Artisan Small Cap Fund Added Freshworks (FRSH) as it Reported Thesis-Affirming Earnings

Artisan Partners, an investment management company, released its “Artisan Small Cap Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. Investor sentiment at the beginning of 2025 was positive. In 2024, US equities once again outperformed their global counterparts, and there was optimism that the new Republican administration would strengthen the idea of US exceptionalism. However, the first quarter did not meet those expectations. In the quarter, its Investor Class fund ARTSX returned -10.14%, Advisor Class fund APDSX posted a return of -10.10%, and Institutional Class fund APHSX returned -10.07%, compared to a return of -11.12% for the Russell 2000 Growth Index. Markets experienced weakness due to rising fiscal and geopolitical uncertainties during the quarter. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its first-quarter 2025 investor letter, Artisan Small Cap Fund highlighted stocks such as Freshworks Inc. (NASDAQ:FRSH). Freshworks Inc. (NASDAQ:FRSH) is a software development company that offers software-as-a-service products. The one-month return of Freshworks Inc. (NASDAQ:FRSH) was 5.18%, and its shares gained 18.55% of their value over the last 52 weeks. On June 2, 2025, Freshworks Inc. (NASDAQ:FRSH) stock closed at $15.02 per share, with a market capitalization of $4.431 billion.

Artisan Small Cap Fund stated the following regarding Freshworks Inc. (NASDAQ:FRSH) in its Q1 2025 investor letter:

“Notable adds in the quarter included Bright Horizons, Freshworks Inc. (NASDAQ:FRSH) and Kratos. Freshworks is a cloud-based software company that provides solutions to enhance customer and employee experiences across various business functions, including customer service, IT service management, sales and marketing. The products offer a unique combination of being easy to use, attractively valued and robust enough to appeal to both the small and medium-sized business market and enterprise customers. Given this backdrop, we believe the company has an opportunity to take market share. Valuations have compressed due to investor concerns that the company will be a victim of AI disruption. However, we believe this is overblown, given the traction it has gained in its “Freddy” AI suite. The company reported thesis-affirming earnings results in the quarter, and we added to the position.”

Freshworks Inc. (FRSH): Among Billionaire David E. Shaw’s Small-Cap Stock Picks with Huge Upside Potential

A close-up picture of a software engineer typing code on a laptop.

Freshworks Inc. (NASDAQ:FRSH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 41 hedge fund portfolios held Freshworks Inc. (NASDAQ:FRSH) at the end of the first quarter, which was 41 in the previous quarter. Freshworks Inc.’s (NASDAQ:FRSH) first quarter revenue increased 19% to $196.3 million. While we acknowledge the potential of Freshworks Inc. (NASDAQ:FRSH) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Freshworks Inc. (NASDAQ:FRSH) and shared billionaire David E. Shaw’s small-cap stock picks with huge upside potential. In addition, please check out our hedge fund investor letters Q1 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.