Fred Alger Management, an investment management company, released its “Alger Weatherbie Specialized Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. equities experienced increased volatility in the first quarter due to changing fiscal, monetary, and trade policies. Uncertainty arose from the emergence of advanced AI models from China. Against this backdrop, Class A shares of the fund underperformed the Russell 2500 Growth Index in the quarter. The Consumer Discretionary and Industrials sectors contributed to the fund’s performance in the quarter, while Health Care and Information Technology detracted. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter Alger Weatherbie Specialized Growth Fund highlighted stocks such as Upstart Holdings, Inc. (NASDAQ:UPST). Upstart Holdings, Inc. (NASDAQ:UPST) is a US-based artificial intelligence (AI) lending platform. The one-month return of Upstart Holdings, Inc. (NASDAQ:UPST) was 14.49%, and its shares gained 140.32% of their value over the last 52 weeks. On June 17, 2025, Upstart Holdings, Inc. (NASDAQ:UPST) stock closed at $53.40 per share, with a market capitalization of $5.081 billion.
Alger Weatherbie Specialized Growth Fund stated the following regarding Upstart Holdings, Inc. (NASDAQ:UPST) in its Q1 2025 investor letter:
“Upstart Holdings, Inc. (NASDAQ:UPST) is a leading AI-powered lending platform that partners with banks and credit unions to improve access to affordable credit. By leveraging machine learning algorithms, the company evaluates non-traditional risk factors to provide more accurate credit assessments, enabling better loan approvals and pricing. Upstart aims to make the lending process more inclusive and efficient while helping its financial institution partners drive growth and manage risk effectively. After delivering impressive share price performance throughout 2024, shares detracted from performance this quarter. While the company reported solid fiscal fourth-quarter operating results with all three major product lines showing considerable growth, we believe shares were under pressure due in large part to macroeconomic concerns. Specifically, escalating trade tensions and potential recession fears pressured financial technology stocks, making investors wary of the company’s consumer credit exposure.”
A close-up of a businesswoman using a laptop, being illuminated by the AI-enabled cloud interface sponsored by the company.
Upstart Holdings, Inc. (NASDAQ:UPST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held Upstart Holdings, Inc. (NASDAQ:UPST) at the end of the first quarter, which was 39 in the previous quarter. Upstart Holdings, Inc. (NASDAQ:UPST) reported revenue of $213 million in Q1 2025, up 67% from Q1 2024. While we acknowledge the potential of Upstart Holdings, Inc. (NASDAQ:UPST) 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 Upstart Holdings, Inc. (NASDAQ:UPST) and shared Maple Tree Capital’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. While we acknowledge the potential of UPST 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.
