Do You Believe in the Growth Potential of Orthofix Medical (OFIX)?

Rewey Asset Management, an investment management company, released its “RAM Smid Composite” second quarter 2025 investor letter. A copy of the letter can be downloaded here. The composite increased 6.11% in Q2 2025, slightly trailing a 7.29% gain for the benchmark Russell 2500 Value Total Return Index. Year-to-date, the composite returned -1.29% vs. 1.03% for the benchmark. The firm views the quarter as in line and has confidence in the Smid value sector as it approaches the second half of 2025. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Rewey Asset Management highlighted stocks such as Orthofix Medical Inc. (NASDAQ:OFIX). Orthofix Medical Inc. (NASDAQ:OFIX) is a medical technology company that operates through Global Spine and Global Orthopedics segments. The one-month return of Orthofix Medical Inc. (NASDAQ:OFIX) was 2.76%, and its shares lost 9.80% of their value over the last 52 weeks. On September 12, 2025, Orthofix Medical Inc. (NASDAQ:OFIX) stock closed at $14.91 per share, with a market capitalization of $588.86 million.

Rewey Asset Management stated the following regarding Orthofix Medical Inc. (NASDAQ:OFIX) in its second quarter 2025 investor letter:

"In 2Q25, we increased our position in Orthofix Medical Inc. (NASDAQ:OFIX) following a 45.6% decline from its February high and a 36.1% drop from its 2024 close. We view this as a compelling valuation opportunity, supported by recent insider purchases by its CEO and also by its top shareholder, a 13D filer.

We believe Orthofix’s strong financial position should continue to improve throughout 2025, as it is largely complete with the integration of its Seaspine merger. In November 2024, OFIX extended its credit agreement through 2029, with net debt to adjusted EBITDA at 1.2x and $115 million in undrawn capacity. On its 1Q25 call, management reaffirmed guidance for positive free cash flow in 2025, with further improvement expected in 2026 and 2027.

We believe part of OFIX’s 2Q25 share weakness stemmed from a $10 million reduction in annual revenue guidance given on its 1Q25 call, driven by one-time factors rather than a slowdown in long-term growth. This included a $5 million impact from a canceled U.S. AID contract and transitional effects from a new distributor and a merger between two customers. We view this as a temporary setback that has led to an overreaction by momentum and quant investors..." (Click here to read the full text)

Orthofix Medical Inc. (NASDAQ:OFIX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 25 hedge fund portfolios held Orthofix Medical Inc. (NASDAQ:OFIX) at the end of the second quarter, compared to 28 in the previous quarter. While we acknowledge the potential of Orthofix Medical Inc. (NASDAQ:OFIX) 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 Orthofix Medical Inc. (NASDAQ:OFIX) and shared the list of best medical device stocks to buy according to analysts. 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.