Artisan Small Cap Fund Sold Dutch Bros (BROS) for Valuation discipline

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 Dutch Bros Inc. (NYSE:BROS). Dutch Bros Inc. (NYSE:BROS) operates and franchises drive-thru shops. The one-month return of Dutch Bros Inc. (NYSE:BROS) was 20.40%, and its shares gained 101.23% of their value over the last 52 weeks. On June 2, 2025, Dutch Bros Inc. (NYSE:BROS) stock closed at $71.76 per share, with a market capitalization of $11.8 billion.

Artisan Small Cap Fund stated the following regarding Dutch Bros Inc. (NYSE:BROS) in its Q1 2025 investor letter:

“Along with Dayforce, we ended our investment campaigns in MYR Group and Dutch Bros Inc. (NYSE:BROS) during the quarter. Dutch Bros operates and franchises quick-service retail shops that serve customizable hand-crafted beverages. The operating model centers around a highly efficient, drive-thru shop format focused on product quality, speed and service. Our thesis is driven by the company’s footprint penetration growth strategy, which is supported by attractive unit-level cash-on-cash returns, as it expands into existing markets and enters new markets. Shares rallied over our holding period, and we exited the position due to our valuation discipline.”

Jim Cramer Says Christine Barone Has the Mojo at Dutch Bros (BROS)

A closeup of a customer tasting a freshly-made cold brew coffee product from the company’s shop.

Dutch Bros Inc. (NYSE:BROS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held Dutch Bros Inc. (NYSE:BROS) at the end of the first quarter which was 41 in the previous quarter. Dutch Bros Inc.’s (NYSE:BROS) first quarter revenue was $355 million, an increase of 29% from Q1 2024. While we acknowledge the potential of Dutch Bros Inc. (NYSE:BROS) 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 Dutch Bros Inc. (NYSE:BROS) and shared the list of stocks Jim Cramer recently discussed. 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.