Riverwater Partners, an investment management company, recently released its Q3 2025 investor letter outlining the performance of its “Micro Opportunities Strategy.” While the strategy reported solid absolute returns in the quarter, it did lag behind the benchmark due to the strong market rally. The company continues to focus on quality companies in the volatile environment, aiming to deliver long-term results for its investors.
One of the highlighted stocks in the investor letter is Coastal Financial Corporation (NASDAQ:CCB), a bank holding company for Coastal Community Bank. The company saw a one-month return of 12.76% and has gained 44.49% in value over the last 52 weeks. As of December 16, 2025, Coastal Financial Corporation (NASDAQ:CCB) closed at $114.93 per share, with a market capitalization of $1.738 billion.
In the investor letter, Riverwater Partners Micro Opportunities Strategy stated, “Within Financials, we maintained an overweight position, particularly in community banks that stand to benefit from an eventual steepening of the yield curve and improving net interest margins. Coastal Financial Corporation (NASDAQ:CCB) remained a top holding, though we trimmed our position during the quarter to harvest gains and manage exposure. We continue to see attractive risk-reward dynamics within the banking sector, especially for well-capitalized institutions with strong deposit franchises and disciplined lending practices.”
While Coastal Financial Corporation (NASDAQ:CCB) is not among the 30 most popular stocks among hedge funds, 15 hedge fund portfolios held the stock at the end of the third quarter. Riverwater Partners sees the potential in Coastal Financial Corporation (NASDAQ:CCB) as an investment but believes that certain AI stocks offer greater upside potential and carry less downside risk. For investors looking for undervalued AI stocks with significant growth potential, they can explore the free report on the best short-term AI stock.
For more investor letters from hedge funds and other leading investors, readers can visit the hedge fund investor letters Q3 2025 page. Stay informed about the latest investment strategies and market insights by following updates from industry experts and fund managers.
