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 Glaukos Corporation (NYSE:GKOS). Glaukos Corporation (NYSE:GKOS) is an ophthalmic pharmaceutical and medical technology company. The one-month return of Glaukos Corporation (NYSE:GKOS) was 2.86%, and its shares lost 16.25% of their value over the last 52 weeks. On June 9, 2025, Glaukos Corporation (NYSE:GKOS) stock closed at $94.64 per share, with a market capitalization of $5.408 billion.
The Brown Capital Management Small Company Fund stated the following regarding Glaukos Corporation (NYSE:GKOS) in its Q1 2025 investor letter:
“Among the detractors to performance in the first quarter of 2025 were Glaukos Corporation (NYSE:GKOS) and Datadog (DDOG). Glaukos is a medical-device company that specializes in the treatment of glaucoma. The company offers a suite of products such as iStent, Infinite, iDose and others. iStent is a permanent stent designed to treat glaucoma by opening the drainage canal and lowering intraocular pressure. The most recent iStent product, Infinite, allows multiple stents to be used to treat glaucoma as a standalone procedure. iDose is a tiny implant that allows for the continuous delivery of drugs to treat glaucoma. iDose was approved by the FDA in December 2023 and has proven to be a true paradigm shift in glaucoma treatment.
Glaukos reported strong fourth quarter results with 28% revenue growth and guided to 24% to 27% revenue growth for 2025. Glaukos did not break out iDose revenues, but we estimate iDose comprised $15 million in revenue in the fourth quarter of 2024 and can total $110 million in 2025, which are strong numbers. U.S. glaucoma sales of stents were below expectations due to changes in how Medicare reimburses doctors for glaucoma procedures. Glaukos guided that its stent business will be flat to down in 2025, which caused its shares to underperform. We believe investors wanted an even stronger and faster iDose ramp. In addition, the weakness in U.S. stents may also be a factor to a smaller degree. Our research indicates that iDose is receiving a strong reception in the market. One bottleneck to iDose adoption is physicians sorting out the reimbursement process. We expect iDose to ramp up strongly once reimbursement becomes smoother, and become a significant contributor over the next few years, adding to the potential of Glaukos’s broad pipeline. Glaukos is developing iDose TRIO which surgeons can implant in the office vs. at a surgery center. This is targeted for a late 2025 introduction. Also in the pipeline is iDose TREX, targeted for commercialization in late 2027 or early 2028. iDose TREX can potentially hold twice as much medication and extend the duration of effect. We see the opportunity for strong long-term revenue growth for Glaukos.”
A doctor examining a patient’s eyes with an ophthalmic medical device.
Glaukos Corporation (NYSE:GKOS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Glaukos Corporation (NYSE:GKOS) at the end of the first quarter compared to 30 in the third quarter. In the first quarter of 2025, Glaukos Corporation’s (NYSE:GKOS) reported revenue of $106.7 million representing 25% increase on a reported basis, or 26% on a constant currency basis compared to Q1 2024. While we acknowledge the potential of Glaukos Corporation (NYSE:GKOS) 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 cheapest AI stock.
In another article, we covered Glaukos Corporation (NYSE:GKOS) and shared Baron Health Care 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.
