On February 5, Simeon Hyman, Global Investment Strategist at ProShares, appeared on a Schwab Network interview to discuss how investors can capitalize on market rotation. He noted that the mega-cap tech stocks are witnessing a sell-off despite strong fundamentals and earnings. The major reason behind the sell-off is largely due to the high bar for these companies based on the AI capital expenditure. Hyman noted that this market rotation presents other attractive opportunities, such as the small caps.
Small caps have been outperforming the S&P 500 on a year-to-date basis. Hyman noted that investing in small-cap ETFs can be a good option for investors seeking exposure to high-quality small-cap stocks. He highlighted that small-cap companies are also backed by strong fundamentals, as evident from the ongoing earnings season. At the time of the interview, almost one-third of the companies had reported earnings, and small-cap earnings were up 25% year-over-year.
With that, let’s take a look at the 12 Best Small-Cap Growth Stocks to Buy According to Hedge Funds.
Stocks
Our Methodology
We used screeners to identify small-cap stocks (market cap between $300 million and $2 billion) that are expected to grow their earnings by at least 25% over the next 5 years, and limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12 Best Small-Cap Growth Stocks to Buy According to Hedge Funds
12. PicS N.V. (NASDAQ:PICS)
PicS N.V. (NASDAQ:PICS) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On February 24, Bank of America Securities initiated a Buy rating on PicS N.V. (NASDAQ:PICS) with a price target of $27.
The firm said in a research note that PicS N.V. ranks as the third largest fintech in Brazil in terms of the number of clients. The company shifted to balance sheet risk through underwriting credit cards and payroll loans in 2023. BofA believes that the credit business will be the core driver for the company’s earnings moving forward. The firm expects 117% EPS compound annual growth rate through 2028, and has also improved the return on equity forecast to more than 30%, up from the current 16% LTM level.
Similarly, earlier on February 23, Mizuho Securities and Citi also initiated the stock with a Buy rating and set price targets of $30 and $28, respectively.
PicS N.V. (NASDAQ:PICS) operates as a leading Brazilian fintech company, delivering digital financial services through a mobile app ecosystem for consumers and businesses nationwide.
11. Appian Corporation (NASDAQ:APPN)
Appian Corporation (NASDAQ:APPN) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 2, Appian Corporation (NASDAQ:APPN) presented at the Morgan Stanley conference, highlighting strategic growth and renewed focus on AI.
At the conference, management highlighted that the company is increasing its focus on mission-critical workflows to automate large enterprises and the public sector in highly regulated verticals, including financial services, government, and life sciences. The company is also leaning into practical AI by embedding AI Skills, DocCenter, Agent Studio, and Composer into process automation.
Management highlighted that they posted GAAP net income of about 1.2 million dollars for the first time in fiscal 2025. Moreover, EBITDA margins also improved from negative 8% to around positive 11%. This was driven by an 18% year-over-year increase in revenue to $576 million for fiscal 2025.
Looking ahead, Appian expects continued growth in revenue, EBITDA, and EPS. This is expected to be driven by management’s increased focus on increasing its customers in the advanced subscription tier.
Appian Corporation (NASDAQ:APPN) develops a low-code automation platform that enables organizations to quickly design, automate, and optimize business processes, cutting costs and enhancing customer experiences.
10. Soleno Therapeutics, Inc. (NASDAQ:SLNO)
Soleno Therapeutics, Inc. (NASDAQ:SLNO) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 4, H.C. Wainwright analyst Raghuram Selvaraju lowered the firm’s price target on Soleno Therapeutics, Inc. (NASDAQ:SLNO) from $120 to $100, while maintaining a Buy rating on the shares.
The rating follows the company’s fiscal Q4 2025 earnings reported on February 25. Soleno posted quarterly revenue of $91.73 million, surpassing estimates by $3.18 million. The EPS of $0.8 also topped the consensus by $0.09. The revenue was notable as it accounts for less than nine months of commercial sales from the early commercial adoption of VYKAT XR.
The analyst said in a research note that he sees a strong commercial outlook for the company. He expects the company’s VYKAT XR to capture 20% market share in the total Prader-Willi syndrome market. This is backed by 859 active patients on VYKAT XR treatment at the end of Q4 2025, up from 764 in Q3.
Soleno Therapeutics, Inc. (NASDAQ:SLNO) is a clinical-stage biopharmaceutical company developing novel therapies for rare diseases, including Prader-Willi Syndrome.
9. Expro Group Holdings N.V. (NYSE:XPRO)
Expro Group Holdings N.V. (NYSE:XPRO) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 4, Expro Group Holdings N.V. (NYSE:XPRO) was downgraded to Sell from Hold by Freedom Capital analyst Sergey Pigarev. The price target remains unchanged at $16.
The analyst noted fiscal Q4 2025 results and Q1 2026 expectations to be the main reasons behind the cautious sentiment. The analyst sees a challenging fiscal Q1 2026 for the company due to a decline in global drilling and declining oil prices, which can negatively impact the results.
