I shouldn't have sold this ASX share two years ago: fund

Regrets, I've had a few.

Amateurs and professionals alike sometimes make investment decisions that they wish they could take back.

Did you sell Afterpay at $20, only to see it rise to $150 a couple of years later? Perhaps you didn't buy Macquarie Group Ltd (ASX: MQG) shares when it plunged to the teens and twenties during the global financial crisis?

These are the stories you don't hear at the barbecues or at fund manager presentations.

People naturally want to talk about their successes, not their regrets.

But remarkably, the team at QVG Capital broke the convention this week.

'We made a costly error'

In a year when most non-mining ASX shares have gone down the gurgler, Lovisa Holdings Ltd (ASX: LOV) has fared very well.

The share price for the low-cost jewellery retailer is up more than 15% year to date, and has rocketed up an eye-popping 78% since mid-June.

QVG capital analysts, in a memo to clients, admitted losing faith in the business a couple of years ago.

"We made a costly error in selling Lovisa in the first COVID lockdown in February and March 2020 on a view that, with almost no online presence, and costume jewellery not being of strategic importance, Lovisa might go broke."

If you can believe it, the Lovisa share price has risen a whopping 470% since the depths of the COVID market crash in March 2020.

Ouch.

'Next few years will be worth watching'

It's not that QVG Capital's worries about the business were not justified.

But after that first wave of the pandemic broke out, unexpected assistance came to avoid calamity for Lovisa.

"With JobKeeper to the rescue, it turns out we were wrong."

The Australian federal government's COVID-19 wage subsidies allowed the retailer to retain many of its staff and took them through the dark months of the 2020 lockdowns.

Now, only two years later, Lovisa is flying high on the back of overseas expansion and a belief that its low-cost offerings will see resilient demand from cash-strapped consumers.

The Motley Fool reported this week that Morgans rates the stock as a buy.

"Lovisa has a substantial multi-year global rollout opportunity across four continents," the team reportedly stated.

"We think Lovisa's products fill an underserved niche, offering good quality fashion jewellery at prices that are attainable to the target demographic."

The team at Morgans also likes the new leadership at the company.

"The recent appointment of Victor Herrero as CEO, replacing Shane Fallscheer, provides a clue as to the extent of Lovisa's global ambition and its impatience to realise that ambition," 

"The next few years will be worth watching."

The good news keeps coming for Lovisa

Another boost for Lovisa this month is that it will be added to the S&P/ASX 200 Index (ASX: XJO).

That will see a nice boost in demand for the stock, as funds that follow the index are forced to buy Lovisa.

So all this must be eating away at the portfolio manager at QVG Capital after cutting the ASX share loose two years ago.

But it's not all bad news for the fund and its clients.

"Fortunately, we reversed the error and now own Lovisa again," read the QVG memo.

"Its result was glittering and the global roll-out of high returning stores appears to be accelerating."