Middle Coast Investing's Q3 2025 Investor Letter: Lululemon Under Scrutiny
Middle Coast Investing has released its third-quarter 2025 investor letter, revealing that its collective portfolio has outperformed the S&P 500 year-to-date. The letter also highlighted specific stock performances, notably focusing on Lululemon Athletica Inc. (NASDAQ:LULU).
Q3 2025 Portfolio Performance
The third quarter of 2025 proved favorable for Middle Coast Investing. Their U.S. portfolios yielded a 9.6% return, surpassing the S&P 500's 7.8%. Core U.S. portfolios saw a 10% gain, while the Russell 2000 returned 12%, the S&P 600 gained 8.7%, and the Nasdaq generated 11.2% during the same period. European portfolios also experienced growth, appreciating by 5.5%.
Lululemon Athletica Inc. (NASDAQ:LULU) in Focus
The investor letter included an analysis of Lululemon Athletica Inc. (NASDAQ:LULU), a company that designs, distributes, and retails athletic apparel, footwear, and accessories. While the one-month return for Lululemon was 4.69%, the stock has lost 35.42% of its value over the past 52 weeks. On October 3, 2025, LULU closed at $175.59 per share, with a market capitalization of $20.888 billion.
Middle Coast Investing's Perspective on Lululemon
Middle Coast Investing expressed concerns regarding Lululemon Athletica Inc. (NASDAQ:LULU)'s performance in their third-quarter investor letter:
"Lululemon Athletica Inc. (NASDAQ:LULU) is on the loser list for the 3rd quarter in a row. It’s fair to say I got the analysis wrong, even as things I couldn’t quite predict fouled up the picture. The company suffers from tariffs and especially the de minimis application of tariffs on smaller shipments. It is fending off competition from Alo and Vuori and other big clothing retailers trying to muscle in on athleisure. And the part I think I got most wrong is that international growth is not strong enough to pick up the slack."
Hedge Fund Sentiment and Alternative Investments
While 55 hedge fund portfolios held Lululemon Athletica Inc. (NASDAQ:LULU) at the end of the second quarter, up from 48 in the previous quarter, other investment opportunities may present greater potential. Middle Coast Investing suggests considering AI stocks, emphasizing the potential benefits from Trump-era tariffs and the onshoring trend. According to insidermonkey.com, Lululemon Athletica Inc. (NASDAQ:LULU) is not on their list of 30 Most Popular Stocks Among Hedge Funds.
