Brown Capital’s Small Company Fund Trails in 2025, Details Repositioning in Q4 Investor Letter

Overview

• The fund fell 1.50% in Q4 2025 and declined 11.46% for the year, lagging the Russell 2000 Growth index, which rose 1.22% in Q4 and 13.01% in 2025.
• Glaukos was a key contributor with reported revenue up 38.1%, U.S. glaucoma sales of $80.8 million up 57% year over year, raised 2025 sales guidance to 28%–29%, and preliminary 2026 growth guidance of about 24%.
• The fund exited Tandem Diabetes Care, calling the position a mistake after weaker-than-expected revenue growth, greater market saturation, rising competition, and continued unprofitability in 2025.
• New positions included Veracyte, PDF Solutions, AvePoint, and Loar Holdings to increase exposure to diagnostics strength and AI-related infrastructure.
• Veracyte was added for its dominant Decipher and Afirma franchises, profitability since 2024, free cash flow since 2023, and more than $400 million in cash, while PDF Solutions offers semiconductor analytics tied to the AI buildout with expected 20%+ revenue growth and margin expansion over three to five years.