Immersion Investment Partners, an investment management company, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. Immersion Investment Partners returned 4.9% (net) in Q4 2025, compared to the Russell 2000Index’s 2.2% return and the Russell Microcap Index’s 6.3% gain. The yearly return was 45.4% compared to 12.8% and 23.0% returns for the indexes, respectively. The letter noted the massive investments being made in AI and raised concerns about energy demands and unclear monetization paths. The market is broadly penalizing tech companies whose business models aren’t adapting to AI, creating potential investment opportunities for those with innovative business models. The firm always makes careful decisions and maintains discipline when opportunities arise. Please review the Partnership’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Immersion Investment Partners highlighted PAR Technology Corporation (NYSE:PAR). PAR Technology Corporation (NYSE:PAR) is a leading technology company that offers cloud-based hardware and software solutions to the restaurant and retail industries. On February 3, 2026, PAR Technology Corporation (NYSE:PAR) stock closed at $22.75 per share. One-month return of PAR Technology Corporation (NYSE:PAR) was -34.55%, and its shares lost 68.53% of their value over the last 52 weeks. PAR Technology Corporation (NYSE:PAR) has a market capitalization of about $923.446 million.
Immersion Investment Partners stated the following regarding PAR Technology Corporation (NYSE:PAR) in its fourth quarter 2025 investor letter:
“PAR Technology Corporation (NYSE:PAR) – Ugly Duckling) merits some discussion. The name was first disclosed in our 2Q 2024 letter and we’ve held it continuously since then, absent tax-loss harvesting sales in the quarter. PAR had what can only be described as a disastrous 2025, with the stock down 50% on an overall decrease in software valuation multiples, especially payments/point-of-sale adjacent stocks, and a deceleration of top-line growth. A significant driver of the deceleration was a delay in Burger King’s point-of-sale rollout because BK decided at the 11th hour to add on a PAR back-office software product to its point-of-sale deployment. This caused a delay in PAR’s annual recurring revenue (ARR) growth in the first half of the year, leading to ARR growth of 15% exiting Q3 vs. previously targeted 20%. The shortsightedness behind the market’s reaction cannot be overstated. A PAR customer wanted to buy more product, thus the stock went down 50%. Meanwhile, the company has continued winning deals across its product portfolio, including Papa John’s, which will utilize several PAR products across its 3,200 U.S. locations, contributing $15 million in ARR when fully deployed. The stock’s market capitalization today is back to late 2020 levels. Since then, PAR has grown ARR per share fourfold, through a combination of 15%+ annual organic software growth and M&A that has expanded the product portfolio and improved value for customers. Gross profit has also increased fourfold, despite divesting a large business in 2024. Perhaps unsurprisingly, the market has not granted the company any credit as management elected to pour back nearly 100% of growth in gross margin dollars into operating expenses (SG&A, R&D, etc.) to continue to fuel the business long term. Despite that, the company is still on track to meet our 2026 gross profit and EBITDA targets that we laid out in our initial letter of $225 million and $90 million, respectively. We can’t be more emphatic about the fact that there is nothing wrong with this business. Management’s strategy and patience to build durability into the business via M&A and R&D investments is out of sync with market trends. When ARR accelerates again with new customer wins, increasing ARPU (average revenue per user), and the existing installation pipeline (Burger King, etc.), the market will reprice shares to a more appropriate level.”
PAR Technology Corporation (NYSE:PAR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held PAR Technology Corporation (NYSE:PAR) at the end of the third quarter compared to 28 in the third quarter. PAR Technology Corporation’s (NYSE:PAR) third quarter revenue increased nearly 23% to $119 million. While we acknowledge the risk and potential of PAR Technology Corporation (NYSE:PAR) 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 PAR Technology Corporation (NYSE:PAR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered PAR Technology Corporation (NYSE:PAR) and shared Laughing Water Capital’s views on the company. 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.
