The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
Riverwater's Sustainable Value Strategy underperformed in Q2 2026 as small-cap stocks achieved their best first-half performance since 1991, driven almost entirely by speculative excess in AI-exposed names. The Russell 2500 Value Index rose 17% in the quarter, with technology surging 75%, but the shortfall came from disciplined avoidance of SanDisk, a cyclical memory semiconductor that appreciated 720% year-to-date and comprised nearly 5% of the benchmark. The manager refused to own SanDisk as it exceeded their market cap threshold and represents a commodity business with poor through-cycle returns, prioritizing mandate discipline over short-term performance. Loss-makers outperformed profitable companies by over 1200 basis points in the quarter, marking the highest-beta quarter for Russell 2000 in over a decade. Technology holdings led by Veeco Instruments contributed strongly in absolute terms but trailed the benchmark's 75% sector surge. The manager maintains conviction in quality-focused investing, believing the portfolio is well-positioned for eventual normalization of market leadership despite current headwinds from speculative market conditions.
Riverwater maintains disciplined, quality-focused small-cap value investing despite a quarter dominated by speculative excess, refusing to compromise their investment framework to chase cyclical commodity businesses or loss-making high-beta names even as these drove benchmark outperformance reminiscent of late 1999 dot-com exuberance.
The manager maintains a constructive view on small-cap equities supported by improving monetary conditions and attractive relative valuations, though acknowledges the anticipated rotation back toward higher-quality businesses has not yet started. While quality continues to lag in the short term with loss-makers and high-beta stocks dominating, the manager believes quality prevails over the long term and the portfolio is well-positioned for eventual normalization of market leadership. The commitment to disciplined, quality-focused investing remains unchanged despite current headwinds.
As of Jul 17, 2026
Adam Peck, CFA, is the founder, Chief Investment Officer, and controlling person of Riverwater Partners, LLC, which he established in Milwaukee in 2016. Under his leadership, the firm has achieved B Corporation certification and Green Master status from the Sustainable Business Council's Green Masters Program. The investment team includes Cindy Bohlen, CFA, as Director of Responsible Investing, along with other experienced professionals. The firm manages approximately $241 million in assets for 189 clients including high net worth individuals, charitable organizations, and other investment advisers. Riverwater has gained industry recognition with multiple PSN Top Guns awards and maintains GIPS compliance with independent verification through 2023.
Riverwater Partners' mission is to make the world a better place by growing wealth through sustainable investing. The firm employs a proprietary Three Pillar Approach® that evaluates each investment through Superior Business, Exceptional Management, and Attractive Valuation criteria. The strategy focuses on long-term capital appreciation by investing in a concentrated portfolio of 20-35 small to mid-sized companies with strong ESG characteristics. The firm integrates environmental, social, and governance criteria into the investment process using a proprietary 25-point scoring system. They actively engage with company management teams on ESG efforts while maintaining exclusionary screens for tobacco, alcohol, pornography, illegal drugs, gambling, for-profit prisons, and unconventional weapons. Unlike many ESG strategies, they invest in energy companies focused on reducing environmental footprint and facilitating clean energy transitions.
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
The manager demonstrates high conviction in their quality-focused investment framework, explicitly refusing to own SanDisk despite its 720% appreciation because it violated their mandate and investment principles. Specific positions are named with clear thesis explanations (Veeco, Stevanato, NetScout, Knight-Swift, Methanex) and position sizing discipline is evident through repeated trimming of winners. However, the portfolio appears diversified with 10+ named holdings across multiple sectors, and some hedging language exists around forward positioning ('continue to evaluate,' 'monitoring'). The manager shows strong conviction in their process and quality mandate but operates within a diversified framework rather than extreme concentration. The explanation cites specific portfolio behavior and falsifiable positioning decisions, supporting a score in the moderate-to-high conviction range.
Growth Outlook
Market outlook remains above average conviction: Despite a challenging 2025 marked by a speculative, late-1999-style market, Riverwater remains committed to quality-focused investing and expects a strong rotation back to small-ca...
Risk Appetite
Risk appetite posture is moderate conviction: Despite a challenging 2025 marked by a speculative, late-1999-style market, Riverwater remains committed to quality-focused investing and expects a strong rotation back to small-ca...
Capital Deployment
The quarter was characterized by capital rotation rather than net deployment or de-risking. The manager sold Charles River Laboratories and Leggett & Platt to fund purchases of Stevanato Group and NetScout Systems, while also adding to Knight-Swift from the prior quarter. Veeco was trimmed repeatedly as it appreciated. No cash level changes are disclosed, and the language suggests balanced activity with new positions funded by exits rather than deployment of incremental cash. Technology overweight increased from slight underweight to 17% versus 10% benchmark, but this was explicitly attributed to index reconstitution on June 30th rather than active positioning changes. This represents rotation and rebalancing activity with no clear evidence of net cash deployment or de-risking.
Forward Guidance
Forward guidance signal: Despite a challenging 2025 marked by a speculative, late-1999-style market, Riverwater remains committed to quality-focused investing and expects a strong rotation back to small-ca...
Language Signal
The letter contains balanced directional language with notable bearish framing around market conditions. Bullish terms include 'constructive view,' 'attractive valuations,' 'well-positioned,' 'opportunity,' and 'compelling returns.' Bearish language includes 'underperformed,' 'shortfall,' 'exuberance,' 'speculative excess,' 'reminiscent of late 1999,' 'struggles,' and repeated references to 'discipline' in the context of avoiding rallying names. The manager describes market conditions with caution and skepticism while maintaining confidence in their own positioning. The net balance tilts slightly positive but is heavily tempered by risk language and historical bubble comparisons.
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Despite a challenging 2025 marked by a speculative, late-1999-style market, Riverwater remains committed to quality-focused investing and expects a strong rotation back to small-ca...
Opportunity Density
The manager sees selective opportunities in defined areas, adding three new positions (Stevanato, NetScout, Knight-Swift) with clear, specific theses for each. Language includes 'attractive entry point,' 'compelling returns,' 'opportunity to buy,' and 'constructive view' on small-cap equities. However, the manager also emphasizes selectivity and discipline, explicitly avoiding large swaths of the market (loss-makers, high-beta names, cyclical commodities like SanDisk). The characterization is not 'plenty to do' but rather 'selective opportunities' within a quality-focused mandate. The manager finds enough compelling ideas to deploy capital but within a disciplined framework that excludes much of what the market is rewarding. This places opportunity density in the selective-but-present range.
Time Horizon
The manager demonstrates a multi-year investment horizon with explicit long-term framing. Key language includes 'quality prevails over the long term,' 'well-positioned for eventual normalization,' and willingness to hold through short-term underperformance driven by market exuberance. The manager trimmed Veeco as it doubled but maintained it as a holding, suggesting a hold-through-volatility approach rather than trading around positions. New positions like Stevanato are described with multi-year structural theses (regulatory switching costs, biologics growth) rather than near-term catalysts. However, some catalyst dependency exists (Knight-Swift tied to Supreme Court ruling, Methanex to normalized methanol pricing), and the manager discusses quarterly results and sector positioning, indicating attention to medium-term milestones. This places the time horizon in the multi-year range with some catalyst awareness but clear long-term orientation.
Top Conviction Themes
Key Catalysts
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