3Q2025 Investor Letter
October 4th, 2025
“The illusion that we understand the past fosters overconfidence in our ability to predict the future.”
— Daniel Kahneman, Thinking Fast & Slow
Dear Partner:
Eaglestone Capital Partners LP (“Eaglestone Partners” or the “Fund”) enjoyed a solid 3Q2025, generating returns for the typical limited partner of 15.6% and 26.5% for the periods ending 3Q2025 and YTD 30 September 2025.
Long positions in Comfort Systems USA (FIX), IES Holdings (IESC) and Tesla (TSLA) were the largest contributors (in that order) to the Fund’s positive performance while long positions in BellRing Brands (BRBR), Kinsale Capital (KNSL) and Coinbase (COIN) were the largest detractors from performance (in that order).
It was great to see the most significant portion of Eaglestone Capital’s most recent quarterly returns coming from a couple of the largest positions in the portfolio: FIX and IESC, confirming my belief that these companies were worthy of such large portfolio weightings. FIX and IESC were both researched in early FY2024 (for more details, see FY2024 investor letter for IESC and the 1Q2025 investor letter for FIX) as I became further convinced that AI work-loads (or tokens generated) would continue to grow and generally drive datacenter construction. What I am less certain about is whether (1) Nvidia and its partners will continue to dominate or (2) AMD, other chip designers, perhaps even specialized ASICs, customer owned tooling designs (etc) will start to eat into Nvidia’s massive market share.
One key difference between FIX and IESC was Eaglestone’s position sizing heading into the now infamous “Liberation Day” on April 2nd, 2025 - the date when Trump announced sweeping tariffs (the stock market swooned as did the long bond – by May 10th, 2025 the 10 year US treasury yield hit 4.4% up from 4.17% just prior to the April 2nd, 2025 tariff announcement). FIX’s stock price had run up in 1Q2024 (by March 3rd, 2024 it was already trading at $330/share or 26x EV/EBIT) before Eaglestone had enough “comfort” to put on a full position. Meanwhile, in March 2024 IESC was still around $100/share or 12x EV/EBIT so at that price it made sense to build a large IESC position. Skip forward to 1Q2025 and both IESC and FIX were seeing share price hits as first the DeepSeek scare and then trade tensions hit - IESC fell to $165/share and FIX was all the way back to $316/share, providing Eaglestone with a new opening to purchase the FIX shares – and purchase Eaglestone did.
3Q2025 also had its share of mistakes, the most glaring was Eaglestone’s over-confidence in BellRing Brands (BRBR). From previous letters I’ve described some of the attractive accounting-based metrics of BRBR - high returns on invested capital and return on capital employed ROCE (hint: they out-source manufacturing!), and attractive growth – and we were aware of the potential storm clouds following the first quarter 2025 earnings call:
“BellRing Brands sells primarily to Costco, Sam’s Club and Amazon and therefore concerns arise when there are differences between consumption (Premier Protein RTD shake sales by the channel retailers) and BRBR’s net sales to these retailers. Consumption of Premier Protein RTD shakes for the 2Q2025 grew 24.9% YoY (higher than net sales growth of 21.7%). .On the [earnings] call, management disclosed 16% consumption growth in April 2025 and for 3Q2025 management projected consumption growth of 15%-18% but due to the Club channel inventory reduction, only single digit sales growth.”
— Eaglestone 1Q2025 Investor Letter
Well, the following quarter’s earnings call provided more of the same – worsening inventory turns as the big box retailers forced BRBR to hold and pay for inventory, inability to pass through costs increases (whether from tariffs or not isn’t the point) and an inability for BRBR management to provide guidance beyond a quarter (did they really know what was going on with their brand?) – classic signs that BRBR wasn’t in control and in-fact Costco et al were in charge and treating BRBR as their private-label brand.
So we exited the position, and once again marveled at the power of Costco: high velocity, low margin and trust-based loyalty. Yes, Charlie we should have bought some Costco.
Regards,
66 Palmer Avenue, Suite 32B, Bronxville, NY 10708
914.202.8811
www.eaglestonecapital.net
Eaglestone Capital’s Investment Philosophy
Eaglestone Capital is an independent registered investment adviser (RIA) based in Bronxville, NY, founded by Fred Stupart. It serves as the sole investment adviser to Eaglestone Capital Partners LP (the “Fund”), which targets 15% absolute annual returns to its limited partners through investments in daily-liquid securities. The Fund primarily invests in U.S. equities and may employ leverage to boost returns. The Fund offers an alternative to the array of index funds, annuities, and other common products available to individuals seeking a secure retirement.
Eaglestone Capital views the U.S. economy as sui generis —truly one of a kind: unparalleled, irreplaceable, and impossible to replicate. Consequently, applying insights drawn from U.S. data to other markets can yield misleading conclusions. Furthermore, the foundation of continued U.S. economic growth—encompassing employment gains, real estate appreciation, and other asset expansion—is its dynamic, highly competitive private sector, exemplified by many publicly traded firms. As a result, investing in high-quality U.S. companies that uphold shareholder rights is vital to any robust investment strategy. Furthermore, Eaglestone Capital appreciates the opportunities available outside the U.S. but prefers to invest with U.S. companies with foreign subsidiaries as the best means of taking advantage of such non-U.S. opportunities.
