Riverwater Partners Micro Opportunities Strategy’s Top Contributor: Aris Water Solutions (ARIS)

Riverwater Partners, an investment management company, released its “Micro Opportunities Strategy” Q1 2025 investor letter. A copy of the letter can be downloaded here. The strategy generated positive relative results in the first quarter, outperforming the benchmark. The results were driven by owning higher-quality companies compared to those in the microcap benchmark. Both stock selection and sector allocation contributed to the outperformance of the strategy in the quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first-quarter 2025 investor letter, Riverwater Partners Micro Opportunities Strategy highlighted stocks such as Aris Water Solutions, Inc. (NYSE:ARIS). Aris Water Solutions, Inc. (NYSE:ARIS) is an environmental infrastructure and solutions company. The one-month return of Aris Water Solutions, Inc. (NYSE:ARIS) was -1.95%, and its shares gained 53.47% of their value over the last 52 weeks. On June 30, 2025, Aris Water Solutions, Inc. (NYSE:ARIS) stock closed at $23.65 per share, with a market capitalization of $1.399 billion.

Riverwater Partners Micro Opportunities Strategy stated the following regarding Aris Water Solutions, Inc. (NYSE:ARIS) in its Q1 2025 investor letter:

“Top Contributor: Aris Water Solutions, Inc. (NYSE:ARIS): Aris Water Solutions (ARIS) was the top contributor to portfolio performance in Q1 2025, driven by solid execution on both operational and strategic fronts. The company provides infrastructure and water recycling solutions to energy producers in Texas. The company reported strong Q4 results:

  • Adjusted EBITDA of $54.5 million and revenue of $118.6 million—both exceeding consensus estimates • Increased dividend by 33%, reinforcing confidence in its free cash flow profile • Successfully integrated recently acquired assets in Texas and New Mexico, notably McNeill Ranch, has reduced operating costs and expanded long term growth opportunities.

With growing regulatory focus on water reuse and a rising demand for sustainable infrastructure, ARIS is well-positioned to benefit from secular ESG trends.”

Is Aris Water Solutions, Inc. (ARIS) the Best Performing Utilities Stock So Far in 2025?

An industrial complex with a pillar of steam billowing from a water recycling plant.

Aris Water Solutions, Inc. (NYSE:ARIS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Aris Water Solutions, Inc. (NYSE:ARIS) at the end of the first quarter, which was 31 in the previous quarter. While we acknowledge the potential of Aris Water Solutions, Inc. (NYSE:ARIS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Aris Water Solutions, Inc. (NYSE:ARIS) and shared Artisan Small Cap Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of ARIS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.