Smart Bets: Rowan Street Capital's Strategic Play with Shopify
Rowan Street Capital's 2025 Performance Overview
Rowan Street Capital, an investment management firm, recently disclosed its performance for the fourth quarter of 2025. While their overall returns in 2025, at +11.1% (net), did not surpass the S&P 500 Index's +17.9%, the firm demonstrated remarkable long-term growth. Over the past three years, Rowan Street delivered a cumulative net return of +252%, significantly outperforming the Index's +78% during the same period. This success is largely attributed to their concentrated investment approach, which prioritizes long-term compounding. A new position in Tesla was a major contributor to their 2025 gains.
Shopify: A Core Holding and Its Market Journey
In their Q4 2025 letter, Rowan Street Capital specifically highlighted Shopify Inc. (NASDAQ:SHOP). Shopify, a Canadian e-commerce technology provider, offers a cloud-based platform for individuals and businesses to establish and manage their online operations. Despite a -29.29% return over one month and a -4.20% loss over the last 52 weeks, with its stock closing at $118.40 per share on February 9, 2026, and a market capitalization of $154.522 billion, Shopify remains a significant part of Rowan Street's portfolio.
The Rationale Behind Shopify Investment
Rowan Street Capital initiated its investment in Shopify in the first quarter of 2022, following a substantial decline of over 60% from its peak during the pandemic. At that time, e-commerce growth had decelerated from the extraordinary levels seen during COVID, and market sentiment towards technology stocks had become distinctly negative, leading to compressed valuation multiples across the sector. Despite these headwinds, Rowan Street viewed the stock as a reasonably priced opportunity in a high-quality business they had meticulously tracked for years, confident in its long-term potential.
Shopify's Market Presence and Future Prospects
While Shopify Inc. does not feature on Insider Monkey's list of the 30 most popular stocks among hedge funds, Rowan Street Capital's continued confidence is noteworthy. Their database indicates that 91 hedge fund portfolios held Shopify at the end of the third quarter, an increase from 69 in the preceding quarter. Despite acknowledging Shopify's investment potential, Rowan Street suggests that certain AI stocks might offer greater upside with less downside risk. However, the firm's strategic entry into Shopify during a period of market pessimism underscores their conviction in the company's fundamental strength and future growth trajectory, particularly as it continues to see stronger enterprise adoption and improved monetization of its ecosystem.