| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
The Riverwater Micro Opportunities Strategy underperformed its benchmark in Q4 2025 and for the full year despite positive absolute returns, as the manager's quality-focused approach lagged market leadership driven by speculative, lower-quality factors. The strategy avoided AI-adjacent themes and biotech rallies that drove performance, instead maintaining discipline around profitable businesses with attractive returns on invested capital. Top contributor IRadimed Corporation gained 80% for the year following FDA approval of its MRI-compatible infusion pump, while detractors included American Vanguard and Limoneira despite operational improvements. The manager added Natural Gas Services and exited National CineMedia and Centrus Energy. Looking ahead to 2026, the outlook is increasingly constructive on quality micro-caps as fundamentals should reassert themselves as the primary return driver. Key tailwinds include Federal Reserve rate cuts that benefit micro-caps through lower capital costs and improved liquidity, harsh winter weather driving equipment replacement cycles, and early signs of earnings revisions among real economy businesses. The portfolio is positioned for cyclical micro-cap outperformance focused on quality businesses at fundamental inflection points.
The manager maintains investment discipline centered on higher-quality micro-cap businesses that are profitable or approaching profitability with attractive returns on invested capital, believing fundamentals will reassert themselves as the primary driver of returns in 2026.
Looking ahead to 2026, we are increasingly constructive on micro-cap equities, particularly high-quality micro-cap businesses with improving fundamentals. We believe 2026 will mark a rotation back toward fundamentals, with quality micro-cap stocks outperforming both lower-quality peers and larger-cap equities as earnings visibility and capital discipline regain importance.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 14 2026 | 2025 Q4 | AVD, AVID, CLMB, FSBC, IRMD, LEU, LMNR, MAMA, MEC, NCMI, NGS, PLOW, PWP, UROY | AI, Biotechnology, fundamentals, Microcap, nuclear, Quality, rates, value |
IRMD AVD LMNR NGS PLOW |
The manager emphasizes investment discipline centered on higher-quality businesses that are profitable or approaching profitability with attractive returns on invested capital. They believe quality businesses… |
| Oct 16 2025 | 2025 Q3 | ALLT, ARIS, AVBC, AVD, CCB, DCTH, IRMD, MEC, UROY | financials, industrials, Nuclear Energy, small caps, uranium |
UROY DCTH AVBC ALLT AVD |
Riverwater highlights strength in uranium and nuclear energy investments as AI data centers increase global power demand. The funds top performer, Uranium Royalty Corp, benefited… |
| Jun 30 2025 | 2025 Q2 | ABEO, ARIS, LEU, TILE | fundamentals, liquidity, Microcaps, mispricing, small caps |
LEU ARIS ABEO TILE |
The letter argues that micro-cap stocks remain deeply mispriced due to neglect, liquidity constraints, and passive flows. Management highlights strong fundamentals and long-term growth potential… |
| Mar 31 2025 | 2025 Q1 | ARIS, CLMB, LMNR, NPKI, RDVT | - | - | - |
| Dec 31 2024 | 2024 Q4 | AEHR, AMRK, CCB, LEU, SSSS, UROY | - | - | - |
| Jun 30 2024 | 2024 Q2 | ARIS, ATOM, BWB, III, LLAP, LMNR, PERI, QNST, VECO | - | - | - |
| Apr 15 2024 | 2024 Q1 | ASLE, CRAI, CRE, HBIO, HDSN, LEU, LMNR, MEC, NYCB, PGY | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
NuclearPosition in Uranium Energy as the largest licensed uranium miner in the U.S., positioned to benefit from renewed focus on nuclear power as long-term energy solution and U.S. efforts to strengthen domestic nuclear fuel supply chains for national security. |
Uranium Mining Nuclear Power Energy Security Domestic Supply National Security | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
RatesFederal Reserve resumed rate-cutting cycle with first cut since December 2024, signaling resumption of easing. Expected three cuts of 25bps between now and first quarter 2026 as Fed responds to signs of weakness in US labor market. |
Fed Monetary Policy Labor Market Easing Liquidity | |
TechnologyThe fund added three technology companies that have each halved over 2025 and hopes to add more. Many tech stocks had become expensive but recent falls present opportunities, though most still aren't cheap enough including Xero. |
Software Valuation Opportunity Selloff | |
| 2025 Q3 |
NuclearPosition in Uranium Energy as the largest licensed uranium miner in the U.S., positioned to benefit from renewed focus on nuclear power as long-term energy solution and U.S. efforts to strengthen domestic nuclear fuel supply chains for national security. |
Uranium Mining Nuclear Power Energy Security Domestic Supply National Security |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q2 |
SmallCaps |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 14, 2026 | Fund Letters | Adam Peck | IRMD | IRadimed Corporation | Health Care | Health Care Equipment | Bull | NASDAQ | FDA, growth, Medtech, Mri, ROIC | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | AVD | American Vanguard Corporation | Materials | Agricultural Chemicals | Bull | New York Stock Exchange | agriculture, EBITDA, Inventory, Margins, turnaround | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | LMNR | Limoneira Company | Consumer Staples | Agricultural Products | Bull | NASDAQ | agriculture, Assetvalue, Avocados, Longcycle, Supply | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | NGS | Natural Gas Services Group, Inc. | Energy | Oil & Gas Equipment & Services | Bull | New York Stock Exchange | Compression, Contracts, Energyservices, Margins, Naturalgas | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | PLOW | Douglas Dynamics, Inc. | Industrials | Commercial Services & Supplies | Bull | New York Stock Exchange | Cyclicality, Industrials, Margins, Replacement, Weather | Login |
