Artisan Partners, an investment management company, released its “Artisan Small Cap Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The third quarter saw strength in small cap stocks, particularly in July when the return on the Russell 2000 Index was 10.2%. In the quarter, its Investor Class fund ARTSX returned 9.02%, Advisor Class fund APDSX posted a return of 9.04%, and Institutional Class fund APHSX returned 9.06%, compared to a return of 8.41% for the Russell 2000 Growth Index. Outperformance of the fund in the quarter was driven by positive security selection within health care and consumer discretionary sectors. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.

Artisan Small Cap Fund highlighted stocks like AppFolio, Inc. (NASDAQ:APPF), in the third 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 11.11%, and its shares gained 42.00% of their value over the last 52 weeks. On December 11, 2024, AppFolio, Inc. (NASDAQ:APPF) stock closed at $260.32 per share with a market capitalization of $9.458 billion.

Artisan Small Cap Fund stated the following regarding AppFolio, Inc. (NASDAQ:APPF) in its Q3 2024 investor letter:

"Along with e.l.f. Beauty, we ended our investment campaigns in Advanced Drainage Systems, AppFolio, Inc. (NASDAQ:APPF) and Sprout Social during the quarter. AppFolio offers a cloud-based property management software that allows apartment and residential property managers to market, manage and grow their businesses. Our thesis was that new management would drive an attractive profit cycle by balancing top-line growth (through market share gains and expanding its average revenue per user) while increasing profitability. Our valuation discipline led us to exit this position after a strong performance run during our holding period."

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, 37 hedge fund portfolios held AppFolio, Inc. (NASDAQ:APPF) at the end of the third quarter which was 39 in the previous quarter. The third quarter revenue of AppFolio, Inc. (NASDAQ:APPF) was up 24% year-over-year to $206 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.