Kathmandu Capital, an investment management company, released its second-quarter 2025 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund returned 17.22% gross of fees and 16.64% net of fees compared to 10.56% for the Standard & Poor’s 500 Total Return Index and 11.52% for the MSCI ACWI Total Return benchmark. The portfolio experienced a ~30% swing over the past quarter, due to heightened market volatility stemming from tariff worries. Despite these worries, the portfolio delivered positive results driven by capital flows seeking opportunities outside the U.S. and a rebound in domestic equities as tariff worries began to ease. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second-quarter 2025 investor letter, Kathmandu Capital highlighted stocks such as ACM Research, Inc. (NASDAQ:ACMR). ACM Research, Inc. (NASDAQ:ACMR) is a leading manufacturer of packaging tools for wafer assembly and packaging customers. The one-month return of ACM Research, Inc. (NASDAQ:ACMR) was 15.95%, and its shares gained 26.68% of their value over the last 52 weeks. On August 12, 2025, ACM Research, Inc. (NASDAQ:ACMR) stock closed at $24.93 per share, with a market capitalization of $1.6 billion.
Kathmandu Capital stated the following regarding ACM Research, Inc. (NASDAQ:ACMR) in its second quarter 2025 investor letter:
“This quarter, we have initiated a new position in ACM Research, Inc. (NASDAQ:ACMR), the leading Chinese Semi-Cap Wafer Cleaning Equipment Manufacturer. ACMR stands to benefit from China’s semiconductor supply chain localization amid growing trade and geopolitical tensions with the United States. Recent trade restrictions on the exports of both semiconductors and semiconductor capital equipment to China have accelerated their efforts to achieve full self-sufficiency – China is the world’s largest consumer of Semiconductors, amounting to 35% of global consumption, but only produces 7% domestically.
The WFE Cleaning market in China is especially vulnerable to foreign competitors, as ~60% of the market is dominated by international companies, but have recently been rapidly losing share to ACM. The WFE market in China is ~$35Bn growing at ~7.5% while the cleaning market comprises ~6% at $2Bn, of which ACMR has 14% share, behind foreign competitors such as Tokyo Electron and LAM Research. As China moves towards self-sufficiency, ACM’s momentum in taking share should accelerate, driving up earnings – share gains from 14% to 25% by 2030 represents an incremental $7Bn in Revenue. Despite being positioned as the dominant domestic cleaning supplier, ACMR trades at a discount to both domestic and foreign peers despite growing sales in 2024 as fast as domestic Chinese peers, and 3x faster than Western Peers while having a consistent track record growing 20% topline CAGR for the past decade.
Beyond the core business, ACMR is structured as a Delaware incorporated HoldCo, owning 83% of Shanghai listed ACM Research Shanghai (SHA: 688082). Despite ACMR and ACMR Shanghai being virtually identical companies, ACM Shanghai trades at 250%+ Premium (~35x EBIT) to its US listed shares. While we believe that the valuation gap substantially closing is unlikely, any management action to unlock the value of their Shanghai shares to US investors acts as a free call option. Overall, ACMR acts a highly asymmetric opportunity to play the secular trend of Chinese supply-chain onshoring and fab buildout while being protected by a US incorporated company with a free call option on the valuation gap closing.”
Close-up of a worker wearing protective gear inspecting a silicon wafer in a laboratory.
ACM Research, Inc. (NASDAQ:ACMR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held ACM Research, Inc. (NASDAQ:ACMR) at the end of the first quarter, which was 23 in the previous quarter. ACM Research, Inc. (NASDAQ:ACMR) reported revenue of $215.4 million in Q2 2025, reflecting an increase of 6.4% from Q2 2024. While we acknowledge the risk and potential of ACM Research, Inc. (NASDAQ:ACMR) 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 ACM Research, Inc. (NASDAQ:ACMR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered ACM Research, Inc. (NASDAQ:ACMR) and shared the list of most undervalued semiconductor stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
Disclosure: None. This article is originally published at Insider Monkey.
