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 Xometry, Inc. (NASDAQ:XMTR) in the third quarter 2024 investor letter. Xometry, Inc. (NASDAQ:XMTR) is an online marketplace that helps buyers to source custom-manufactured parts and assemblies. The one-month return of Xometry, Inc. (NASDAQ:XMTR) was 16.56%, and its shares gained 6.06% of their value over the last 52 weeks. On December 19, 2024, Xometry, Inc. (NASDAQ:XMTR) stock closed at $36.60 per share with a market capitalization of $1.814 billion.
The Brown Capital Management Small Company Fund stated the following regarding Xometry, Inc. (NASDAQ:XMTR) in its Q3 2024 investor letter:
“As a result of negative investor sentiment, portfolio companies that reported a weaker outlook were punished hard this year, often to a degree that seems unwarranted, in our view. For example, Xometry, Inc. (NASDAQ:XMTR) operates an online manufacturing platform that allows customers to receive quotes, place orders and receive custom-manufactured parts meeting their specifications. Buyers quickly receive quotes and finished parts, and manufacturing partners reduce excess manufacturing capacity by sourcing additional jobs through the Xometry network. Early in 2024, Xometry noted softness in customer orders due primarily to a lack of large orders. As a result, the company provided lower-than-expected revenue guidance for 2024, and the stock price was cut in half in the first quarter. Then, in the third quarter, Xometry provided solid financial results and reaffirmed guidance. The company’s stock price increased 40%. In both cases, we believe the magnitude of the stock-price move was not warranted. The overreaction each way was a potential sign of a swing in investor sentiment, not just fundamentals.”
A machinist operating a CNC machine in a well-lit facility, scrutinizing the quality of a part.
Xometry, Inc. (NASDAQ:XMTR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 7 hedge fund portfolios held Xometry, Inc. (NASDAQ:XMTR) at the end of the third quarter which was 9 in the previous quarter. Xometry, Inc. (NASDAQ:XMTR) delivered strong growth in the third quarter 2024 with revenue increasing 19% year-over-year to a record $142 million, driven by marketplace business. While we acknowledge the potential of Xometry, Inc. (NASDAQ:XMTR) 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 Xometry, Inc. (NASDAQ:XMTR) and shared the list of worst 3D printing and additive manufacturing stocks to buy. Xometry, Inc. (NASDAQ:XMTR) detracted from The Brown Capital Management Small Company Fund’s performance in the previous quarter, despite posting solid results. 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.