Trex Company (trex) Under Pressure As Housing Weakness Impacts Outdoor Living Demand

Wasatch Global Investors, an asset management company, released its “Small Cap Growth Strategy” Q4 2025 investor letter. A copy of the letter can be downloaded here. The Wasatch Small Cap Growth Strategy experienced a challenging fourth quarter as small-cap equities lagged broader market indices, reflecting investor caution and a continued preference for larger, more liquid stocks. During the period, the Russell 2000® Growth Index gained 1.22%, while the strategy finished the quarter in negative territory, with performance driven by stock-specific factors rather than macroeconomic stress. Results contrasted with strength in select areas of the small-cap market, as biotechnology emerged as one of the strongest segments, with the biotech component of the Russell 2000® Growth Index rising nearly 27%. For the 2025 calendar year, the Russell 2000 Growth Index advanced 13.01%, while the strategy posted a loss, highlighting the impact of earnings volatility and valuation compression across several holdings despite management citing improving fundamentals and easing financial conditions as potential longer-term supports. In addition, please check the Fund’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Wasatch Global Investors highlighted stocks like Trex Company, Inc. (NYSE:TREX). Trex Company, Inc. (NYSE:TREX) manufactures composite decking and railing products made from recycled materials, benefiting from long-term demand for low-maintenance outdoor building solutions. The one-month return of Trex Company, Inc. (NYSE:TREX) was -1.54% while its shares traded between $29.77 and $70.08 over the last 52 weeks. On February 13, 2026, Trex Company, Inc. (NYSE:TREX) stock closed at approximately $42.65 per share, with a market capitalization of about $4.633 billion.

Wasatch Global Investors stated the following regarding Trex Company, Inc. (NYSE:TREX) in its Q4 2025 investor letter:

“Trex Co., Inc. (NYSE:TREX) also detracted. Trex manufactures high-performance, low-maintenance composite decking, railing, and related outdoor living products. The stock was down sharply in November after the company reported third quarter earnings that were short of market expectations. In addition, management offered disappointing guidance for the fourth quarter, pointing to a weaker housing market and softer consumer spending on home improvement as the reasons. While the company is facing some current challenges, we still view Trex as a highquality business. We’re doing more due diligence on the company, but we still like its position as the largest company in a market that is largely a duopoly.”

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Trex Company, Inc. (NYSE:TREX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held Trex Company, Inc. (NYSE:TREX) at the end of the third quarter, which was 41 in the previous quarter. While we acknowledge the risk and potential of Trex Company, Inc. (NYSE:TREX) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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In another article, we covered Trex Company, Inc. (NYSE:TREX) and shared the bulls’ thesis. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.