Expro Group Holdings N.V. (NYSE:XPRO) reported Q4 2025 results on February 19. Revenue for the quarter declined 12.53% year-over-year to $382.13 million and missed estimates by $31.34 million. The EPS of $0.21 also fell short of the estimation by $0.03. The annual revenue of $1.6 billion also fell at the lower end of management’s previous guidance. Management noted that they expect fiscal 2026 revenue to remain flat year-over-year and expect a seasonal dip in activity and margins during Q1 2026.
Expro Group Holdings N.V. (NYSE:XPRO) provides energy services to oil and gas companies in onshore and offshore environments across approximately 60 countries.
8. Kemper Corporation (NYSE:KMPR)
Kemper Corporation (NYSE:KMPR) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 3, Kemper Corporation (NYSE:KMPR) presented at the Raymond James conference, highlighting its strategic roadmap.
Interim CEO Tom candidly addressed headwinds in the auto insurance market. He highlighted California as a pain point due to higher minimum liability limits that hammered profitability. However, the company remains optimistic and looks forward to its expansion in high-potential states like Florida and Texas. This strategy is backed by robust capital and liquidity to fuel efficiency drives and profit recovery.
Management highlighted that loss ratios in California jumped by 15 to 16 points in the second half of 2025. This was slightly offset by a 6.9% overall rate hike by the state, with liability coverages surging over 40%. The company aims to reduce its expense ratios to under 20%.
Looking ahead, Kemper Corporation (NYSE:KMPR) aims to de-risk by accelerating growth beyond California. Management noted that by growing in promising markets such as Florida and Texas, the company will reduce earnings volatility and will be able to reinvest in growth opportunities.
Kemper Corporation (NYSE:KMPR) is a diversified insurance holding company that offers property and casualty insurance as well as life insurance through its subsidiaries.
7. Asana, Inc. (NYSE:ASAN)
Asana, Inc. (NYSE:ASAN) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 2, Asana, Inc. (NYSE:ASAN) reported its fiscal Q4 2026 earnings. The company delivered 9.15% year-over-year revenue growth to reach $205.57 million and topped expectations by $443,400. The EPS of $0.08 also topped expectations by $0.01.
Management noted the growth to be driven by increased AI product traction and disciplined capital allocation. Notably, the AI Studio annual recurring revenue exceeded $6 million with more than 50% quarter-over-quarter growth in Q4.
Looking ahead, management expects fiscal 2027 revenue in the range of $850 million-$858 million, reflecting 7.5% to 8.5% year-over-year growth. The non-GAAP operating margins are expected at 9.5%. For the next quarter, the company expects revenue between $202.5 million and $204.5 million, with a non-GAAP operating income of $15 million-$17 million.
Asana, Inc. (NYSE:ASAN) helps businesses streamline their daily tasks and strategic cross-functional projects with its work management platform.
6. LiveRamp Holdings, Inc. (NYSE:RAMP)
LiveRamp Holdings, Inc. (NYSE:RAMP) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 4, LiveRamp Holdings, Inc. (NYSE:RAMP) announced a new partnership with Predactiv to help brands and organizations use offline data, called PII. PII includes offline data such as names, addresses, emails, and phone numbers. The integration turns the PII data into secure identifiers for use in Predactiv’s Data Platform.
Management noted that LiveRamp handles the identity resolution and converts the sensitive PII into privacy-safe, interoperable identifiers such as hashed email addresses, mobile advertising IDs, and IP-based ones. After transformation, these identifiers can be used for modeling, analytics, enrichment, and audience activation within Predactiv’s ecosystem.
This move expands what data Predactiv can handle. Earlier users had limited options to handle PII. However, now users can access all platform features, including a new Lookalike Modeling tool that resolves identities safely. The new tool, with the help of LiveRamp Holdings, Inc. (NYSE:RAMP), lets data owners turn PII into privacy-safe products they can sell.
LiveRamp Holdings (NYSE:RAMP) is a technology company that provides a privacy-focused data collaboration platform. It offers the LiveRamp Data Collaboration platform that allows businesses to activate, unify, and manage customer data over multiple marketing mediums. The company ensures the security and privacy of consumers’ data in this context.
5. Burford Capital Limited (NYSE:BUR)
Burford Capital Limited (NYSE:BUR) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On February 26, Burford Capital Limited (NYSE:BUR) released its fiscal Q4 2025 earnings.
The company posted quarterly revenue of $44.56 million, down 32.17% year-over-year and below expectations by $122.94 million. The EPS of negative $0.17 also fell short of the expectations by $0.56. Management noted that the capital provision income fell $331 million for the full year from $388 million in 2024, with Q4 at just $23 million. This was primarily due to lower realized gains and higher unrealized losses. Those losses largely arose from duration extensions, where cases take longer than expected, eroding fair value, along with other one-off developments unrelated to case merits.
Moreover, the asset management income also declined to $36 million for FY25 from $45 million the prior year, with Q4 at $15 million. The decline was attributed to reduced profit-sharing from the BOF-C fund. However, this was partly offset by stronger performance fees from the Advantage Fund. On the bright side, management highlighted a 39% year-over-year increase in definitive commitments and a 20% expansion in the base portfolio driven by the company’s strong market position.
