Is Guidewire Software (GWRE) a Smart Long-term Buy?

Baron Partners Fund recently published its third-quarter commentary – a copy of which can be downloaded here. During the third quarter of 2020, the Baron Partners Fund returned 47.15% (institutional shares). In comparison, the benchmark S&P 500 Index was up 8.93%, while the Russell Midcap Growth Index was up 9.37%. You should check out Baron Partners Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Baron Partners Fund highlighted a few stocks and Guidewire Software Inc. (NYSE:GWRE) is one of them. Guidewire Software Inc. (NYSE:GWRE) is a software company. Year-to-date, Guidewire Software Inc. (NYSE:GWRE) stock gained 17.6% and on December 4th it had a closing price of $129.12. Here is what Baron Partners Fund said:

“Shares of P&C insurance software vendor Guidewire Software, Inc. detracted from performance. The company’s transition to the cloud has caused short-term financial headwinds and slowed the cadence of new license sales. We retain conviction. We believe new products and cloud delivery will triple Guidewire’s total addressable market. Over time, we think Guidewire will become the key software vendor for the global P&C insurance industry, capturing 30% to 50% of its $15 billion to $30 billion market and generating margins in excess of 40%.”

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In Q2 2020, the number of bullish hedge fund positions on Guidewire Software Inc. (NYSE:GWRE) stock decreased by about 15% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in Guidewire Software’s growth potential. Our calculations showed that Guidewire Software Inc. (NYSE:GWRE) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.