TimesSquare Capital Management, an equity investment management company, recently released its “U.S. Focus Growth Strategy” first quarter 2025 investor letter. The letter highlighted the company’s outperformance in a challenging market environment, with a return of 2.42% (gross) and 2.20% (net) compared to a -7.12% return for the Russell Midcap Growth Index. The strategy’s top five holdings were also disclosed in the letter, showcasing its best picks for 2025.
One of the notable stocks mentioned in the investor letter was CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a global cybersecurity solutions provider. CrowdStrike Holdings, Inc. saw a 16.94% one-month return and a 26.98% gain over the last 52 weeks. As of May 16, 2025, the stock closed at $439.26 per share, with a market capitalization of $109.408 billion.
The investor letter provided insights into TimesSquare Capital’s views on CrowdStrike Holdings, Inc. The company acknowledged CrowdStrike’s 3% gain in a volatile quarter, attributing it to the optimism surrounding software companies and AI adoption. Despite some challenges related to one-time costs, TimesSquare Capital believed that CrowdStrike’s annual recurring revenues would reaccelerate later in the year, prompting them to add back to their holdings.
While CrowdStrike Holdings, Inc. is not among the 30 most popular stocks among hedge funds, it saw an increase in the number of hedge fund portfolios holding the stock in the fourth quarter of fiscal 2025. The company’s subscription revenue grew by 31% year-over-year in the third quarter, surpassing $1 billion in total revenue. TimesSquare Capital expressed confidence in CrowdStrike’s potential as an investment but emphasized a greater conviction in AI stocks for delivering higher returns within a shorter timeframe.
For investors interested in AI stocks with promising potential, TimesSquare Capital recommended exploring an undervalued AI stock set for massive gains, trading at less than 5 times its earnings. This strategic approach aligns with the company’s investment philosophy and focus on identifying high-growth opportunities in the market.
In conclusion, TimesSquare Capital Management’s U.S. Focus Growth Strategy continues to navigate challenging market conditions with a focus on outperforming key benchmarks and selecting top-performing stocks like CrowdStrike Holdings, Inc. Investors looking for opportunities in the evolving landscape of AI and cybersecurity can leverage the insights provided in the investor letter to make informed investment decisions.
