Frontier Capital Management, an investment management company, released its “Frontier Small Cap Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. Class N shares of the fund returned -14.43% in the first quarter, compared to -11.12% for the benchmark Russell 2000 Growth Index. The fund returned -14.50% for the 12 months ended March 31, 2025, compared to the benchmark return of -4.86%. US equities traded lower in the first quarter, mainly during the last week of the quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its first quarter 2025 investor letter, Frontier Small Cap Growth Fund highlighted stocks such as Tempus AI, Inc. (NASDAQ:TEM). Tempus AI, Inc. (NASDAQ:TEM) is a healthcare technology company. The one-month return of Tempus AI, Inc. (NASDAQ:TEM) was -1.77%, and its shares gained 97.44% of their value over the last 52 weeks. On July 3, 2025, Tempus AI, Inc. (NASDAQ:TEM) stock closed at $60.99 per share, with a market capitalization of $10.558 billion.
Frontier Small Cap Growth Fund stated the following regarding Tempus AI, Inc. (NASDAQ:TEM) in its first quarter 2025 investor letter:
“Our best contributing stock was Tempus AI, gaining 43% on the back of robust growth and the end of its initial public offering (IPO) lockup period. Tempus AI, Inc. (NASDAQ:TEM) is a health care company that combines its next generation diagnostics platform across multiple diseases with its leading data and analytics capabilities. Tempus is rooted in clinical care delivery as one of the largest sequencers of cancer patients and patients with other diseases. The company is building an intelligent diagnostics platform through the application of its artificial intelligence (AI) capabilities to allow physicians to deliver more personalized and data-driven therapies to patients and to help researchers develop more precise therapies. The Tempus platform collects numerous data types, and unlike peers, the data comes not only from its own labs but also from a variety of sources including more than 2,000 health care institutions and more than half of the practicing U.S. oncologists. Today, Tempus has a multimodal, de-identified database that is much larger than any other company or institution. This database creates a substantial economic moat and additional revenue stream for the company when it licenses the data to pharma companies to aid in therapy development. The company’s recent rapid growth has been driven both by increased testing volumes, higher realized average selling prices, as more payors are covering their tests, and improved coverage and price through Medicare. While not yet profitable, Tempus guided slightly positive Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for 2025, a meaningful improvement compared to 2024 and prior periods.”
A doctor administering a diagnostic test kit for the detection of gastrointestinal diseases.
Tempus AI, Inc. (NASDAQ:TEM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Tempus AI, Inc. (NASDAQ:TEM) at the end of the first quarter, compared to 17 in the previous quarter. In the first quarter of 2025, Tempus AI, Inc.’s (NASDAQ:TEM) revenue increased 75.4% year-over-year to $255.7 million. While we acknowledge the potential of Tempus AI, Inc. (NASDAQ:TEM) 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 Tempus AI, Inc. (NASDAQ:TEM) and shared the list of top healthcare AI stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of TEM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
