Brown Capital Management Small Company Fund Sold 10x Genomics (TXG) Due to Fundamental Concerns

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 10x Genomics, Inc. (NASDAQ:TXG). 10x Genomics, Inc. (NASDAQ:TXG) is a life science technology company. The one-month return of 10x Genomics, Inc. (NASDAQ:TXG) was 4.56%, and its shares lost 53.24% of their value over the last 52 weeks.  On June 9, 2025, 10x Genomics, Inc. (NASDAQ:TXG) stock closed at $10.09 per share, with a market capitalization of $1.242 billion.

The Brown Capital Management Small Company Fund stated the following regarding 10x Genomics, Inc. (NASDAQ:TXG) in its Q1 2025 investor letter:

“In the first quarter of 2025, we eliminated four companies. Two companies, Inari Medical (NARI) and Smartsheet (SMAR), were acquired, and two companies, Inogen (INGN) and 10x Genomics, Inc. (NASDAQ:TXG), we sold as mistakes. 10x Genomics is a leading life-science technology company developing and selling instruments, consumables and software for analyzing gene expression in cells. Gene expression controls the functioning of a cell and is fundamental to developing biological insights and advancing human health. 10x Genomics’s tools are advancing academic research, particularly in the areas of oncology, immunology and neuroscience. 10x Genomics reported worse-than-expected results in 2024, with revenue declining 1% versus the year-earlier period. Macroeconomic uncertainties and tight budgets have been causing weakness in capital spending for 10x’s biopharma and academic institution customers. Additionally, revenue growth is being hindered by 10x’s organizational realignment of its sales team and the introduction of several new products in the last few years at lower prices than the company’s flagship products. Add to that rising R&D expenses and it is hard for us to see the company achieving profitability in the coming years. Given the poorer revenue and profitability picture, we sold this holding out of the portfolio.”

A team of medical professionals in surgical scrubs analysing research data in a laboratory.

10x Genomics, Inc. (NASDAQ:TXG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held 10x Genomics, Inc. (NASDAQ:TXG) at the end of the first quarter, which was 40 in the previous quarter. While we acknowledge the potential of 10x Genomics, Inc. (NASDAQ:TXG) 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 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.