Frontier Capital Management, an investment management company, recently released its first quarter 2025 investor letter for the Frontier Small Cap Growth Fund. The fund saw a return of -14.43% for Class N shares in the first quarter, compared to -11.12% for the benchmark Russell 2000 Growth Index. Over the 12 months ended March 31, 2025, the fund returned -14.50%, while the benchmark return was -4.86%. Despite the challenging market conditions, the fund’s top 5 holdings provide insight into its investment strategy for 2025.
One of the highlighted stocks in the investor letter is CACI International Inc (NYSE:CACI), a company that provides expertise and technology to enterprise and mission customers in support of national security. The stock saw a one-month return of 9.78% and has gained 15.62% over the last 52 weeks. As of July 3, 2025, CACI International Inc (NYSE:CACI) closed at $489.02 per share with a market capitalization of $10.754 billion.
In the investor letter, Frontier Small Cap Growth Fund discussed its investment thesis for CACI International Inc (NYSE:CACI) and other companies in its portfolio. The fund initiated new positions in companies like Amentum Holdings, Inc., Essential Properties Realty Trust, Inc., and DigitalOcean Holdings, Inc. These companies operate in sectors that are essential to the government, such as defense and digital infrastructure. Despite concerns about potential budget cuts, Frontier Capital Management believes these companies provide significant value and are poised for growth in the coming years.
While CACI International Inc (NYSE:CACI) is not among the 30 most popular stocks among hedge funds, it remains a compelling investment option. The company reported a revenue of $2.2 billion in the fiscal third quarter of 2025, reflecting growth of 11.8%, with 5.6% attributable to organic growth. However, Frontier Capital Management sees greater potential in AI stocks for delivering higher returns in a shorter timeframe.
In a previous article, River Road Mid Cap Value Fund shared its views on CACI International Inc (NYSE:CACI), highlighting the company’s strong fundamentals. For more insights from hedge funds and leading investors, readers can refer to the hedge fund investor letters from the first quarter of 2025. While CACI International Inc (NYSE:CACI) remains a promising investment, there are other AI stocks with greater upside potential and lower downside risk.
For investors seeking undervalued AI stocks with significant growth potential, a free report on the best short-term AI stock is available. Disclosure: None. This article was originally published on Insider Monkey and provides valuable insights into the investment landscape for 2025.
