Overview
- Riverwater published its Q2 2026 Micro Opportunities investor letter on Friday, reporting a positive absolute return for the quarter that nevertheless lagged the Russell Microcap Index.
- The fund attributed the quarter’s market action to an accelerating AI buildout and ongoing geopolitical supply shocks that helped drive a speculative rally in many small stocks.
- Riverwater said it added Strattec in April and noted meaningful open-market purchases by the company’s chief executive and chief financial officer, which the fund views as a strong insider-buying signal.
- The letter described a brief Zevia position bought in early May and sold at a modest gain after the company’s chief executive resigned unexpectedly in mid-June, illustrating the fund’s pre-stated sell discipline.
- Red Violet is named a top-five holding after about an 84% gain, continued customer onboarding, management-led AI integration, and Q1 2026 revenue of $25.8 million, which the fund cites as evidence of durable fundamentals it seeks in microcaps.