Optimist Fund, an investment management company, released its fourth quarter investor letter. A copy of the letter can be downloaded here. 2024 proved to be another impressive year for the fund, with a return of around 67%. Since the fund’s inception, it has achieved approximately 15% annualized returns, net of fees, and the firm is nearing its 3-year anniversary. The firm believes that the portfolio has significant upside over the next 5 years. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.

In its fourth quarter 2024 investor letter, Optimist Fund emphasized stocks such as ThredUp Inc. (NASDAQ:TDUP). ThredUp Inc. (NASDAQ:TDUP) an online resale platform that helps consumers to buy and sell primarily secondhand apparel, shoes, and accessories. Over the past month, ThredUp Inc. (NASDAQ:TDUP) shares experienced a return of 89.55%, and they have appreciated by 30.93% over the last 52 weeks. On February 4, 2024, ThredUp Inc. (NASDAQ:TDUP) stock closed at $2.54 per share, with a market capitalization of $288.945 million.

Optimist Fund stated the following regarding ThredUp Inc. (NASDAQ:TDUP) in its Q4 2024 investor letter:

"ThredUp Inc. (NASDAQ:TDUP)– ThredUp, a leading marketplace for second-hand clothing, is showing strong signs of recovery following two self-inflicted setbacks during the summer of 2024. We have significantly increased our investment in the company, as we anticipate a substantial boost in free cash flow generation in 2025. We will provide more details on this outlook later in the letter.

ThredUp is the leading second-hand managed marketplace in the United States, positioned to deliver significant free cash flow growth over the next five years. Despite this potential, the stock currently trades at an exceptionally attractive valuation due to two main factors: a stumble in 2024 that we believe has been successfully addressed and a historical pattern of cash burn, which we now see inflecting into material free cash flow generation…” (Click here to read the full text)

A satisfied customer leaving an online resale store with an armload of purchases.

ThredUp Inc. (NASDAQ:TDUP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 11 hedge fund portfolios held ThredUp Inc. (NASDAQ:TDUP) at the end of the third quarter which was 14 in the previous quarter. In the third quarter of 2024 ThredUp Inc. (NASDAQ:TDUP) reported consolidated revenue of $73 million, a decrease of 11% year-over-year. While we acknowledge the potential of ThredUp Inc. (NASDAQ:TDUP) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article we discussed ThredUp Inc. (NASDAQ:TDUP) and shared the list of hottest smid-cap stocks so far in 2025. In addition, please check out our hedge fund investor letters Q3 2024 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.