What Led Night Watch Investment Management to Exit Tidewater (TDW)

Night Watch Investment Management, an investment management firm, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the third quarter, the fund LP appreciated by 4.28% net of fees, and YTD, its performance stood at 25.88%. The portfolio continued its strong performance in the quarter. The market also experienced a strong recovery in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Night Watch Investment Management highlighted stocks such as Tidewater Inc. (NYSE:TDW). Tidewater Inc. (NYSE:TDW) provides offshore support vessels and marine support services to the offshore energy industry. The one-month return for Tidewater Inc. (NYSE:TDW) was 5.40%, and its shares gained 21.66% over the last 52 weeks. On December 05, 2025, Tidewater Inc. (NYSE:TDW) stock closed at $57.63 per share, with a market capitalization of $2.856 billion.

Night Watch Investment Management stated the following regarding Tidewater Inc. (NYSE:TDW) in its third quarter 2025 investor letter:

"We have fully exited our energy positions (VAL, Tidewater Inc. (NYSE:TDW), NE). We had a view on the business cycle of offshore energy infrastructure, which bottomed in 2021. Given that there is no new infrastructure under construction, we believed the cycle could keep going for many years to come. However, we did not foresee the pause in offshore spending that started in 2024. We do not expect a resumption of spending until 2027 at the earliest. In the meantime, companies like Noble Energy trade at ~10x Free cash flow, which is simply not as cheap if your cost of debt is 8% and your assets have a limited life span. In total, we lost a very modest 2.67% on our VAL, NE and TDW position. Since inception, energy has been our only significant detractor from performance."

Tidewater Inc. (NYSE:TDW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Tidewater Inc. (NYSE:TDW) at the end of the third quarter, which was 29 in the previous quarter. While we acknowledge the potential of Tidewater Inc. (NYSE:TDW) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Tidewater Inc. (NYSE:TDW) and shared Black Bear Value Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2025 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.