Middle Coast Investing, an investment advisor firm, released its first-quarter investor letter. A copy of the letter can be downloaded here. Middle Coast Investing had a difficult but manageable first quarter, but everyone has suffered since the Liberation Day crash at the beginning of the second quarter. To manage the volatility, the firm decided to increase cash goal levels by roughly 5% for each portfolio. In the quarter, the firm sold 3% more than it bought. In Q1 2025, the US Portfolios returned -3.7% compared to -4.6% for the S&P 500. It’s Core U.S. portfolios returned -0.7% while Russell 2000 returned -9.8%, S&P 600 returned -9.3% and Nasdaq generated -10.4% for the same period. However, its European Portfolios appreciated by 9.2%. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first quarter 2025 investor letter, Middle Coast Investing emphasized stocks such as Capital One Financial Corporation (NYSE:COF). Capital One Financial Corporation (NYSE:COF) is a financial services holding company for the Capital One, National Association that offers various financial products and services. The one-month return of Capital One Financial Corporation (NYSE:COF) was -5.25%, and its shares gained 19.57% of their value over the last 52 weeks. On April 15, 2025, Capital One Financial Corporation (NYSE:COF) stock closed at $163.54 per share with a market capitalization of $62.629 billion.
Middle Coast Investing stated the following regarding Capital One Financial Corporation (NYSE:COF) in its Q1 2025 investor letter:
“We were net sellers of Discover Financial shares, buying and selling at different times. Two things are going on here – whether One Financial Corporation (NYSE:COF) will successfully buy it, and the impending recession risk. We sold earlier in the quarter at $200, feeling it would be stupid to not take some risk off the table if a deal doesn’t close. Then when reports broke that the deal might face heavy scrutiny, we bought at $145, which would be a fair value for just Discover, in my view. Another report suggested the deal will be approved, and we sold some shares at $166.5, out of concern for economic sensitivity. Ultimately, COF and DFS should be a winning combination, and the deal seems likely to go through. But credit card companies tend to be very cyclical, and if the economy hits a recession, the stock (though not necessarily the long-term business) will suffer.”
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Capital One Financial Corporation (NYSE:COF) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 89 hedge fund portfolios held Capital One Financial Corporation (NYSE:COF) at the end of the fourth quarter compared to 67 in the third quarter. In the fourth quarter, Capital One Financial Corporation (NYSE:COF) achieved earnings of $1.1 billion, which amounts to $2.67 per diluted common share. While we acknowledge the potential of Capital One Financial Corporation (NYSE:COF) 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.
We covered Capital One Financial Corporation (NYSE:COF) in another article, where we shared the list of best financial stocks to buy according to billionaires. In addition, please check out our hedge fund investor letters Q1 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.