Soumya Eswaran

Mon, Jun 30, 2025, 5:20 AM3 min read

Riverwater Partners, an investment management company, released its “Small Cap Strategy” Q1 2025 investor letter. A copy of the letter can be downloaded here. The Small Cap Core Strategy outperformed the Russell 2000 in Q1 2025, driven by strong stock selection and sector allocation. Within this strategy, the firm focuses on bottom-up fundamental research rather than making top-down macroeconomic bets. While much of the market discourse today is centered on tariffs and U.S. fiscal policy, the firm’s focus remains on identifying high-quality companies. 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 Small Cap Strategy highlighted stocks such as Palomar Holdings, Inc. (NASDAQ:PLMR). Palomar Holdings, Inc. (NASDAQ:PLMR), with a market capitalization of $4.102 billion, is a specialty insurance company. The one-month return of Palomar Holdings, Inc. (NASDAQ:PLMR) was -12.69%, and its shares gained 84.35% of their value over the last 52 weeks. On June 27, 2025, Palomar Holdings, Inc. (NASDAQ:PLMR) stock closed at $153.38 per share.

Riverwater Partners Small Cap Strategy stated the following regarding Palomar Holdings, Inc. (NASDAQ:PLMR) in its Q1 2025 investor letter:

"Palomar Holdings, Inc. (NASDAQ:PLMR) was our top performer in the first quarter. PLMR is a specialty insurance company focused on underserved property catastrophe insurance markets in the United States, with a particular emphasis on earthquake coverage. Palomar's business strategy involves underwriting and analytical expertise, allowing them to concentrate on markets with limited competition. Their key product categories include earthquake, inland marine & other property, casualty, fronting, and crop.

A real estate investment banker sitting in a plush office, reviewing financials and papers.

Palomar Holdings, Inc. (NASDAQ:PLMR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Palomar Holdings, Inc. (NASDAQ:PLMR) at the end of the first quarter, which was 20 in the previous quarter. While we acknowledge the potential of Palomar Holdings, Inc. (NASDAQ:PLMR) 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.