Riverwater Partners has released its fourth-quarter 2025 investor letter for the Micro Opportunities Strategy. The document shows the strategy faced difficulties in both the final quarter and the entire year of 2025, failing to match its benchmark performance.
The underperformance during the second half of the year was attributed to an underweight position in speculative market segments. Throughout 2025, stocks with poor fundamentals outperformed the market, while the strategy's focus on high-quality companies lagged behind broader trends.
Looking ahead to 2026, the strategy will concentrate on micro-cap firms with wider sales and growth prospects. It maintains that recent rallies in low-quality stocks will not last.
The letter specifically mentioned National CineMedia, Inc. (NASDAQ:NCMI), a cinema advertising network operator based in North America. On January 16, 2026, the company's stock closed at $3.84 per share. Its one-month return was -0.26%, and it lost 43.53% of its value over the past 52 weeks. National CineMedia has a market capitalization of $360.312 million.
Regarding National CineMedia, Riverwater Partners stated: "National CineMedia, Inc. (NASDAQ:NCMI) was held on the thesis that a normalization in box office attendance would drive a recovery in cinema advertising volumes, operating leverage, and free cash flow following the company’s restructuring. We exited the position as fourth-quarter box office trends proved materially weaker than expected, limiting advertiser demand and delaying the anticipated rebound in national and local ad spend. Similar to theater operators, market speculation around increased vertical integration—such as Netflix reportedly exploring the acquisition of Warner Bros.—introduced a longer-term structural overhang by raising concerns around theatrical relevance and marketing budgets tied to cinemas. While NCMI remains the dominant cinema advertising platform with improved balance sheet flexibility post-bankruptcy, these factors reduced our confidence in the timing and durability of earnings recovery."
According to available data, 18 hedge fund portfolios held National CineMedia at the end of the third quarter, an increase from 15 in the previous quarter.