Immersion Investment Partners, an investment management company, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Immersion Investment Partners returned 39.1% in the second quarter, surpassing the Russell 2000 Index’s 21.5% gain. The market started valuing their non-AI investments more rationally in the quarter, focusing on strong management, revenue growth, and improving cash flow. The firm capitalized on market selloffs due to macroeconomic factors unrelated to company fundamentals, increasing positions at lower prices, which led to gains in several holdings as they rebounded in the second quarter. In addition, please check the firm’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Immersion Investment Partners 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 August 10, 2026, Red Violet, Inc. (NASDAQ:RDVT) closed at $65.65 per share. The one-month return of Red Violet, Inc. (NASDAQ:RDVT) was -4.05%, and its shares gained 53.78% over the past 52 weeks. Red Violet, Inc. (NASDAQ:RDVT) has a market capitalization of $1.05 billion.
Immersion Investment Partners stated the following regarding Red Violet, Inc. (NASDAQ:RDVT) in its Q2 2026 investor letter:
“Red Violet, Inc. (NASDAQ:RDVT) (RDVT – Underdog) merits some discussion, given the violent contraction in the first quarter and the subsequent snapback. To reiterate our previously stated views from our Annual Meeting presentation, the company’s core identity offering is not exposed to AI threats. If anything, Red Violet has always been a beneficiary of AI trends and is itself powered by its custom-built AI driven CORE platform, which can efficiently build profiles on every American from billions of data points in a secure environment with continuous monitoring and live profile updates. Aside from the technological advantages of Red Violet’s CORE platform, the company benefits from reputational intangibles on the supplier and buyer sides of the equation. Data providers selling sensitive personal information require significant security infrastructure from credible buyers like Red Violet, and, on the other side, Red Violet’s customers (banks, debt collectors, government agencies, etc.) need the data to be accurate. For example, a debt collector that contacts a person who has declared bankruptcy is liable to significant fines and penalties. Those customers cannot rely on a cobbled-together AI-built solution. They buy information from partners they can trust.
Consistent with this narrative, the company’s second-quarter results and forward commentary provided no indication that customers were delaying purchases or building their own AI-driven solutions. Management delivered expectation-beating top- and bottom-line results and noted on the earnings call that April (earnings call on May 6) was an “extremely strong month.” Subsequent to the end of the quarter, Red Violet announced the Forewarn’s formal entry into the healthcare industry. Forewarn’s leading safety product can now be used by home health aides and nurses to screen for potential threats during home visits. We anticipate that the immediately addressable opportunity is in the range of $50 million to $75 million in revenue. Since Forewarn is effectively just a consumer-facing application skin on top of the CORE platform, utilizing the same data, even modest incremental revenue will translate into significant increases in profitability.”
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 Riverwater Micro Opportunities Strategy’s insight 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.
