Riverwater Partners, an investment management company, released its “Small Cap Strategy” Q2 2025 investor letter. A copy of the letter can be downloaded here. The Small Cap Core Strategy underperformed the Russell 2000 in Q2 2025, primarily due to the portfolio’s more defensive holdings and the market’s preference for low-quality companies. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its second-quarter 2025 investor letter, Riverwater Small Cap Strategy highlighted stocks such as HealthStream, Inc. (NASDAQ:HSTM). HealthStream, Inc. (NASDAQ:HSTM) is a US-based healthcare company that provides Software-as-a-Service (SaaS) based applications for healthcare organizations. The one-month return of HealthStream, Inc. (NASDAQ:HSTM) was 5.92%, and its shares lost 0.57% of their value over the last 52 weeks. On September 08, 2025, HealthStream, Inc. (NASDAQ:HSTM) stock closed at $28.09 per share, with a market capitalization of $832.621 million.
Riverwater Small Cap Strategy stated the following regarding HealthStream, Inc. (NASDAQ:HSTM) in its second quarter 2025 investor letter:
“HealthStream, Inc. (NASDAQ:HSTM): Founded in 1990, HSTM originally pioneered the use of online learning to hospitals, with courses specifically tailored to educate healthcare professionals and meet hospitals’ required regulatory needs, i.e., Red Cross training. Today, HealthStream’s solutions help hospitals effectively onboard, retain, engage, educate, manage, and develop workforce talent; meet rigorous GRC requirements; optimize staff scheduling and capacity management; and automate the management of medical staff credentialing, privileging, and enrollment. To achieve this, HSTM has developed its proprietary hStream SaaS technology platform, which is designed to create interoperability among the various applications in its ecosystem. HealthStream serves a large and growing TAM of approximately 22 million health care service providers employed in the healthcare and social services segment of the economy. The 5.4 million hospital-based healthcare professionals registered with Medicare are required by federal and state mandates and accrediting bodies to complete training, including OSHA safety training, HIPAA confidentiality training, etc. Additionally, ongoing pressure to reduce costs by healthcare organizations has driven interest in help with scheduling, capacity management, credentialing, and privileging for healthcare employees. HealthStream’s new platform enables customers to leverage the information on these segments and gain efficiencies.
Founder Robert A. Frist, Jr., has been achieving his vision to help healthcare providers effectively manage their most important asset – their people – since the company’s founding in 1990. The company is projected to grow revenue and EBITDA by 6-8% and 10-12% annually. This accelerating growth profile and reasonable multiple should enable HealthStream to be a good compounder over time.”
HealthStream, Inc. (NASDAQ:HSTM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held HealthStream, Inc. (NASDAQ:HSTM) at the end of the second quarter, which was 12 in the previous quarter. HealthStream, Inc. (NASDAQ:HSTM) reported record revenue of $74.4 million in Q2 2025, up 4% from Q2 2024.While we acknowledge the risk and potential HealthStream, Inc. (NASDAQ:HSTM) 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 HealthStream, Inc. (NASDAQ:HSTM) 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 Q2 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.
