Lakehouse Capital, an investment management firm based in Sydney, has recently released its investor letter for the first quarter of 2025, detailing the performance of its “Lakehouse Global Growth Fund.” This letter, available for download, sheds light on the challenges and opportunities faced by the fund during a turbulent month for equity markets in March.

During March 2025, the markets experienced significant volatility, primarily driven by uncertainties related to former President Donald Trump's trade policy. This uncertainty created a challenging environment for growth-focused investment strategies, as investors typically react adversely to unpredictability. The Lakehouse Global Growth Fund recorded a return of -7.4% net of fees and expenses for the month, which starkly contrasted with its benchmark, the MSCI All Country World Index, which posted a -4.2% return. Since the fund's inception in December 2017, it has shown remarkable resilience, achieving a total return of 224.5%, compared to 126.3% for its benchmark.

Furthermore, the investor letter highlights the fund’s top five holdings, offering insights into its best-performing picks for 2025. One standout mentioned is Sea Limited (NYSE:SE), a prominent player in the digital entertainment, e-commerce, and financial services sectors. Though Sea Limited's stock saw a decline of -17.34% in one month, it still achieved an impressive 85.15% increase in value over the past year. By April 8, 2025, Sea Limited's stock closed at $105.57 per share, giving the company a market capitalization of approximately $60.633 billion.

The investor letter praised Sea Limited for its performance, noting that it delivered robust results characterized by strong growth and improving profitability. The company reported a 37% increase in revenue, reaching $5.0 billion, marking its fastest growth rate in nearly three years. Additionally, Sea Limited's adjusted EBITDA skyrocketed by 366%, totaling $591 million. Their core e-commerce arm, Shopee, maintained its dominance in significant markets, particularly in Indonesia and Thailand. Shopee recorded a 28% increase in Gross Merchandise Volume (GMV), amounting to $28.6 billion. The letter also highlighted that Shopee’s marketplace take rate improved by 160 basis points year-on-year to 12.8%, attributed to higher commissions and a surge in ad adoption. Notably, even with recent fee increases, Shopee's GMV growth remained unaffected, indicating the platform’s strong pricing power and the value it offers to sellers.

In contrast, the letter also explored the performance of Alibaba Group Holding Ltd. (BABA), questioning the factors that led to its decline on a particular Monday. This context underscores the competitive landscape in which Sea Limited operates, emphasizing ongoing challenges faced by other e-commerce giants.

Despite its setbacks, Sea Limited (NYSE:SE) is not listed among the 30 Most Popular Stocks Among Hedge Funds. According to recent data, 86 hedge fund portfolios included Sea Limited by the end of the fourth quarter, a noticeable increase from 58 in the previous quarter. The fourth quarter of 2024 saw Sea Limited’s total GAAP revenue rise 37% year-on-year to $5 billion, contributing to a total annual revenue of $16.8 billion, which was up 29% year-on-year.

Lakehouse Capital acknowledges the potential of Sea Limited as an investment; however, it has expressed a stronger conviction in the prospects of AI stocks, suggesting they may offer higher returns within a shorter timeframe. Investors are encouraged to explore AI stocks with promising growth potential at lower valuations compared to established names like NVIDIA.