Several Factors Lifted Guidewire Software (GWRE) in Q1

Brown Brothers Harriman & Co., a global financial services firm, released its “The BBH Select Series – Mid Cap Fund” first quarter investor letter. A copy of the same can be downloaded here. The fund fell -6.0% in the first quarter on a total return basis, while the Russell Midcap Index decreased -3.4%. The fund generated an average annual total return of 3.1% since its inception on May 24, 2021, compared to the index’s 4.1% return. Given the increased policy uncertainty and market volatility, many of the firm’s management teams issued cautious 2025 guidance. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its first-quarter 2025 investor letter, The BBH Select Series – Mid Cap Fund highlighted stocks such as Guidewire Software, Inc. (NYSE:GWRE). Guidewire Software, Inc. (NYSE:GWRE) offers a platform for property and casualty (P&C) insurance companies. The one-month return of Guidewire Software, Inc. (NYSE:GWRE) was 13.75%, and its shares gained 76.07% of their value over the last 52 weeks. On June 24, 2025, Guidewire Software, Inc. (NYSE:GWRE) stock closed at $237.45 per share, with a market capitalization of $19.992 billion.

The BBH Select Series – Mid Cap Fund stated the following regarding Guidewire Software, Inc. (NYSE:GWRE) in its Q1 2025 investor letter:

“For the quarter, the Fund’s largest positive contributors were Brown & Brown Inc. (Brown) and Guidewire Software, Inc. (NYSE:GWRE). Brown returned 22.1% during the quarter, ending with a weight of 5.2%. Guidewire returned 11.1% during the quarter, ending as our largest position with a weight of 5.5%. Guidewire is the leading provider of core systems software to the P&C insurance industry. Like Brown & Brown, Guidewire benefits from the value of gross written premiums as insurance rates increase, whether due to inflation, growth in economic activity, higher claims volumes, or higher insurance rates due to limited capacity. Guidewire reported strong fiscal Q2 results, exceeding expectations and raising guidance for the full year, as it wins new customers and migrates existing customers to the cloud. Gross margins on subscription and support revenue increased to 69% up from 65% in the prior year, buoyed by ~80% incremental gross margins. Guidewire is strongly outperforming competitors, and management set a new long-term target for more than 50% of P&C insurance industry premiums to run on their software, up from 23% currently.”

Guidewire Software, Inc. (NYSE:GWRE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held Guidewire Software, Inc. (NYSE:GWRE) at the end of the first quarter, which was 60 in the previous quarter. While we acknowledge the potential of Guidewire Software, Inc. (NYSE:GWRE) 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 Guidewire Software, Inc. (NYSE:GWRE) and shared Brown Capital Management’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 GWRE 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.