Baron Funds, an investment management company, released its “Baron Small Cap Fund” second-quarter 2024 investor letter. A copy can be downloaded here. The fund returned -6.43% (Institutional Shares) in the quarter trailing the Russell 2000 Growth Index’s -2.92 % return and the broader Russell 3000 Index’s 3.22% return. The technology-heavy NASDAQ Composite Index and the broader indices hit record highs in the second quarter. Still, the rally was extremely focused and narrow, with the mega-cap Magnificent Seven’s consistently excellent performance accounting for all of the larger-cap index gains while small-cap stocks declined. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Small Cap Fund highlighted stocks like Guidewire Software, Inc. (NYSE:GWRE) in its Q2 2024 investor letter. Guidewire Software, Inc. (NYSE:GWRE) offers a platform for property and casualty (P&C) insurers. The one-month return of Guidewire Software, Inc. (NYSE:GWRE) was 0.07%, and its shares gained 64.87% of their value over the last 52 weeks. On August 5, 2024, Guidewire Software, Inc. (NYSE:GWRE) stock closed at $140.01 per share with a market capitalization of $11.574 billion.
Baron Small Cap Fund stated the following regarding Guidewire Software, Inc. (NYSE:GWRE) in its Q2 2024 investor letter:
“Shares of property and casualty (P&C) insurance software vendor Guidewire Software, Inc. (NYSE:GWRE) contributed to performance for the quarter. After a multi-year transition period, we believe the company’s cloud transition is substantially over. We believe that cloud will be the sole path forward, with annual recurring revenue (ARR) benefiting from new customer wins and migrations of the existing customer base to Insurance Suite Cloud. We also expect the company to shift R&D resources from infrastructure investment to product development, which will help to drive cross sales into its sticky installed base and potentially accelerate ARR over time. We are also encouraged by Guidewire’s subscription gross margin expansion, which improved by more than 1,000 basis points in its most recently reported quarter. We believe that Guidewire will be the critical software vendor for the global P&C insurance industry, capturing 30% to 50% of its $15 billion to $30 billion total addressable market and generating margins above 40%.”
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, 34 hedge fund portfolios held Guidewire Software, Inc. (NYSE:GWRE) at the end of the first quarter which was 33 in the previous quarter. Guidewire Software, Inc. (NYSE:GWRE) reported $241 million in revenues, in the fiscal third quarter of 2024 and posted better-than-expected revenue growth in all areas. 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 Artisan Small Cap Fund’s views on the company. Baron Funds increased its stake in Guidewire Software, Inc. (NYSE:GWRE) in Q4 2023. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
