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Overview of Frontier Capital Management’s Q1 2025 Performance
Frontier Capital Management, an investment management company, recently released its “Frontier Small Cap Growth Fund” first quarter 2025 investor letter. The letter provides a detailed analysis of the fund’s performance and insights into its investment strategy. Class N shares of the fund returned -14.43% in the first quarter, underperforming the benchmark Russell 2000 Growth Index, which had a return of -11.12%. Over the past 12 months, the fund returned -14.50%, compared to the benchmark’s -4.86%. This highlights the challenges faced by small-cap growth stocks during a period of market volatility.
The first quarter saw US equities decline, particularly in the final week of the quarter. Investors can gain further insight into the fund’s strategy by reviewing its top 5 holdings, which reflect its best picks for 2025.
Spotlight on BILL Holdings, Inc. (NYSE: BILL)
One of the key stocks highlighted in the investor letter is BILL Holdings, Inc. (NYSE: BILL). The company provides cloud-based software solutions that help businesses simplify, digitize, and automate complex back-office financial operations. Despite its innovative offerings, the stock experienced a one-month return of 5.68%, while it lost 8.49% over the last 52 weeks. As of July 3, 2025, the stock closed at $48.21 per share with a market capitalization of $4.97 billion.
Frontier Capital Management noted that the industrial sector was a major area of underperformance, largely due to poor stock selection. Among the worst performers was BILL Holdings, Inc., a payments company serving small businesses. The company faced concerns about its ability to maintain margins following lower adoption rates of its more profitable payment services. Additionally, negative sentiment towards small businesses contributed to the fund’s decision to reduce its position in the stock.
Hedge Fund Activity and Investment Outlook
According to available data, 53 hedge fund portfolios held BILL Holdings, Inc. (NYSE: BILL) at the end of the first quarter, down from 64 in the previous quarter. This suggests a cautious approach from some institutional investors. In the fiscal third quarter of 2025, the company reported revenue of $358 million, reflecting an 11% year-over-year increase.
While Frontier Capital Management acknowledges the potential of BILL as an investment, it emphasizes that AI stocks may offer greater upside potential. The firm believes that AI-driven companies could deliver higher returns in a shorter timeframe. For investors seeking an AI stock similar to NVIDIA but trading at a lower valuation, there are reports highlighting undervalued opportunities in the sector.
Additional Insights and Resources
In another article, we explored BILL Holdings, Inc. and shared the views of the Parnassus Mid Cap Growth Fund on the company. For those interested in learning more about hedge fund strategies, the “hedge fund investor letters Q1 2025” page offers additional insights from leading investors.
While BILL Holdings, Inc. presents certain investment opportunities, the focus on AI stocks remains strong due to their potential for growth and reduced downside risk. For investors looking for an AI stock that could benefit from Trump-era tariffs and the onshoring trend, there are free reports available that highlight promising options.
Related Reading
For further reading, consider exploring the following topics:
- The Best and Worst Dow Stocks for the Next 12 Months – A comprehensive look at how major Dow Jones components might perform.
- 10 Unstoppable Stocks That Could Double Your Money – A list of high-potential stocks that could deliver significant returns.
These resources provide valuable insights for investors looking to make informed decisions in a dynamic market environment.