Eaglestone Capital also believes in the individual’s power to independently analyze and choose their path to economic freedom. Today’s investors are well-informed and enjoy abundant investment choices. Although we applaud rising participation in U.S. equity markets, the growing concentration of a few companies in major equity indexes could dampen equity index returns if margins or topline growth at those companies decline and investors become more selective.
Eaglestone Capital believes that intelligence, effort, and patience yield the best results. While this should be self-evident, many index fund philosophies conflict with it. When Jack Bogle introduced the S&P 500 index fund in 1976, he offered a new, low-cost product that helped keep large asset managers honest. Yet what is initially a clever innovation often becomes overused. We may soon see many index funds lag behind AI-empowered active managers able to allocate capital more flexibly.
Eaglestone Capital oversees a portfolio of 20–30 liquid equities, each run by leadership teams possessing a “fiduciary gene”—managers who respect shareholder rights and strive to develop innovative, capital-efficient businesses that deliver strong returns to owners. Eaglestone Capital recognizes that risks and rewards vary widely across the U.S. economy, welcoming multiple industries and business models into its portfolio. Some firms have attained scale and efficiency and thus generate high margins and robust returns on capital. Others, analogous to partially finished real estate developments, still have room to grow margins and returns on capital and hence during this “development phase” they might appear to have very high valuations based on traditional EV/EBIT or P/E multiples.
Finally, Eaglestone Capital acknowledges the U.S. equity market’s potential volatility, as shifting momentum can strongly influence investor behavior. However, Eaglestone Capital does not equate volatility with risk – in fact, volatility is a key benefit available only to public market investors seeking high absolute returns. Sometimes “the market” decides that it wants to sell stocks – Eaglestone Capital respects the market’s momentum, appreciates its power and will wait for an appropriate time to exercise any judgement.
General Disclaimer
By accepting this investment letter, you agree that you will not divulge any information contained herein to any other party. This letter and its contents are confidential and proprietary information of the Fund and any reproduction of this information, in whole or in part, without the prior written consent of the Fund is prohibited.
The information contained in this letter reflects the opinions and projections of Eaglestone Capital Management LLC (the "General Partner") and its affiliates as of the date of publication, which are subject to change without notice at any time after the date of issue. All information provided is for informational purposes only and should not be deemed as investment advice or a recommendation to purchase or sell any specific security.
Statements herein that reflect projections or expectations of the future financial or economic performance of the Fund are forward-looking statements. Such "forward-looking" statements are based on various assumptions, which may not prove to be correct. Accordingly, there can be no assurance that such assumptions and statements will accurately predict future events or the Fund's actual performance.
The funds described herein are unregistered private investment funds commonly called "hedge funds" (each, a "Private Fund"). Private Funds, depending upon their investment objectives and strategies, may invest and trade in a variety of different markets, strategies and instruments (including securities and derivatives) and are NOT subject to the same regulatory requirements as mutual funds, including requirements to provide certain periodic and standardized pricing and valuation information to investors. There are substantial risks in investing in a Private Fund.
Prospective investors should note that:
- A Private Fund represents a speculative investment and involves a high degree of risk.
- Investors must have the financial ability, sophistication/experience, and willingness to bear the risks of an investment in a Private Fund.
- An investor could lose all or a substantial portion of his/her/its investment.
- An investment in a Private Fund is not suitable for all investors and should be discretionary capital set aside strictly for speculative purposes.
- Only qualified eligible investors may invest in a Private Fund.
- A Private Fund's prospectus or offering documents are not reviewed or approved by federal or state regulators and its privately placed interests are not federally, or state registered.
- An investment in a Private Fund may be illiquid and there are significant restrictions on transferring or redeeming interests in a Private Fund.
- There is no recognized secondary market for an investor's interest in a Private Fund and none is expected to develop.
- A Private Fund's manager/advisor has total trading authority over a Private Fund.
- A Private Fund's fees and expenses, which may be substantial regardless of any positive return, will offset such Private Fund's trading profits.
- A Private Fund and its managers/advisors and their affiliates may be subject to various potential and actual conflicts of interest.
- A Private Fund may employ leverage, including involving derivatives. Leverage presents specialized risks.
The above summary is not a complete list of the risks, tax considerations and other important disclosures involved in investing in a Private Fund and is subject to the more complete disclosures in such Private Fund's offering documents, which must be reviewed carefully prior to making an investment.
Eaglestone Capital Management LLC is an independent investment advisory firm based in Bronxville, New York. Additional information about Eaglestone Capital Management LLC and its associated persons (including Form ADV) is available on the SEC’s website at www.adviserinfo.sec.gov. You can search this site by a unique identifying number, known as a CRD number. The CRD number for Eaglestone Capital Management LLC is 297958.
