Madison Investments, an investment advisor, released its “Madison Small Cap Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The Madison Small Cap Fund completed a great year in the fourth quarter. For the fourth quarter and the entire year, the fund generated strong absolute and relative returns. Growth continued to beat value, while large caps continued to outperform small caps on average. In the fourth quarter, the fund (class I) returned 4.04% outperforming a (0.33%) return for the Russell 2000 Index and a (0.62%) return for the Russell 2500 Index. The outperformance was driven by stock selection and favorable allocation. In addition, looking at the entire year, the performance exceeded benchmarks by an even greater margin. Despite the Russell 2000 Index’s 11.55% annual gain, the fund outpaced the benchmark by a whopping 900 basis points, reporting a 22% overall return. Although advantageous sector allocation also helped, stock selection accounted for the vast bulk of the outperformance. In addition, you can check the fund’s top 5 holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Madison Small Cap Fund emphasized stocks such as JFrog Ltd. (NASDAQ:FROG). Incorporated in 2008, JFrog Ltd. (NASDAQ:FROG) provides software supply chain platform. The one-month return of JFrog Ltd. (NASDAQ:FROG) was 21.53%, and its shares lost 11.22% of their value over the last 52 weeks. On February 14, 2025, JFrog Ltd. (NASDAQ:FROG) stock closed at $39.80 per share with a market capitalization of $4.44 billion.
Madison Small Cap Fund stated the following regarding JFrog Ltd. (NASDAQ:FROG) in its Q4 2024 investor letter:
“We sold our position in Software vendor JFrog Ltd. (NASDAQ:FROG). While we continue to feel this is a strategic asset in the critical software development automation market, we’ve grown increasingly uncomfortable with management’s credibility and visibility into its business. In the final days of the second quarter (3 business days), in conjunction with an acquisition, the company reiterated its quarterly and annual guidance. It then proceeded to miss on both metrics only weeks later during the second quarter.”
A corporate executive standing in front of a large monitor, demonstrating the DevOps package repository.
JFrog Ltd. (NASDAQ:FROG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held JFrog Ltd. (NASDAQ:FROG) at the end of the third quarter which was 33 in the previous quarter. JFrog Ltd. (NASDAQ:FROG) reported $428.5 million in revenues in 2024, up 22% from 2023 and $116.1 million in Q4 2024, an increase of 19% from Q4 2023. While we acknowledge the potential of JFrog Ltd. (NASDAQ:FROG) 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 JFrog Ltd. (NASDAQ:FROG) and shared Baron Small Cap 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.