Ace River Capital, an investment management company, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q4 2025, the Fund returned -4.55% compared to the S&P 500’s (SPX) +2.7% return and the Russell 2000’s (RTY) +2.2% return. The Fund has delivered -21.95% for the full year compared to +18.0% and +12.8% returns for the indexes, respectively. The firm attributed the unfavorable outcomes in the year to valuation pressures and unique events. Ace River Capital is a highly concentrated portfolio of small- and micro-cap businesses with resilient fundamentals, a solid asset base, and significant reinvestment potential. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Ace River Capital highlighted stocks like RCI Hospitality Holdings, Inc. (NASDAQ:RICK). Headquartered in Houston, Texas, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is a hospitality company that owns and operates clubs and restaurants. On February 9, 2026, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) stock closed at $23.59 per share. One-month return of RCI Hospitality Holdings, Inc. (NASDAQ:RICK) was -9.02%, and its shares are down 54.05% over the past twelve months. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) has a market capitalization of $205.716 million.
Ace River Capital stated the following regarding RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in its fourth quarter 2025 investor letter:
“During the fourth quarter, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) shares declined roughly 25% following the filing of bribery and tax-related charges against the CEO, CFO, and other executives by the New York Attorney General in September 2025. These developments created significant legal and governance uncertainty and drove the stock to what I would describe as crisis valuation without crisis operations.
Importantly, the core business remains intact. Cash flow continues, share repurchases have not stopped, and the company now trades below the estimated value of its owned real estate, effectively assigning little value to ongoing earnings power.
Short interest has increased to roughly 12% of the float, further compressing an already small share base following recent buybacks. The CEO and CFO have since stepped down, reducing governance risk, and while there may be fines or balance-sheet impacts ahead, I believe much of this risk is already reflected in the stock price.
The long-term thesis is unchanged. I view current prices as an opportunity and expect to add to the position as conditions warrant.”
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RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 15 hedge fund portfolios held RCI Hospitality Holdings, Inc. (NASDAQ:RICK) at the end of the third quarter, up from 11 in the previous quarter. While we acknowledge the risk and potential of RCI Hospitality Holdings, Inc. (NASDAQ:RICK) 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 RCI Hospitality Holdings, Inc. (NASDAQ:RICK) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered RCI Hospitality Holdings, Inc. (NASDAQ:RICK) and shared a list of best sin 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.
