Riverwater Partners, an investment management company, released its “Small Cap Strategy” Q2 2025 investor letter. A copy of the letter can be downloaded here. The Small Cap Core Strategy underperformed the Russell 2000 in Q2 2025, primarily due to the portfolio’s more defensive holdings and the market’s preference for low-quality companies. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its second-quarter 2025 investor letter, Riverwater Small Cap Strategy highlighted stocks such as AtriCure, Inc. (NASDAQ:ATRC). AtriCure, Inc. (NASDAQ:ATRC) develops devices for surgical ablation of cardiac tissue, exclusion of the left atrial appendage, and temporarily blocking pain by ablating peripheral nerves to medical centers. The one-month return of AtriCure, Inc. (NASDAQ:ATRC) was 0.45%, and its shares gained 33.98% of their value over the last 52 weeks. On September 08, 2025, AtriCure, Inc. (NASDAQ:ATRC) stock closed at $36.00 per share, with a market capitalization of $1.789 billion.
Riverwater Small Cap Strategy stated the following regarding AtriCure, Inc. (NASDAQ:ATRC) in its second quarter 2025 investor letter:
“AtriCure, Inc. (NASDAQ:ATRC): ATRC is a leading innovator of treatments for atrial fibrillation (Afib), left atrial appendage (LAA) management and post-operative pain management. Afib is an irregular heartbeat, or arrhythmia, which affects over 37 million people worldwide, including more than eight million people in the United States, and is a growing epidemic. It is the most common cardiac arrhythmia encountered in clinical practice and results in high utilization of healthcare services and significant cost burden. ATRC serves the Cardiac (open-heart) and Minimally-Invasive Ablation and LAAM markets. ATRC’s cardiac ablation and LAAM products are used by physicians during open-heart and minimally invasive surgical procedures.
Minimally invasive procedures (MIA) are performed on a standalone basis and often include multidisciplinary or “hybrid” approaches, combining surgical procedures using AtriCure ablation and AtriCure LAAM products with catheter ablation performed by an electrophysiologist. ATRC’s pain management solutions are used by physicians to freeze nerves during cardiothoracic or thoracic surgical procedures. Many surgeons use multimodal pain management strategies that include oral delivery of opioid and non-opioid pain medications. ATRC cryoICE cryoSPHERE probe for pain management (Cryo Nerve Block) provides temporary relief of postoperative pain, allowing the patient’s body to heal after surgery while the nerves regenerate and sensation is regained.
ATRC expects revenue to grow 14-16% annually, and will be cash flow positive going forward. The stock sold off during 2024 as newly introduced pulse-field ablation (PFA) procedures took most of the cardiology lab’s attention during 2024, causing surgical ablation/LAAM procedures to fall, negatively impacting ATRC. Using the EU’s previous experience with PFA taking mindshare and market share a few years ago, and then returning to cardiac ablation and LAAM as an example, ATRC should be well-positioned to resume this growth trend in 2025.”
AtriCure, Inc. (NASDAQ:ATRC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held AtriCure, Inc. (NASDAQ:ATRC) at the end of the second quarter, which was 24 in the previous quarter. AtriCure, Inc. (NASDAQ:ATRC) generated an outstanding second quarter results with revenue of $136 million, representing a 17% year-over-year increase. While we acknowledge the risk and potential AtriCure, Inc. (NASDAQ:ATRC) 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 AtriCure, Inc. (NASDAQ:ATRC) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In addition, please check out our hedge fund investor letters Q2 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.
