| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 4.9% | 45.4% |
| 2025 |
|---|
| 45.4% |
Immersion Investment Partners is capitalizing on AI-driven market dislocations that have created mispricing opportunities in small-cap technology and consumer stocks. The fund maintains a concentrated approach with 86% of assets in five core holdings: Bel Fuse, Celsius Holdings, Dutch Bros, Mama's Creations, and Red Violet. The managers argue that massive AI infrastructure spending with questionable near-term ROI has led the market to broadly punish technology companies, creating opportunities in quality businesses with strong fundamentals. Dutch Bros represents their largest new position, offering exceptional unit economics and growth potential in the restaurant space. Par Technology, despite declining 50% in 2025, remains attractive given its mission-critical software platform and improving fundamentals. Mama's Creations delivered exceptional results with 50% sales growth and new national distribution wins. The portfolio strategy focuses on identifying companies with differentiated competitive positions trading at attractive valuations due to temporary market sentiment rather than fundamental deterioration. The managers emphasize patience and conviction as key drivers of long-term outperformance.
AI infrastructure spending has created broad-based mispricing in technology stocks, particularly punishing small-cap companies without direct AI disruption risk, creating asymmetric investment opportunities for disciplined capital allocators willing to invest in quality businesses trading at attractive valuations.
The managers express optimism about capitalizing on AI-driven mispricing in small-cap technology stocks. They believe patience and conviction will be rewarded as the market eventually reprices quality companies trading at attractive valuations. The tone suggests confidence in their concentrated approach and ability to identify undervalued opportunities created by broad market sentiment.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 30 2026 | 2025 Q4 | BELFB, BROS, CAVA, CELH, CMG, DPZ, MAMA, PAR, RDVT, SBUX, TGT, WING | AI, Food, growth, Restaurants, small caps, tech, Valuations |
PAR MAMA BROS |
The letter argues that the unwind of AI-driven mega-cap excess has created significant valuation dislocations in high-quality small-cap companies unfairly punished by broad tech multiple… |
| Oct 20 2025 | 2025 Q3 | CELH, MAMA | Consumer Brands, EBITDA, M&A, Small Cap Equities, Software Analytics |
CELH MAMA CELH MAMA |
Smallcaps: A concentrated, six-name portfolio seeks misunderstood, underfollowed businesses where structural flows create mispricing. Catalysts: Distribution realignments and accretive bolt-ons (e.g., Celsius/Pepsi, Mamas acquisition) aim… |
| Aug 19 2025 | 2025 Q2 | MAMA | fundamentals, mispricing, permanent capital loss, small caps, volatility | MAMA | The letter challenges conventional definitions of risk, arguing that volatility is often mispriced as danger while true risk lies in permanent capital impairment. Management highlights… |
| May 15 2024 | 2024 Q1 | - | - | - | - |
| Feb 2 2024 | 2023 Q4 | EDR SM, GFF, PBPB | - | - | - |
| Nov 22 2023 | 2023 Q3 | BELF, CELH, GFF | - | - | - |
| Jan 7 2023 | 2023 Q2 | BFIT NA, FC, IDT, MPAA, PBPB | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q3 |
Catalysts |
|
ConcentrationFive companies now represent roughly 30% of the S&P 500's market cap. The top 10 exceed 40%—the highest concentration in 50 years. Nearly $340 billion flowed into U.S. deals, yet it was packed into the fewest deals of the decade, with nearly half the capital concentrated in a few dozen deals over $500 million. |
Market Capital Risk Deals Venture | |
SmallCaps |
||
| 2025 Q2 |
VolatilityManager emphasizes volatility as a structural feature of markets, noting that rare events occur far more frequently than expected. April's volatility event validated their convexity approach, with systematic monetization during stress periods. December saw compressed volatility with VIX hitting year lows, creating buying opportunities despite short-term costs. |
VIX Implied Volatility Realized Volatility Convexity Options |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 20, 2025 | Fund Letters | David Polansky | CELH | Celsius Holdings Inc. | Consumer Staples | Beverages | Bull | NASDAQ | Beverages, Distribution, EBITDA, Energy drinks, growth, Margins, market share, Partnership, PepsiCo, Re-rating | Login |
