iMGP Global Partner, an investment management company, recently released its fourth-quarter 2025 investor letter for the “iMGP Small Company Fund”. The Fund returned 1.33% in the fourth quarter, slightly underperforming the Russell 2000 Index, which returned 2.19%. For the full year 2025, the Fund’s returns were flat at 0.01%, compared to the Index’s 12.81% return.
One of the main reasons for the Fund’s underperformance in the fourth quarter was the strong performance of biotech businesses, which saw an increase of more than 25%. The Fund typically avoids investing in biotech stocks due to their high volatility and binary nature. However, the majority of the underperformance for the year occurred in the third quarter due to style-related factors.
Looking ahead to 2026, the Fund aims to refine its investment process and enhance performance by focusing on high-quality, growing companies. The top five holdings of the Fund provide insights into their key selections for 2025.
One of the highlighted stocks in the investor letter was AppFolio, Inc. (NASDAQ:APPF), a US-based technology company that offers a cloud-based platform for the real estate industry. As of March 06, 2026, AppFolio, Inc. (NASDAQ:APPF) closed at $191.17 per share, with a one-month return of 4.02% and a 52-week loss of 11.34%. The company boasts a market capitalization of $6.88 billion.
In the investor letter, iMGP Small Company Fund shared their insights on AppFolio, Inc. (NASDAQ:APPF), highlighting the company’s focus on small to medium-sized property managers in the real estate industry. The Fund noted that AppFolio’s margins contracted in 2025 due to a bonus accrual impact, which was driven by the addition of new units. However, the Fund sees this as a positive development, as each new customer added by AppFolio is expected to have a high lifetime value.
Moreover, the Fund attended AppFolio’s Investor Day and expressed confidence in the company’s ability to enhance its solutions and increase lifetime value for customers. Despite concerns about competition in AI, particularly from EliseAI, AppFolio is introducing comparable solutions in 2026. The Fund remains optimistic about AppFolio’s long-term prospects, citing the company’s control over its destiny as a system of record, focus on serving SMBs, unit-based pricing model, and strong track record of product execution.
While AppFolio, Inc. (NASDAQ:APPF) is not among the 40 most popular stocks held by hedge funds, 33 hedge fund portfolios included the company at the end of the fourth quarter. The company reported revenue of $248 million in Q4 2025, marking a 22% year-over-year increase. While the Fund acknowledges the potential of AppFolio as an investment, it believes that certain AI stocks offer greater upside potential with lower downside risk.
In conclusion, the iMGP Small Company Fund’s investor letter for the fourth quarter of 2025 sheds light on their investment approach, performance, and key holdings such as AppFolio, Inc. (NASDAQ:APPF). As the Fund looks to navigate the challenges and opportunities in the market in 2026, investors can gain valuable insights from their strategic outlook and focus on high-quality, growing companies.
