Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. The Small Company Fund returned 0.48%, significantly underperforming the Russell 2000 Growth index’s 7.58% return. Following the release of the inflation report in February, the Small Company Fund experienced underperformance as investors shifted away from high-growth companies, impacting their valuations. In addition, check the fund’s top five holdings to know its best picks in 2024.
The Brown Capital Management Small Company Fund highlighted stocks like AppFolio, Inc. (NASDAQ:APPF), in the first quarter 2024 investor letter. AppFolio, Inc. (NASDAQ:APPF) offers cloud business management solutions for the real estate industry. The one-month return of AppFolio, Inc. (NASDAQ:APPF) was -0.44%, and its shares gained 38.97% of their value over the last 52 weeks. On June 24, 2024, AppFolio, Inc. (NASDAQ:APPF) stock closed at $232.13 per share with a market capitalization of $8.406 billion.
The Brown Capital Management Small Company Fund stated the following regarding AppFolio, Inc. (NASDAQ:APPF) in its first quarter 2024 investor letter:
“AppFolio, Inc. (NASDAQ:APPF) provides cloud-based content management software to U.S. property management clients. AppFolio streamlines and enhances the mostly manual rental process, saving clients time, money and headaches. AppFolio provides small and mid-sized managers with a wide range of user-friendly solutions, seamlessly in a single platform. AppFolio is growing by adding new solutions to the platform and attracting larger clients. In contrast, the largest competitors address larger clients and have older, legacy products or have acquired a patchwork of solutions that are difficult to integrate. AppFolio clients manage 8.2 million rental units in the U.S., which is about a 10% penetration. Given AppFolio’s low market share, we see a long runway for growth.
AppFolio reported stronger-than-expected fourth quarter and fiscal year (FY) 2023 results in January. Fourth quarter revenue grew 39% year over year while FY 2023 revenue grew 31%. The strong revenue growth was driven by 13% rental unit growth, 7% customer growth, growth in average revenue per user and an increase in payments utilization. The company returned to GAAP profitability after two years of higher-than-normal investments. These strong results contributed to the recent price outperformance.”
A close-up shot of a user-friendly and customizable interface of the company’s software, designed to suit different workflows.
AppFolio, Inc. (NASDAQ:APPF) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held AppFolio, Inc. (NASDAQ:APPF) at the end of the first quarter which was 33 in the previous quarter. In the first quarter, AppFolio, Inc.’s (NASDAQ:APPF) revenue increased by 38% year-over-year to reach $187 million. While we acknowledge the potential of AppFolio, Inc. (NASDAQ:APPF) 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.
We discussed AppFolio, Inc. (NASDAQ:APPF) in another article and shared Polen U.S. Small Company Growth Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q1 2024 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.
