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 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 -13.10%, and its shares gained 75.26% of their value over the last 52 weeks. On December 11, 2024, Guidewire Software, Inc. (NYSE:GWRE) stock closed at $170.69 per share with a market capitalization of $14.256 billion.

Artisan Small Cap Fund stated the following regarding Guidewire Software, Inc. (NYSE:GWRE) in its Q3 2024 investor letter:

"Among our top Q3 contributors were Guidewire Software, Inc. (NYSE:GWRE), Veracyte and SharkNinja. Guidewire is a market leader in next-generation property and casualty (P&C) insurance software. The company's software enhances modern underwriting and claims operations by supporting workflows, external collaboration and rule-based decision-making. It recently transitioned from a licensed software business model to a subscription-based cloud service. We have seen these cloud subscription transitions before—they involve sacrificing near-term profitability for higher and more predictable long-term cash flows. As companies emerge from these (often messy) transitions, their profit growth tends to accelerate. We believe Guidewire is at this inflection point. In an environment that generally has been challenging for software, the company posted strong earnings results, including annual recurring revenue growth of 14% and the signing of 16 new cloud deals."

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.