| Oct 16, 2025 | Fund Letters | Adam Peck | UROY | Uranium Royalty Corp. | Materials | Uranium & Nuclear Energy | Bull | NASDAQ | AI, clean energy, Commodities, nuclear energy, royalties, uranium | Login |
| Oct 16, 2025 | Fund Letters | Adam Peck | DCTH | Delcath Systems Inc. | Health Care | Biotechnology | Bull | NASDAQ | Biotech, Catalysts, Clinical trials, Medical devices, Oncology | Login |
| Oct 16, 2025 | Fund Letters | Adam Peck | AVBC | Avidia Bancorp Inc. | Financials | Banks | Bull | - | Banks, Fintech, growth, IPO, Payments, Value | Login |
| Oct 16, 2025 | Fund Letters | Adam Peck | ALLT | Allot Ltd. | Information Technology | Cybersecurity & Networking | Bull | NASDAQ | cybersecurity, growth, SaaS, Telecom, turnaround | Login |
| Oct 16, 2025 | Fund Letters | Adam Peck | AVD | American Vanguard Corp. | Materials | Agricultural Chemicals | Bull | NYSE | — | Login |
| Jun 30, 2025 | Fund Letters | Adam Peck | LEU | Centrus Energy Corp. | Energy | Uranium | Bull | New York Stock Exchange | HALEU, Nuclear, Reactors, uranium, utilities | Login |
| Jun 30, 2025 | Fund Letters | Adam Peck | ARIS | Aris Water Solutions, Inc. | Industrials | Environmental & Facilities Services | Bull | New York Stock Exchange | infrastructure, midstream, Permian, Recycling, Water | Login |
| Jun 30, 2025 | Fund Letters | Adam Peck | ABEO | Abeona Therapeutics Inc. | Health Care | Biotechnology | Bull | NASDAQ | Biotech, dermatology, Gene, Raredisease, Therapy | Login |
| Jun 30, 2025 | Fund Letters | Adam Peck | TILE | Interface, Inc. | Industrials | Building Products | Bull | NASDAQ | Building, Commercial, ESG, Flooring, Sustainability | Login |
| TICKER | COMMENTARY |
|---|---|
| AVD | American Vanguard Corp. (AVD), a developer and marketer of agricultural products, underperformed during the quarter despite clear evidence of operational improvement. Since the appointment of a new CEO, management has executed on a turnaround plan that has meaningfully strengthened the business, though the stock price has moved in the opposite direction—an example of the inefficiencies often present in micro-cap equities. Inventory levels have been materially reduced and are now more manageable, declining approximately 20% year over year, while gross margins expanded sharply to 29% from 15%. Adjusted EBITDA improved to $8 million from $2 million in the prior year, reflecting better execution, cost discipline, and pricing. While we remain cognizant of the risks inherent in the agricultural end markets, we believe AVD is clearly on a path toward a significantly stronger and more durable operating profile than the market currently reflects. |
| AVID | Top contributor YTD with +9.5% performance. |
| CLMB | Software distribution company Climb Global Solutions has a strong track record of bringing new products to small and medium-sized businesses that require higher levels of technical support than the large enterprise market. Its results can be somewhat 'lumpy' depending on the timing of larger deals, and recognized revenue has also been impacted by the cost of integrating a handful of acquisitions in recent years. While the stock performed poorly in the quarter, we view Climb as positioned to post double-digit year-over-year growth over a significant runway while it continues to reinvest in its business. |
| IRMD | IRMD develops, manufactures, and markets MRI-compatible medical devices, including infusion pump systems and patient monitors. The company delivered record third-quarter revenue and earnings, prompting management to raise full-year guidance. This strong operational performance, combined with the announcement of a special cash dividend, underscored the company's financial health and commitment to shareholder returns. |
| LEU | Centrus Energy (LEU) was our top performer for the year as the market increasingly recognized its unique strategic positioning at the nexus of U.S. national security, nuclear energy independence, and next-generation reactor deployment. As the only U.S.-owned and licensed producer of both LEU and HALEU (high-assay low-enriched uranium), Centrus is a critical beneficiary of the structural shift away from Russian nuclear fuel supply and toward domestic enrichment, a theme reinforced by strong bipartisan and Department of Energy support. This thesis was validated when Centrus was awarded approximately $900 million on January 5, 2026 (subsequent to quarter-end) by the Department of Energy to build out additional enrichment capacity, materially strengthening its long-term earnings visibility and strategic value. Following the significant re-rating, we exited the position in full as we believe a substantial portion of the favorable policy, contract, and growth outlook has now been reflected in the share price. |
