The RealReal (REAL): Minot Light Capital Partners' Top Contributor

Minot Light Capital Partners, an investment management company, released its Q3 2025 investment letter. A copy of the letter can be downloaded here. In the quarter, Minot Light generated solid returns for limited partners, with a net of 7.6%. However, on a net basis, the performance underperformed the benchmarks, particularly the micro-cap benchmark’s 17.1% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Minot Light Capital Partners highlighted stocks such as The RealReal, Inc. (NASDAQ:REAL). The RealReal, Inc. (NASDAQ:REAL) is an online marketplace for the resale of luxury goods. The one-month return of The RealReal, Inc. (NASDAQ:REAL) was 7.46%, and its shares gained 66.77% of their value over the last 52 weeks. On December 23, 2025, The RealReal, Inc. (NASDAQ:REAL) stock closed at $15.56 per share, with a market capitalization of $1.816 billion.

Minot Light Capital Partners stated the following regarding The RealReal, Inc. (NASDAQ:REAL) in its third quarter 2025 investor letter:

"The RealReal, Inc. (NASDAQ:REAL): The RealReal was our largest contributor to performance in the quarter. The company is the leader in online consignment of second-hand luxury goods and is well positioned to capitalize on secular growth trends within the expanding resale and circular economy. We also believe that RealReal has several strong competitive advantages, such as its 1M+ active buyer base (network effects) and an inbound processing/authentication infrastructure that would be very costly to replicate. RealReal’s second quarter results marked a transformational quarter for the company, with GMV and revenue rising by 14%. Importantly, the number of consignors on the platform in the quarter grew double digits to an all-time high. Supply unlock is crucial for what we believe to be a sustainable double-digit top-line growth rate going forward, as the company’s historical sell-through rate has been 90%. The company is also a true beneficiary of improvements in AI. Some examples include:

Athena, the company’s proprietary AI Machine vision learning tool, enables more efficient authentication and assists with item descriptions when an item is listed on the website. Not only does this reduce the cost per item listed, but it also reduces the number of days for an inbound item to be processed, which could increase the velocity of items sold, leading to higher revenue and better leverage on fixed costs. Athena currently only touches 20% of total units as of 2Q25, and the company believes it will touch 30-40% of units by the end of the year…” (Click here to read the full text)

The RealReal, Inc. (NASDAQ:REAL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 42 hedge fund portfolios held The RealReal, Inc. (NASDAQ:REAL) at the end of the third quarter, compared to 35 in the previous quarter. In Q3 2025, The RealReal, Inc. (NASDAQ:REAL) reported revenue of $174 million marking an increase of 17% year-over-year. While we acknowledge the potential of The RealReal, Inc. (NASDAQ:REAL) 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 The RealReal, Inc. (NASDAQ:REAL) and shared the list of hottest small cap stocks to buy. 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.