Alluvial Capital Management, an investment advisory firm, released its fourth-quarter 2025 investor letter. A copy of the same can be downloaded here. The Fund delivered an exceptional quarter, returning 41.2%, making 2025 the best year since inception. The supportive market environment drove the performance of the Fund. The gains are highly concentrated in a small set of companies in the AI value chain. The Fund is confident in its portfolio of good-quality, deeply undervalued companies. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Alluvial Capital Management highlighted stocks like Sylvamo Corporation (NYSE:SLVM). Sylvamo Corporation (NYSE:SLVM) is a paper company that manufactures cutsize, offset paper, and pulp producing uncoated freesheet used in printing and publishing. On March 11, 2026, Sylvamo Corporation (NYSE:SLVM) stock closed at $43.49 per share. One-month return of Sylvamo Corporation (NYSE:SLVM) was -20.55%, and its shares lost 31.66% over the past 52 weeks. Sylvamo Corporation (NYSE:SLVM) has a market capitalization of $1.718 billion.
Alluvial Capital Management stated the following regarding Sylvamo Corporation (NYSE:SLVM) in its fourth quarter 2025 investor letter:
“In the fourth quarter, Alluvial Fund purchased shares of Sylvamo Corporation (NYSE:SLVM), a manufacturer of uncoated freesheet paper—think printer paper. In Sylvamo, I see an opportunity to buy a fundamentally sound company facing short term headwinds. Sylvamo, spun off from giant International Paper in 2021, has a strong history of profitability and free cash flow generation. However, 2025 and 2026 results are being weighed down by a confluence of negative factors. The company’s long-term supply agreement with its former parent is expiring as International Paper converts a production line from freesheet to cardboard. Paper pricing is down. And Europe, a major market for Sylvamo, is experiencing poor demand. Difficult times. However, there is good reason to believe these factors will alleviate over the course of this year, setting Sylvamo up to return to healthy free cash flow generation. The company is working to replace its lost supply via a major investment in its Eastover and Sumter mills in South Carolina. The project will increase capacity by 60,000 short tons annually. Elsewhere in the industry, the International Paper conversion and the closure of a Pixelle paper mill in Chillicothe, Ohio will reduce supply and support paper pricing. Sylvamo expects that its South Carolina investment program will yield a 30%+ internal rate of return, and that the company can return to producing $300 million in free cash flow annually in 2027 and beyond.
I expect Sylvamo shares to respond positively as cash flow production inflects higher in 2027. However, there’s a chance we won’t have to wait that long. Late last year, Sylvamo’s top shareholder, an industrial holding company with extensive involvement in the paper industry, abruptly withdrew its two directors from Sylvamo’s board and voided the cooperation agreement that had prevented it from buying additional Sylvamo shares. These actions may indicate a potential transaction in the works.”
Sylvamo Corporation (NYSE:SLVM) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 22 hedge fund portfolios held Sylvamo Corporation (NYSE:SLVM) at the end of the fourth quarter, up from 20 in the previous quarter. While we acknowledge the risk and potential of Sylvamo Corporation (NYSE:SLVM) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Sylvamo Corporation (NYSE:SLVM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Sylvamo Corporation (NYSE:SLVM) and shared a list of best small-cap value stocks to buy. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
