Etsy’s Echoes: A Fund’s Quiet Accumulation

by

Many years later, as the market remembered the scent of burnt silicon and the hushed anxieties of algorithms, old Manolo, a weaver of digital fortunes, would recall the winter of ’26 and the curious insistence of Hussman Strategic Advisors upon a certain marketplace of handcrafted dreams. It began, as these things often do, not with a proclamation, but with a quiet doubling down, a gesture almost lost in the clamor of quarterly reports. The air hung thick with the metallic taste of unfulfilled potential, a premonition of fortunes yet to bloom, or wither.

Hussman, a fund known for its deliberate steps and long views – a rare breed in a world obsessed with the immediate shimmer of profit – had, it was revealed through the meticulous dance of SEC filings, deepened its embrace of Etsy, the purveyor of handmade wonders and vintage echoes. An additional $2.56 million, a sum that could have built a small palace of data centers or funded a fleet of algorithmic traders, was quietly allocated to 42,000 new shares. It wasn’t a sudden burst of enthusiasm, but a steady accretion, a belief whispered into the ear of the market, that Etsy held something enduring, something beyond the fleeting trends.

By the close of the quarter, Hussman’s holding in Etsy had swelled to $4.66 million, a substantial sum, representing 1.13% of their reportable assets under management. This made Etsy the fund’s second-largest holding, a position of quiet prominence alongside Qualcom ($4.67 million), Ubiquiti ($4.65 million), United Natural Foods ($4.24 million), and Charter Communications ($3.95 million). It was as if the fund, a seasoned cartographer of wealth, had found a hidden valley, a place where the old ways of creation still held sway, amidst the relentless march of automation.

The market, of course, remained largely indifferent, caught in its usual frenzy. Etsy’s shares, trading at $52.96 as of January 30th, had underperformed the S&P 500 by a disheartening 18 percentage points over the past year. Yet, Hussman persisted, seemingly unperturbed by the short-term fluctuations, as if guided by a different calendar, a different measure of value. This was not the impulsive fervor of a day trader, but the deliberate calculation of a long-term investor, a patient gardener tending to a slow-growing bloom.

To understand Hussman’s interest, one must consider the peculiar alchemy of Etsy itself. It is a marketplace unlike any other, a digital bazaar where artisans and collectors converge, offering not merely goods, but fragments of dreams, echoes of forgotten skills. Etsy operates a network of online marketplaces—Etsy.com and Depop—offering handmade goods, vintage treasures, musical instruments, and the resurrected fashions of bygone eras. Revenue flows from transaction fees, the subtle hum of payment processing, the allure of advertising, and the tools offered to those who create. It serves a unique clientele—the solitary artisan, the small business owner, the buyer seeking something beyond the mass-produced, primarily in the United States, the United Kingdom, Germany, Canada, Australia, France, and India.

The company’s financial pulse, as of the latest reckoning, revealed a market capitalization of $5.25 billion, revenue of $2.85 billion, and a net income of $182.15 million. Numbers, of course, are merely shadows, hinting at the deeper currents of value. What truly sets Etsy apart is its defensible position within the specialty retail sector, its focus on the unique and the handcrafted, a refuge from the relentless homogenization of the modern world.

The recent whispers from within Etsy suggest a subtle turning of the tide. While the core marketplace remains somewhat subdued, recent quarters have shown a glimmer of growth – a 300 basis point increase in gross merchandise sales. Revenue, too, has risen by 6%, fueled by the divestiture of Reverb and a clever manipulation of onsite ads, subtly raising the overall take rate. More intriguing, however, is the burgeoning success of Depop, Etsy’s secondhand fashion app, a digital echo of the vintage markets of old. Depop’s gross merchandise sales have soared by 39%, with the United States experiencing even faster growth at 59%. It now accounts for nearly 15% of Etsy’s total gross merchandise sales, rapidly becoming the stock’s key growth story.

There are, of course, shadows. Stock-based compensation still consumes 9% of sales, a lingering burden despite the stock’s underperformance. Yet, even accounting for this, Etsy trades at a reasonable 14 times free cash flow. Management, demonstrating a rare prudence, has already repurchased one-fifth of Etsy’s outstanding shares, with $1.2 billion remaining on the buyback. If the core Etsy business stabilizes and Depop continues its ascent, Hussman’s wager may prove to be a wise one, a quiet accumulation of value in a world obsessed with fleeting spectacle. It was a patient investment, a belief that even in the age of algorithms, the human touch, the enduring appeal of the handcrafted, would ultimately prevail.

Read More

2026-02-02 21:42