Kinetic Partners Is Done With Trex: Should Investors Sell the Stock Too?

Kinetic Partners Management, LP, fully divested its 1,059,900-share position in Trex (TREX) during the third quarter, a transaction valued at approximately $57.6 million, as disclosed in a November 14, 2025 SEC filing. This sale eliminated a stake that previously represented 3.2% of the fund's AUM. The divestment proved prescient, occurring when Trex shares were trading in the $60s, prior to a subsequent decline to the $30s following disappointing earnings; as of the filing date, Trex stock was down 55% year-over-year, significantly underperforming the S&P 500.

Analysis

Kinetic Partners Management, LP, fully divested its 1,059,900-share position in Trex (TREX) during Q3 2025, a transaction valued at approximately $57.6 million. This sale, disclosed on November 14, 2025, eliminated a stake that previously constituted 3.2% of the fund's reportable AUM. The divestment proved prescient, occurring when Trex shares traded in the $60s, prior to a significant post-earnings decline.

Following disappointing November earnings, Trex's stock plummeted to $31.77 as of November 14, 2025, representing a 55% year-over-year decline and a 69 percentage point underperformance against the S&P 500. The company, a leading manufacturer of composite decking, reported TTM revenue of $1.18 billion and net income of $197.9 million, with a market capitalization of $3.41 billion. This underperformance occurred amidst intensifying competition and a weak housing repair and remodeling market.

Despite recent challenges, an analyst highlights Trex as a "fascinating investment option" due to its current P/E ratio of 17, marking its lowest level in a decade. The analyst believes Trex's eco-friendly products, premium pricing, and leadership in composite decking will drive a market-beating return, though acknowledging it may take multiple quarters or years given its cyclical nature. The analyst also notes the company's share repurchases, suggesting management views the stock as undervalued.

Key Decisions for Investors

• Monitor Trex's fundamental recovery, focusing on housing market trends and competitive pressures.
• Evaluate the current P/E ratio of 17 against the company's cyclical nature and potential for a multi-quarter recovery.
• Assess the impact of Trex's share repurchase program as a signal of management's view on undervaluation.
• Re-evaluate existing Trex positions, considering the recent significant underperformance and the fund's strategic divestment.