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 Interface, Inc. (NASDAQ:TILE). Interface, Inc. (NASDAQ:TILE) is a leading manufacturer of modular carpet tiles and resilient flooring products. On May 5, 2026, Interface, Inc. (NASDAQ:TILE) closed at $27.30 per share. One-month return of Interface, Inc. (NASDAQ:TILE) was 4.00%, and its shares gained 37.46% over the past 52 weeks. Interface, Inc. (NASDAQ:TILE) has a market capitalization of $1.59 billion.
Riverwater Partners Small Cap Strategy stated the following regarding Interface, Inc. (NASDAQ:TILE) in its Q1 2026 investor letter:
“Interface, Inc. (NASDAQ:TILE) is a global leader in sustainable flooring solutions, with its carbon-neutral carpet tile program and use of recycled and bio-based materials positioning it as a preferred supplier in an era of growing ESG procurement standards. Financially, the business is leveraged to a recovery in commercial construction and renovation activity, with margin expansion potential from mix shift toward higher-value resilient flooring and continued operational efficiencies.”
Interface, Inc. (NASDAQ:TILE) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 27 hedge fund portfolios held Interface, Inc. (NASDAQ:TILE) at the end of the fourth quarter, up from 24 in the previous quarter. While we acknowledge the potential of Interface, Inc. (NASDAQ:TILE) 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.