Riverwater Partners, an investment management company, released its “Micro Opportunities Strategy” Q2 2026 investor letter. A copy of the letter is available to download here. In Q2 2026, the Micro Opportunities strategy underperformed the Russell Microcap Index, despite a positive absolute result. The benchmark performed well during a speculative period for micro caps. Over the past twelve months, the strategy has lagged behind the index. Industrials was the best-performing sector while Information Technology lagged. An accelerating artificial intelligence buildout and a persistent geopolitical supply shock drove the market in the quarter. While the micro-cap rally exhibited speculative traits with significant returns in areas avoided by design. The Fund’s focus remains on owning profitable, well-managed small businesses at reasonable prices rather than pursuing fleeting market trends. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Riverwater Micro Opportunities Strategy highlighted Red Violet, Inc. (NASDAQ:RDVT). Red Violet, Inc. (NASDAQ:RDVT) is a software and services company that provides analytics and information solutions focusing on identity intelligence and risk management. On July 23, 2026, Red Violet, Inc. (NASDAQ:RDVT) closed at $59.57 per share. One-month return of Red Violet, Inc. (NASDAQ:RDVT) was 1.97%, and its shares gained 38.25% over the past 52 weeks. Red Violet, Inc. (NASDAQ:RDVT) has a market capitalization of $840.47 million.
Riverwater Micro Opportunities Strategy stated the following regarding Red Violet, Inc. (NASDAQ:RDVT) in its Q2 2026 investor update:
“Red Violet, Inc. (NASDAQ:RDVT), a data analytics and identity intelligence provider, gained approximately 84%. The company’s proprietary identity graph continues to take share in fraud prevention and investigative workflows, and it is one of the rare profitable, founder-driven software businesses available at the micro-cap end of the market. It remains a top-five holding. Red Violet continues to onboard customers at record levels which is a good leading indicator of future sales growth. Management is also integrating AI in product development. In contrast to most other software companies, the market sees AI as a tailwind rather than a headwind for them.”
Red Violet, Inc. (NASDAQ:RDVT) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 19 hedge fund portfolios held Red Violet, Inc. (NASDAQ:RDVT) at the end of the first quarter, compared to 17 in the previous quarter. In Q1 2026, Red Violet, Inc.’s (NASDAQ:RDVT) revenue increased 17% year-over-year to $25.8 million. While we acknowledge the risk and potential of Red Violet, Inc. (NASDAQ:RDVT) 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 Red Violet, Inc. (NASDAQ:RDVT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Red Violet, Inc. (NASDAQ:RDVT) and shared Wasatch Micro Cap Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2026 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.
