Riverwater Partners, an investment management company, released its “Micro Opportunities Strategy” Q4 2025 investor letter. A copy of the letter can be downloaded here. Both Q4 and the full year 2025 were challenging for the strategy, which struggled to match the benchmark performance in Q4 and FY2025. The underweight exposure in speculative areas of the market led to the underperformance in the second half of the year. Low-quality stocks with poor fundamentals outperformed the market in the year. The strategy’s emphasis on high-quality stocks lagged behind the broader market trends. Heading to 2026, the Strategy focuses on micro-cap companies with broader sales and growth trajectories and believes that the low-quality stock market rallies will be short-lived. In addition, you can check the fund’s top five holdings to determine its best picks for 2025.
In its fourth-quarter 2025 investor letter, Riverwater Partners Micro Opportunities Strategy highlighted stocks such as Douglas Dynamics, Inc. (NYSE:PLOW). Douglas Dynamics, Inc. (NYSE:PLOW), with a market capitalization of $841.683 million, is a manufacturer and upfitter of commercial work truck attachments and equipment. One-month return of Douglas Dynamics, Inc. (NYSE:PLOW) was 8.14%, and its shares gained 47.72% of their value over the last 52 weeks. On January 16, 2026, Douglas Dynamics, Inc. (NYSE:PLOW) stock closed at $36.53 per share.
Riverwater Partners Micro Opportunities Strategy stated the following regarding Douglas Dynamics, Inc. (NYSE:PLOW) in its fourth quarter 2025 investor letter:
“Douglas Dynamics, Inc. (NYSE:PLOW) is a leading North American manufacturer of commercial snow and ice control equipment and work truck solutions, serving municipal, commercial, and contractor end markets through a portfolio of well-established brands such as FISHER®, WESTERN®, SnowEx®, Henderson®, and Dejana. The company operates through two segments: Work Truck Attachments, which is highly levered to winter snowfall patterns, and Work Truck Solutions, which provides truck upfitting, municipal solutions, and more diversified, less weather-dependent revenue streams. This combination gives PLOW a unique cyclical profile, with meaningful upside during normalized winters and increasing stability as the Solutions business scales and diversification initiatives take hold.
From an investment standpoint, PLOW offers asymmetric exposure to a normalization in winter weather after several consecutive years of below-average snowfall that suppressed equipment usage and extended replacement cycles. Data from the current 2025–2026 season indicate one of the harshest winters in six to seven years across key Northeast and Midwest markets, PLOW’s most important regions, with snowfall and number of snow days both running well above recent averages (NOAA). Increased snow events drive higher wear-and-tear regardless of inches per storm, which historically accelerates parts demand and stimulates equipment replacement in subsequent seasons. Importantly, dealer inventory levels remain relatively lean following cautious ordering during the snow drought, setting up a favorable replacement cycle as demand returns…” (Click here to read the full text)
Douglas Dynamics, Inc. (NYSE:PLOW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 20 hedge fund portfolios held Douglas Dynamics, Inc. (NYSE:PLOW) at the end of the third quarter, up from 18 in the previous quarter. In Q3 2025, the consolidated net sales of Douglas Dynamics, Inc. (NYSE:PLOW) increased 25% to $162.1 million, and gross profit grew 23% to $38.1 million. While we acknowledge the risk and potential of Douglas Dynamics, Inc. (NYSE:PLOW) 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 Douglas Dynamics, Inc. (NYSE:PLOW) 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 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.
