Third Avenue Small-Cap Value Fund's Comments on Cantaloupe (CTLP)

Third Avenue Management, an investment management company based in New York City, released its “Third Avenue Small-Cap Value Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the fund returned 6.53% compared to -4.74% for the MSCI USA Small-Cap Value Index (the “Index”) and 4.96% return for the Russell 2000 Value Index. For more information on the fund’s top picks in 2025, please check its top five holdings.

In its second-quarter 2025 investor letter, Third Avenue Small-Cap Value Fund highlighted stocks such as Cantaloupe, Inc. (NASDAQ:CTLP). Cantaloupe, Inc. (NASDAQ:CTLP) is a digital payments and software services company. The one-month return of Cantaloupe, Inc. (NASDAQ:CTLP) was 0.54%, and its shares gained 64.64% of their value over the last 52 weeks. On August 7, 2025, Cantaloupe, Inc. (NASDAQ:CTLP) stock closed at $11.08 per share, with a market capitalization of $812.021 million.

Third Avenue Small-Cap Value Fund stated the following regarding Cantaloupe, Inc. (NASDAQ:CTLP) in its second quarter 2025 investor letter:

"During the second quarter, the Fund initiated two new positions in niche technology-related industries. Cantaloupe, Inc. (NASDAQ:CTLP) is a payment processing business and Visteon Corp is an automotive technology company.

Cantaloupe Inc. (“CTLP”) is a leading provider of payments hardware and software solutions to the unattended and self service retail sector. The company’s end markets have expanded over the years from a focus on vending machine transactions, which entail small transaction sizes, to a range of micro markets entailing larger transaction sizes. Importantly, the combination of higher transaction volumes and values, from which CTLP earns a spread, have been a tailwind for CTLP’s operating performance. CTLP has a history of competing well in an industry benefiting from automation and labor-saving trends and the growth of self-serve commerce.

Tariff related uncertainty and general concerns about economic outlooks led to widespread U.S. equity market volatility during the quarter and provided the opportunity for Fund management to initiate a position in CTLP after having followed the company closely for over a year. Fund management’s attractions to CTLP include a very loyal customer base with extremely high customer retention rates across a range of stable or growing end markets such as car washes, laundromats, parking, vending machines, and arcade games. By retaining its clients in a consistent fashion, CTLP has been able to operate with relatively high forward visibility, offering Fund management relatively reliable forward-looking data points when evaluating the company. Also relevant to the company’s valuation is the technology underpinning CTLP’s business, which includes a portfolio of valuable patents generally relating to telematic functions. Additionally, a healthy balance sheet and growing profitability fueled by self-help initiatives, leading to expanding operating margins and growing operating cash flow, were also attractions. Furthermore, the potential for continued consolidation within the highly fragmented but secularly growing payments processing industry informed our sense of a reasonable probability that CTLP may eventually be involved in some type of consolidating transaction..." (Click here to read the full text)

Cantaloupe, Inc. (NASDAQ:CTLP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Cantaloupe, Inc. (NASDAQ:CTLP) at the end of the first quarter, which was 19 in the previous quarter. Cantaloupe, Inc.’s (NASDAQ:CTLP) first quarter revenue increased 11% year-over-year to $75.4 million. While we acknowledge the potential of Cantaloupe, Inc. (NASDAQ:CTLP) 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 Cantaloupe, Inc. (NASDAQ:CTLP) and shared Laughing Water Capital's views on the company. In addition, please check out our hedge fund investor letters Q2 2025 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.