Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The Small Company Fund fared worse compared to its benchmark in the first quarter and declined 16.03% vs 11.12% decline for the Russell 2000® Growth index. The underperformance in the quarter was led by negative investor sentiment due to geopolitical shocks or the sudden deterioration of the macroeconomic outlook. In addition, check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, The Brown Capital Management Small Company Fund highlighted stocks such as Guidewire Software, Inc. (NYSE:GWRE). Guidewire Software, Inc. (NYSE:GWRE) offers a platform for property and casualty (P&C) insurance companies. The one-month return of Guidewire Software, Inc. (NYSE:GWRE) was 19.99%, and its shares gained 89.24% of their value over the last 52 weeks. On June 9, 2025, Guidewire Software, Inc. (NYSE:GWRE) stock closed at $257.37 per share with a market capitalization of $21.669 billion.
The Brown Capital Management Small Company Fund stated the following regarding Guidewire Software, Inc. (NYSE:GWRE) in its Q1 2025 investor letter:
“Guidewire Software, Inc. (NYSE:GWRE) is a provider of packaged software running mission-critical processes at property and casualty (P&C) insurance companies. These processes include claims handling, underwriting, policy administration and customer billing. Guidewire’s software replaces decades-old code running on mainframe computers, thereby reducing costs and improving decision making and agility. Guidewire is beginning to reap the benefits of a multi year effort to transition customers from on-premise applications to its cloud platform. This platform enables Guidewire to increase its pace of product releases, which is being well received by customers.
Guidewire’s stock price increased during the quarter following its earnings report, as revenue and profitability were better than expected, as were projections for the full fiscal year. The results showed continued strong demand for Guidewire’s cloud platform. Total revenue growth in the quarter was 20%, with annual recurring revenue (ARR) up 15%. This growth was driven by existing customers migrating to Guidewire’s new cloud platform, as well as a pick-up in large new customers. As the platform gains scale, improvements to Guidewire’s profitability are becoming evident. Subscription gross margins increased to 69% in the quarter from 65% a year earlier, while Services gross margins turned positive after being negative in the prior period. In addition to the adoption of its cloud platform, new product innovations such as data-analytics tools should drive growth for many years to come.”
An insurance adjuster reviewing images and paperwork to process a claim.
Guidewire Software, Inc. (NYSE:GWRE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held Guidewire Software, Inc. (NYSE:GWRE) at the end of the first quarter, which was 60 in the previous quarter. Guidewire Software, Inc. (NYSE:GWRE) generated revenue of $294 million in the third quarter of fiscal 2025, marking a 22% increase from last year’s comparable quarter. While we acknowledge the potential of Guidewire Software, Inc. (NYSE:GWRE) 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 Guidewire Software, Inc. (NYSE:GWRE) and shared Artisan Small Cap Fund’s views on the company. 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.
