What's Behind This Fund Manager's Bold Move on a 26% Declining Software Stock

The Contrarian Play That Caught Attention

In November, Connecticut-based Manatuck Hill Partners made a striking move in the market: it purchased 415,000 additional shares of Zeta Global (NYSE: ZETA), despite the stock’s brutal 26% decline over the past year. This wasn’t a panic sell—it was precisely the opposite. The fund’s expanded holdings now total 705,000 shares worth approximately $14 million, making it the fund’s largest disclosed position and accounting for 4.6% of its assets under management.

Why Add Exposure When Sentiment Is Weak?

The answer lies in what the market appears to be overlooking. While Zeta Global’s stock price has been under pressure—trading at $19.05 as of the most recent market close, well underperforming the S&P 500’s 13% gain—the underlying business has been firing on all cylinders. The company just delivered its 17th consecutive beat-and-raise quarter, posting 26% revenue growth to $337 million while expanding adjusted EBITDA margins. Free cash flow surged 83% year over year to $47 million.

This pattern of consistent execution in a volatile software and marketing technology landscape is rare. For a fund manager to concentrate 4.6% of assets in a single position, alongside similarly sized stakes in The RealReal (NASDAQ: REAL) and IMAX (NYSE: IMAX), signals genuine conviction rather than opportunistic bottom-fishing.

The Business Model Behind the Numbers

Zeta Global operates an omnichannel, cloud-based marketing platform that combines consumer intelligence, marketing automation, and customer data solutions. What differentiates the company is its reliance on proprietary, opted-in datasets and advanced machine learning algorithms—enabling enterprise clients to predict consumer intent with precision and optimize marketing spend across multiple channels.

The company’s revenue model hinges on enterprise software subscriptions and data analytics services, generating $1.2 billion in trailing twelve-month revenue. Despite recent trading pressure, Zeta maintains a $4.7 billion market capitalization and has demonstrated its ability to serve large-scale organizations seeking data-driven competitive advantages.

Fundamentals Paint a Stronger Picture Than Stock Price Suggests

The disconnect between Zeta’s stock performance and its business trajectory offers a compelling lens for understanding Manatuck Hill Partners’ conviction. While the market appears preoccupied with sector sentiment around adtech and martech names, the company’s improving cash generation, expanding customer base (particularly among “super-scaled” enterprise clients), and 2026 guidance projecting continued 20%+ revenue growth suggest a clearer path to sustained profitability than existed a year ago.

The risk, of course, is that sentiment-driven volatility could persist. However, the combination of consistent earnings beats, rising free cash flow, and explicit margin expansion now provides a stronger fundamental foundation than the stock’s recent performance would suggest.

What This Tells Us About Smart Capital Allocation

Manatuck Hill Partners’ decision reflects a disciplined approach to concentrated investing: backing mid-cap names with accelerating fundamentals, even during periods of investor skepticism. For long-term investors evaluating Zeta, the question isn’t whether the stock deserves its current discount, but whether the company’s trajectory toward profitability—backed by real cash generation and consistent operational execution—justifies re-engagement with a position once the market sentiment inevitably shifts.