Investment management firm Minot Light Capital Partners recently released its Q3 2025 investment letter, reporting a net return of 7.6% for its limited partners. Although this figure indicates solid performance, it fell short in comparison to benchmarks, particularly the micro-cap index, which recorded a return of 17.1%. Among the stocks highlighted in the letter is Arq, Inc. (NASDAQ:ARQ), an environmental technology company, which has shown a one-month return of -9.14% and a significant 53.28% decline over the past year.
On December 23, 2025, Arq’s shares closed at $3.28 each, giving the company a market capitalization of approximately $140.036 million. Minot Light provided insights into Arq’s operations and market position, emphasizing the company’s role as one of the largest producers of activated carbons in the United States. These activated carbons serve a variety of industrial purposes, primarily focused on purifying and removing contaminants from water, air, and soil.
Arq’s Strategic Position and Future Potential
Arq operates with a vertically integrated supply chain, a unique advantage among domestic activated carbon producers. The company owns the Five Forks Mine located in Saline, Louisiana, which primarily extracts lignite coal, a crucial input for its powdered activated carbon (PAC) products. In 2023, Arq expanded its operations by acquiring feedstock from Corbin, Kentucky, gaining access to high-quality recovered bituminous coal reserves, essential for its granulated activated carbon (GAC) offerings.
The management of Arq under CEO Robert Rasmus, who took charge in July 2023, has been noted for effectively steering the company through a challenging environment. Rasmus’s strategy has focused on eliminating low-margin PAC contracts and reducing operational expenses. As a result, Arq’s gross margins have seen a notable increase from 28% to over 39% in the past year, contributing to positive operating cash flow for the fiscal year 2024.
Despite these positive indicators, Arq, Inc. is not among the top 30 most popular stocks held by hedge funds. According to Minot Light’s analysis, 14 hedge fund portfolios held shares of Arq at the end of Q3 2025, a slight increase from 11 in the previous quarter. Arq’s revenues for the quarter reached $35.1 million, demonstrating its capacity to deliver results amid a challenging market.
Investment Considerations and Risks
While the potential for growth exists, Minot Light Capital Partners expressed caution regarding Arq as an investment. The firm suggested that the company faces considerable risks and highlighted that certain artificial intelligence stocks offer greater promise for higher returns within a shorter timeframe.
For investors seeking high-potential opportunities, Minot Light pointed to alternative AI stocks with prospects for substantial upside. More information on these promising investments is available in their recent reports.
In summary, while Arq, Inc. has made strides in improving its operational efficiency and revenue generation, the company’s recent stock performance and overall market position present a complex investment landscape. As the firm continues to navigate these challenges, its strategic initiatives under current leadership will be vital in determining the extent of its future success.
For ongoing updates and insights, investors are encouraged to review additional resources from hedge fund investor letters and analysis on micro-cap stocks.