| LMNR | Limoneira Company (LMNR) declined 14% in the quarter and was our largest detractor for the full year. The agricultural company's stock has been pressured by the cessation of a strategic alternatives review and by weaker cash flows stemming from a reorganization of its citrus business. Despite the disappointing price action, we continue to believe the company's land and water rights are significantly undervalued relative to the current stock price. We expect non-core asset sales in 2026 as well as improved cash flows from its citrus operations. |
| MAMA | stocks scaling very nicely and entering the small-cap sweet spot (REAL, MAMA, CBLL, KRMD). |
| MEC | MEC was our top 4Q25 performer, rising 34.8%. Shares rallied as investors began to look past 2025 cyclical sales weakness and envision the potential sales strength a 2026-2027 recovery could bring. The stock also benefited from enthusiasm around the Accu-Fab acquisition, which opened the data-center equipment market to MEC. While we remain positive on the company's long-term prospects, we expect the cyclical recovery in its agriculture, truck, and consumer recreational end markets to be gradual and uneven. As a result, we modestly trimmed our position. |
| NCMI | National CineMedia, Inc. (NCMI) was held on the thesis that a normalization in box office attendance would drive a recovery in cinema advertising volumes, operating leverage, and free cash flow following the company's restructuring. We exited the position as fourth-quarter box office trends proved materially weaker than expected, limiting advertiser demand and delaying the anticipated rebound in national and local ad spend. Similar to theater operators, market speculation around increased vertical integration—such as Netflix reportedly exploring the acquisition of Warner Bros.—introduced a longer-term structural overhang by raising concerns around theatrical relevance and marketing budgets tied to cinemas. While NCMI remains the dominant cinema advertising platform with improved balance sheet flexibility post-bankruptcy, these factors reduced our confidence in the timing and durability of earnings recovery. |
| NGS | During the 4th quarter we purchased Natural Gas Services Inc (NGS), an energy services company located in Texas, primarily in the Permian region. NGS rents and maintains natural gas compression units used in oil and gas transportation, production and processing facilities. NGS is a unique energy play because they are largely price and commodity agnostic as their focus is on volumes rather than being reliant on the economics of a given commodity. A large percent of their revenue is under long term contracts. Additionally, NGS is in the process of optimizing their portfolio to large horsepower (greater than 1,000HP) while reducing their exposure to small and medium horsepower, about 25% of current revenue. Importantly, NGS has access to large horsepower compressors which is a vital asset in a very tight market. A larger horsepower fleet will be better utilized and have a better margin profile. We are optimistic about volume growth, the optimization of their portfolio evolution and how this could better allow them to compete with the larger players. |
| PLOW | Douglas Dynamics (PLOW) is a leading North American manufacturer of commercial snow and ice control equipment and work truck solutions, serving municipal, commercial, and contractor end markets through a portfolio of well-established brands such as FISHER®, WESTERN®, SnowEx®, Henderson®, and Dejana. From an investment standpoint, PLOW offers asymmetric exposure to a normalization in winter weather after several consecutive years of below-average snowfall that suppressed equipment usage and extended replacement cycles. Data from the current 2025–2026 season indicate one of the harshest winters in six to seven years across key Northeast and Midwest markets, PLOW's most important regions, with snowfall and number of snow days both running well above recent averages (NOAA). Under new CEO Mark Van Genderen, Douglas Dynamics is also executing on a deliberate diversification strategy to reduce reliance on snowfall alone. The company's 'Optimize, Expand, and Activate' framework includes internal efficiency initiatives, organic product development, and targeted M&A, highlighted by the acquisition of Venco Venturo, which expands PLOW's presence in complex truck-mounted cranes and hoists. Management has indicated this acquisition should be modestly accretive to earnings and free cash flow in 2026, with additional margin upside from integration and cross-selling opportunities. |
| PWP | Perella Weinberg Partners is a boutique investment bank that has been investing in incremental deal capacity through strategic hires of experienced investment bankers. An expected upturn in mergers & acquisitions (M&A) activity over the next several years following a period of below average activity should allow the company to operationally leverage the investments they've been making during the downturn. Deal pipelines remain near all-time highs, activity is increasing, and the market is pricing in future modest interest rate cuts, which increases confidence that sustained M&A volume recovery is growing. This environment should allow the company to generate shareholder value over the coming years. |
| UROY | We still hold our position in Uranium Royalty Corp (UROY) as a way to play the rising uranium prices that we believe are coming this year. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
