Rewey Asset Management, an investment management company, released its “RAM Smid Composite” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The third quarter was favorable for small-cap stocks. The composite increased 10.70% in the quarter, outperforming the 8.17% gain for the benchmark Russell 2500 Value Total Return Index. Year-to-date, the composite returned 9.29% vs. 9.29% for the benchmark. Market capitalization likely contributed to performance in the third quarter of 2025. Smaller market cap indices in the Russell family outperformed their larger counterparts. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, RAM Smid Composite highlighted stocks such as Ultra Clean Holdings, Inc. (NASDAQ:UCTT). Ultra Clean Holdings, Inc. (NASDAQ:UCTT) develops and distributes supplies for the semiconductor industry. The one-month return of Ultra Clean Holdings, Inc. (NASDAQ:UCTT) was 6.40%, and its shares lost 25.72% of their value over the last 52 weeks. On October 13, 2025, Ultra Clean Holdings, Inc. (NASDAQ:UCTT) stock closed at $27.78 per share, with a market capitalization of $1.26 billion.
RAM Smid Composite stated the following regarding Ultra Clean Holdings, Inc. (NASDAQ:UCTT) in its third quarter 2025 investor letter:
“We continued to build our position in Ultra Clean Holdings, Inc. (NASDAQ:UCTT), adding on price weakness early in the quarter. UCTT is a $1.2 billion market cap supplier for the semiconductor capital equipment industry, focusing on gas delivery systems. It also provides cleaning services for installed equipment. Lam Research is UCTT’s largest customer at 33% of revenues, Applied Materials is number two at 23% while service makes up 12% of revenues. UCTT shares ended the quarter at $27.29, well below their 52-week high of $41.84, due to the continued weak semi capital equipment (capx) spending environment in 1H25, which was likely impacted by the global investment pause caused by the ‘Liberation Day’ tariffs. We see a compelling investment outlook for UCTT as we think the semi-capx cycle has begun to inflect positively, while street revenue and earnings estimates have yet to discount this expected improvement.
We believe UCTT will be able to retain and potentially improve its strong financial profile over the balance of 2025 and into 2026 even as it continues to invest in new products and capacity. On September 15th, UCTT revamped its term loan facility with Barclays to reduce the variable interest rate spread over SOFR by 50 basis points. This reduction, combined with the 25 bps Fed funds cut on Sept. 17th reduces UCTT’s borrowing costs by 75 bps for 4Q25 forward, before any additional potential Fed easing. As of 2Q25, UCTT’s gross debt was $478.4 million, offset by $327.4 million in cash, for a net debt/EBITDA ratio of approximately 1x…” (Click here to read the full text)
Ultra Clean Holdings, Inc. (NASDAQ:UCTT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 20 hedge fund portfolios held Ultra Clean Holdings, Inc. (NASDAQ:UCTT) at the end of the second quarter, up from 14 in the previous quarter. In the second quarter Ultra Clean Holdings, Inc. (NASDAQ:UCTT) reported total revenue of $518.8 million compared to $518.6 million in the prior quarter. While we acknowledge the risk and potential of Ultra Clean Holdings, Inc. (NASDAQ:UCTT) 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 Ultra Clean Holdings, Inc. (NASDAQ:UCTT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Ultra Clean Holdings, Inc. (NASDAQ:UCTT) and shared the list of most undervalued semiconductor stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
Disclosure: None. This article is originally published at Insider Monkey.
