Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The Small Company Fund returned 8.48% in the quarter, roughly in line with the Russell 2000 Growth index’s 8.41% return. The Fund has only gained 1.80% year to date, far behind the benchmark’s return of 13.22%, despite this quarter representing a minor move toward a fundamentally driven market. 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 Guidewire Software, Inc. (NYSE:GWRE) in its Q3 2024 investor letter. 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 -15.17%, and its shares gained 58.54% of their value over the last 52 weeks. On December 19, 2024, Guidewire Software, Inc. (NYSE:GWRE) stock closed at $172.06 per share with a market capitalization of $14.37 billion.
The Brown Capital Management Small Company Fund stated the following regarding Guidewire Software, Inc. (NYSE:GWRE) in its Q3 2024 investor letter:
“Guidewire Software, Inc. (NYSE:GWRE) is a provider of packaged software running mission-critical processes at property and casualty (P&C) insurance companies. These processes include claims handling, underwriting, policy administration and customer billing. Guidewire’s software replaces decades-old code running on mainframe computers, thereby reducing costs and improving decision making and agility. Guidewire is beginning to reap the benefits of a multiyear effort to transition customers from on-premise applications to its cloud platform. This platform enables Guidewire to increase its pace of product releases, which is also being well-received by customers.
Guidewire’s stock price increased during the quarter following its earnings report, as revenue and profitability were better than expected, as were projections for the upcoming fiscal year. The results showed continued strong demand for Guidewire’s cloud platform. Subscription growth accelerated annual recurring revenue by 19%, up from 17% growth a year earlier. This growth was driven by existing customers migrating from older, on-premise deployments to Guidewire’s new higher-priced cloud platform, as well as a pick-up in large new customers. As the platform gains scale, improvements to Guidewire’s profitability are becoming evident. Subscription gross margins increased to 63% in the quarter from 54% a year earlier. In addition to the adoption of its cloud platform, new product innovations such as data-analytics tools should drive growth for many years.”
An insurance adjuster reviewing images and paperwork to process a claim.
Guidewire Software, Inc. (NYSE:GWRE) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held Guidewire Software, Inc. (NYSE:GWRE) at the end of the third quarter which was 43 in the previous quarter. Total revenue of Guidewire Software, Inc. (NYSE:GWRE) was $263 million in the fiscal first quarter of 2025, which was above the high end of guidance and up 27% year-over-year. 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 cheapest AI stock.
In another article, we discussed Guidewire Software, Inc. (NYSE:GWRE) and shared Carillon Chartwell Mid Cap Value Fund’s views on the company. In addition, please check out our hedge fund investor letters Q3 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.