Riverwater Partners, an investment management company, released its “Micro Opportunities Strategy” Q3 2025 investor letter. A copy of the letter can be downloaded here. The strategy reported solid absolute returns in the quarter but lagged the benchmark as it did not keep pace with the strong rally. The strategy continues to focus on quality companies in the volatile environment. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its third-quarter 2025 investor letter, Riverwater Partners Micro Opportunities Strategy highlighted stocks such as Allot Ltd. (NASDAQ:ALLT). Allot Ltd. (NASDAQ:ALLT) is a technology company that develops and markets network intelligence and security solutions. The one-month return for Allot Ltd. (NASDAQ:ALLT) was 4.45%, and its shares gained 88.19% over the last 52 weeks. On December 16, 2025, Allot Ltd. (NASDAQ:ALLT) stock closed at $8.92 per share, with a market capitalization of $431.957 million.
Riverwater Partners Micro Opportunities Strategy stated the following regarding Allot Ltd. (NASDAQ:ALLT) in its third quarter 2025 investor letter:
“Incorporated in Israel in 1996, public on the Nasdaq since 2006, and dually-listed in Tel-Aviv in 2010, Allot Ltd. (NASDAQ:ALLT) offers network security as a service (SECaaS-Allot Secure 360) and network intelligence solutions (AllotSmart) to communications service providers (CSPs) and enterprises worldwide. ALLT’s multi-service platforms are deployed by over 500 mobile, fixed, and cloud service providers and over 1000 enterprises. Its industry-leading network-native security-as-a-service solution is already used by many millions of subscribers globally. ALLT serves over one billion service providers and enterprise network users across 100 countries, and 25% of Fortune 500 companies are its customers.
ALLT can disrupt the security market for individuals and small businesses via its customer base of communications service providers (CSPs), which serve as a channel to deliver enterprise-grade cybersecurity solutions seamlessly and transparently to customers. Its security-as-a-service (SECaaS) business is growing above 50% and is now 20% of revenue.
For the full year 2024, ALLT achieved a pivotal financial turnaround by returning to profitability and generating positive free cash flow. The company reported pro forma net income of $1.6 million, swinging positively from its $53.3 million loss in 2023. Also, the company’s product mix shift toward security and cost discipline vastly improved margins and reduced cash burn, leading to $4.8 million in operating cash flow and significant operating leverage in 2024. We believe that ALLT’s unique technology platform combined with its commercial strategy to offer its SECaaS make it a unique opportunity in the security software space.”
Allot Ltd. (NASDAQ:ALLT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held Allot Ltd. (NASDAQ:ALLT) at the end of the third quarter, which was 18 in the previous quarter. In the third quarter of 2025, Allot Ltd. (NASDAQ:ALLT) reported revenue of $26.4 million, marking an increase of 14% from Q3 2024. While we acknowledge the risk and potential of Allot Ltd. (NASDAQ:ALLT) 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 ALLOT LTD. (NASDAQ:ALLT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Allot Ltd. (NASDAQ:ALLT) and shared the list of best performing small cap tech stocks in the past 3 years. In addition, please check out our hedge fund investor letters Q3 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.