| Oct 20, 2025 | Fund Letters | David Polansky | MAMA | Mama’s Creations Inc. | Consumer Staples | Packaged Foods | Bull | NASDAQ | acquisition, Deli, EBITDA, Food, growth, Integration, M&A, Prepared foods, scale, valuation | Login |
| Oct 20, 2025 | Fund Letters | David Polansky | CELH | Celsius Holdings Inc. | Consumer Staples | Beverages | Bull | NASDAQ | Beverages, Distribution, EBITDA, Energy drinks, growth, Margins, market share, Partnership, PepsiCo, Re-rating | Login |
| Oct 20, 2025 | Fund Letters | David Polansky | MAMA | Mama’s Creations Inc. | Consumer Staples | Packaged Foods | Bull | NASDAQ | acquisition, Deli, EBITDA, Food, growth, Integration, M&A, Prepared foods, scale, valuation | Login |
| Aug 19, 2025 | Fund Letters | David Polansky | MAMA | Mama's Creations, Inc. | Consumer Staples | Packaged Foods & Meats | Bull | NASDAQ | Acquisitions, Deli, EBITDA, grocery, management, Margins, Prepared, Scalability, valuation | Login |
| Jan 30, 2026 | Fund Letters | David Polansky | PAR | Par Technology Corp. | Information Technology | Application Software | Bull | New York Stock Exchange | ARR, mispricing, operating leverage, Point of Sale, restaurant software | Login |
| Jan 30, 2026 | Fund Letters | David Polansky | MAMA | Mama’s Creations Inc. | Consumer Staples | Packaged Foods | Bull | NASDAQ | Distribution, Free Cash Flow, Margins, Prepared foods, retail expansion | Login |
| Jan 30, 2026 | Fund Letters | David Polansky | BROS | Dutch Bros Inc. | Consumer Discretionary | Restaurants | Bull | New York Stock Exchange | cash flow, Culture, expansion, Restaurants, Unit economics | Login |
| TICKER | COMMENTARY |
|---|---|
| BELFB | The portfolio's top contributor for the quarter was Bel Fuse, which we subsequently sold out of entirely after owning shares, in varying sizes, for nearly three years. If given the opportunity to own Bel Fuse at a more reasonable price, we would not hesitate to be shareholders again. |
| BROS | Longer-term holdings such as Dutch Bros increased, outperforming benchmark returns |
| CAVA | CAVA, the Mediterranean restaurant chain, was the top performer in the Consumer Discretionary sector in the fourth quarter. The stock was under pressure for much of 2025, along with the entire restaurant industry, due to slowing growth trends. But CAVA's sales stabilized in the fourth quarter, prompting investors to recognize they had become too negative, and the share price rebounded nicely. Looking ahead, CAVA is planning to expand to 1,000 units in the United States by 2032, which is a solid growth target relative to its current base of ~450. |
| CELH | Security selection within the Consumer Staples sector also detracted from relative performance, driven by an allocation to Celsius Holdings, Inc. (1.1%), a developer of energy drinks. |
| CMG | The top-five detractors from returns were Fiserv, Chipotle, Constellation Software, Roper, and Floor & Décor. In the quarter, we exited Fiserv, Chipotle, and monday.com. |
| MAMA | stocks scaling very nicely and entering the small-cap sweet spot (REAL, MAMA, CBLL, KRMD). |
| PAR | Software has always been a hyper-competitive industry teeming with well-funded start-ups. Consider PAR Technology's niche in restaurant point-of-sale (POS). Despite facing over 6,000 global competitors—including countless "free" alternatives requiring no subscription—PAR consistently wins mandates from Tier-1 restaurant chains. A prime example is their newly announced deal with Papa John's, which abandoned its in-house software to migrate to PAR. This dynamic runs 180° counter to the prevailing market narrative. AI will undoubtedly turn up the heat on this already intense global competition, but it will also accelerate PAR's product velocity, broaden its capabilities, and vastly expand its TAM. Ultimately, the endgame for incumbents is unlikely to be the race to zero gross margins that so many software skeptics are predicting. |
| RDVT | Red Violet (RDVT – Ugly Duckling) is one of our five largest holdings in alphabetical order. Companies like Red Violet and Par Technology, one of which has legally privileged and proprietary data streams and the other which creates and manages mission critical, intricate databases for transaction flows, are just a couple of the countless examples of babies being thrown out with the bathwater. |
| SBUX | Starbucks was sold during the quarter as it was not tracking to plan. |
| TGT | Target was sold during the quarter as it was not tracking to plan. |
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