Riverwater Partners disclosed its Sustainable Value Strategy Q2 2026 investor letter, noting that small-cap equities achieved their best first-half performance since 1991, with the Russell 2500 Value Index advancing 17%. The strategy’s performance lagged its benchmark during the second quarter, primarily due to stock selection factors. The technology sector emerged as the strategy’s largest overweight position at 17% of holdings, a shift influenced by index reconstitution that reduced the benchmark’s technology weighting.
Within the portfolio, Veeco Instruments Inc. (NASDAQ:VECO) served as the strategy’s largest contributor to quarterly performance. The company manufactures laser annealing and ion beam deposition equipment used in semiconductor production, with particular application in manufacturing high-bandwidth memory devices for artificial intelligence data centers. According to the investor letter, orders and financial results substantially exceeded expectations as memory manufacturers accelerated capacity expansion efforts, propelling the stock to more than double in value over a three-month period.
As of September 18, 2026, Veeco Instruments shares closed at $42.72, reflecting a monthly decline of 8.64% but a year-to-date gain of 46.45%. The company maintained a market capitalization of $2.61 billion, with shares trading within a 52-week range of $26.00 to $86.63. The fund management team implemented disciplined profit-taking measures throughout the quarter, trimming the position repeatedly as its size within the portfolio expanded. The holding was retained at what management characterized as an appropriate and defensible weight.
Hedge fund interest in Veeco Instruments increased during the period, with 38 hedge fund portfolios holding the stock at the end of the second quarter compared with 27 in the prior quarter. Looking ahead, the outlook for small-cap equities remained constructive, supported by improving monetary conditions and attractive valuations, though the anticipated rotation toward higher-quality businesses had not materialized as expected.
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