Burford Capital Limited (NYSE:BUR) is a global finance firm specializing in law, providing litigation funding, risk management, asset recovery, and related advisory services. It operates mainly through two segments, including Principal Finance and Asset Management.
4. Artivion, Inc. (NYSE:AORT)
Artivion, Inc. (NYSE:AORT) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 5, Artivion, Inc. (NYSE:AORT) was reiterated with a Buy rating by analyst John McAulay of Stifel with a price target of $55.
The analyst said in a research note that the Buy rating is based on the company’s promising aortic disease pipeline. He highlighted Artivion’s NEXUS stent graft system as the next key launch for treating chronic aortic arch dissections and aneurysms, estimating a $150 million US total addressable market. The analyst noted that the one-year results from the NEXUS TRIOMPHE pivotal trial were shared at the Society of Thoracic Surgeons meeting in late January 2026. The data showed strong sealing performance and low endoleak rates.
The analyst interviewed three physicians experienced with NEXUS implants who intend to adopt it post-FDA approval. These discussions evaluated trial data strength, approval odds, and market uptake potential, informing the note’s optimistic outlook.
Artivion, Inc. (NYSE:AORT) manufactures and distributes medical devices and implantable human tissues for cardiac and vascular surgeries, primarily targeting aortic diseases.
3. Alkami Technology, Inc. (NASDAQ:ALKT)
Alkami Technology, Inc. (NASDAQ:ALKT) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 5, Alkami Technology, Inc. (NASDAQ:ALKT) announced a key upgrade to its Software Development Kit (SDK) called Automated Stage Match.
Management noted that this integration aims to speed up development by letting developers quickly sync their local testing environments with Alkami’s staging setup. The goal is to cut down lengthy delays in building, testing, and deploying custom features for banking apps. The company highlighted real-world pain points from customers, including iQ Credit Union and Westmark Credit Union.
After testing the new feature, Westmark Credit Union noted that the Automated Stage Match lets teams self-serve in under 15 minutes, test with realistic data early, and gain confidence that local tests match live production. The company highlighted that this reduces deployment uncertainty, shortens cycles, and gives extra time for actual feature building rather than troubleshooting.
Alkami Technology, Inc. (NASDAQ:ALKT) is a cloud-based provider of digital banking solutions tailored for US financial institutions, particularly community, regional, and super-regional banks and credit unions serving both retail and business clients.
2. Adient plc (NYSE:ADNT)
Adient plc (NYSE:ADNT) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 4, Bank of America Securities resumed coverage of Adient plc (NYSE:ADNT) with an Underperform rating and a $22 price target.
The firm highlighted in a research note that, as per the current market environment, automakers are focusing on cutting costs due to slowing global sales. BofA noted that Adient plc (NYSE:ADNT) faces headwinds due to its increased exposure in the less profitable European region and idiosyncratic profitability. The firm believes that these factors are expected to impact the company’s growth and margin expansion compared to the market.
The company released its fiscal Q1 2026 results on February 4. The revenue for the quarter grew 4.26% year-over-year to $3.64 billion and topped estimates by $166.69 million. Moreover, the EPS of $0.35 also surpassed estimates by $0.16. Management attributed growth to FX tailwinds from Europe. The company also raised annual sales guidance to approximately $14.6 billion, from $14.4 billion, along with adjusted EBITDA guidance to $880 million from $845 million.
Adient plc (NYSE:ADNT) is a leading global supplier of automotive seating systems and components. The company focuses on designing, manufacturing, and marketing seats for passenger cars, light trucks, vans, SUVs, and commercial vehicles.
1. Vericel Corporation (NASDAQ:VCEL)
Vericel Corporation (NASDAQ:VCEL) is one of the Best Small-Cap Growth Stocks to Buy According to Hedge Funds. On March 4, Vericel Corporation (NASDAQ:VCEL) announced securing a major win from the FDA.
The company announced receiving FDA approval for commercial manufacturing of MACI, which is the company’s autologous cultured chondrocytes on a porcine collagen membrane. The production will take place at the company’s cutting-edge cell therapy facility in Burlington, Massachusetts. Management noted that the approval allows Vericel to ramp up production starting in Q2 2026, addressing the growing demand for the restorative cartilage repair product used in knee surgeries for injuries or osteoarthritis.
CEO Nick Colangelo described the milestone as a testament to Vericel’s operational and scientific advancement in complex cell therapies. He noted that by bringing the Burlington site online, the company will enhance its supply chain resilience, ensuring high-quality delivery to patients while aiming for international commercialization of MACI.
Vericel Corporation (NASDAQ:VCEL) is a fully-integrated, commercial-stage biopharmaceutical company specializing in advanced cell therapies for sports medicine and severe burn care markets.
While we acknowledge the potential of VCEL to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than VCEL and that has 100x upside potential, check out our report about this cheapest AI stock.
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