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Riverwater Partners, an investment management company, released its “Small Cap Strategy” Q1 2026 investor letter. A copy of the letter can be downloaded here. In Q1 2026, the Riverwater Small Cap Strategy outperformed the Russell 2000 Index. The quarter rewarded patience and discipline. The first quarter of 2026 saw a significant shift in market leadership and risk perceptions, due to geopolitical tensions in the Middle East and concerns over sustainable growth in the software and AI sectors. Additionally, private credit markets are under stress. In this environment, the firm is concentrating on identifying market dislocations caused by what it perceives as indiscriminate selling, particularly in AI-related areas. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Riverwater Partners Small Cap Strategy highlighted Modine Manufacturing Company (NYSE:MOD) as a notable contributor. Modine Manufacturing Company (NYSE:MOD) is a leading thermal management products and solutions provider. On May 4, 2026, Modine Manufacturing Company (NYSE:MOD) closed at $259.76 per share. One-month return of Modine Manufacturing Company (NYSE:MOD) was 21.38%, and its shares gained 187.89% over the past 52 weeks. Modine Manufacturing Company (NYSE:MOD) has a market capitalization of $13.69 billion.
Riverwater Partners Small Cap Strategy stated the following regarding Modine Manufacturing Company (NYSE:MOD) in its Q1 2026 investor letter:
"Among our largest contributors, Modine Manufacturing Company (NYSE:MOD) led the way during the quarter. The thermal management specialist continued to benefit from secular demand in data center cooling and a well received spinoff of their auto cooling business into a combined company with Gentherm (THRM), with the stock appreciating over 60% as the market recognized the durability of its growth drivers. We have held Modine since early in the strategy’s life and trimmed modestly during the quarter, but it remains a meaningful position."
Modine Manufacturing Company (NYSE:MOD) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 59 hedge fund portfolios held Modine Manufacturing Company (NYSE:MOD) at the end of the fourth quarter, up from 49 in the previous quarter. While we acknowledge the potential of Modine Manufacturing Company (NYSE:MOD) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
In another article, we covered Modine Manufacturing Company (NYSE:MOD) and shared the list of best AI pick-and-shovel stocks to buy. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.