Riverwater's Q2 performance lagged as the absence of high-flying SanDisk offset gains, while the firm remains bullish on Methanex's long-term free cash flow potential despite recent geopolitical headwinds.
Riverwater sees value in Methanex despite a near-term cash flow pullback, citing strong free cash flow yield and undervaluation based on normalized methanol pricing.
SanDisk rose approximately 720% year to date and contributed an estimated 6% to the Russell 2500 Value Index's 2026 return, but was absent from the fund's portfolio.
Riverwater Partners' Sustainable Value Strategy underperformed the Russell 2500 Value Index in Q2 2026, largely due to missing out on SanDisk's 720% year-to-date surge. Despite the drag from Methanex Corporation, the firm maintains a constructive outlook on small-cap equities, citing improving monetary conditions and attractive valuations for quality-focused portfolios.
Methanex shares declined as the geopolitical risk premium linked to the Middle East conflict unwound following a ceasefire, and the company announced the indefinite idling of its Titan plant in Trinidad.
Despite near-term cash flow concerns, Riverwater remains attracted to the company's strong free cash flow yield and believes the stock is undervalued based on normalized methanol pricing.