycamore Partners, which was expected to lead to only a temporary dip.
Despite these setbacks, Minot Light sees potential for substantial upside if the company meets its financial targets in the coming years. At current prices, if Torrid aligns with its outlined EBITDA and free cash flow goals, it could either repurchase its stock or pay off its debt within four years.
The investment firm emphasized the high risks associated with embarking on a major business transformation during a challenging economic climate. Minot Light is closely monitoring Torrid’s performance and managing its exposure to this position, given the high stakes involved.
As of the end of the third quarter, Torrid Holdings was no longer among the top 30 most popular stocks among hedge funds. Data indicates that only seven hedge fund portfolios held shares in Torrid, a significant decline from the 15 portfolios in the previous quarter. While acknowledging the risks associated with Torrid, Minot Light expressed a preference for certain AI stocks, which they believe may offer more promising returns in a shorter timeframe.
For those interested in a deeper analysis of hedge fund strategies and insights on promising investments, Minot Light Capital Partners’ complete investor letter is available for review.
In the coming months, the performance of Torrid Holdings will be critical to watch, as the company navigates a challenging retail landscape with the potential for recovery hinging on effective strategic execution.
