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 StoneX Group Inc. (NASDAQ:SNEX). StoneX Group Inc. (NASDAQ:SNEX) is a global financial services company. The one-month return of StoneX Group Inc. (NASDAQ:SNEX) was 7.92%, and its shares gained 82.81% of their value over the last 52 weeks. On June 27, 2025, StoneX Group Inc. (NASDAQ:SNEX) stock closed at $91.38 per share, with a market capitalization of $4.47 billion.

Riverwater Partners Small Cap Strategy stated the following regarding StoneX Group Inc. (NASDAQ:SNEX) in its Q1 2025 investor letter:

“Our largest weighting in the portfolio remains StoneX Group Inc. (NASDAQ:SNEX), a more defensive financial services firm. As a capital markets operator, SNEX stands to benefit from increased volatility. Looking ahead, should market conditions deteriorate and valuations compress further, we may look to add exposure to traditional banks when the risk/reward becomes more favorable.”

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StoneX Group Inc. (NASDAQ:SNEX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held StoneX Group Inc. (NASDAQ:SNEX) at the end of the first quarter, which was 27 in the previous quarter. In Q1 2025, StoneX Group Inc. (NASDAQ:SNEX) reported earnings of $71.7 million reflecting increases of 35% year-over-year. While we acknowledge the potential of StoneX Group Inc. (NASDAQ:SNEX) 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.