Artisan Mid Cap Fund's Performance Hit by Palantir Technologies' (PLTR) Exclusion

Artisan Partners, an investment management company, released its “Artisan Mid Cap Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund’s Investor Class fund ARTMX returned 14.40%, Advisor Class fund APDMX posted a return of 14.45%, and Institutional Class fund APHMX returned 14.50%, compared to a 18.20% return for the Russell Midcap Growth Index. Global markets experienced a significant but volatile Q2, rotating from double-digit declines to double-digit gains. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Artisan Mid Cap Fund highlighted stocks such as Palantir Technologies Inc. (NASDAQ:PLTR). Palantir Technologies Inc. (NASDAQ:PLTR) builds and deploys software platforms for the intelligence community.  The one-month return of Palantir Technologies Inc. (NASDAQ:PLTR) was 21.06%, and its shares gained 491.77% of their value over the last 52 weeks. On August 5, 2025, Palantir Technologies Inc. (NASDAQ:PLTR) stock closed at $173.27 per share, with a market capitalization of $411.055 billion.

Artisan Mid Cap Fund stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its second quarter 2025 investor letter:

"The portfolio turned in an objectively solid Q2, posting a double-digit absolute return. However, it did not keep pace with the Russell Midcap® Growth Index. Our information technology (IT) holdings performed well, led by Snowflake, Zscaler and Cloudflare. Even so, the portfolio’s IT holdings were a meaningful drag on a relative basis. The reason can generally be summed up in two words: Palantir Technologies Inc. (NASDAQ:PLTR).

Palantir was up 62% for the quarter and a whopping 438% percent in the past year. To put that into perspective, it accounted for more than 20%oftheindex’s Q2return and morethan30%forthe1-yearperiod. In our Q1letter, we noted how Palantir was trading at an astonishing price-to-sales ratio of 66X. At the end of Q2, it was trading around 100X.

But the stock’s influence on the index is also a story about concentration. We are in a world where index concentration has been a common characteristic in large caps, thanks to the Magnificent Seven. But it also has been an issue for the Russell Midcap Growth® Index. In late June, Palantir’s index weighting was around 9%, far larger than the biggest name in the Russell 1000® Index, which was NVIDIA at 6.5%..." (Click here to read the full text)

Palantir Technologies Inc. (NASDAQ:PLTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 77 hedge fund portfolios held Palantir Technologies Inc. (NASDAQ:PLTR) at the end of the first quarter, which was 64 in the previous quarter. Palantir Technologies Inc.’s (NASDAQ:PLTR) first quarter revenue grew 7% sequentially to $884 million. While we acknowledge the potential of Palantir Technologies Inc. (NASDAQ:PLTR) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Palantir Technologies Inc. (NASDAQ:PLTR) and shared the list of AI stocks gaining attention on Wall Street. Baron Asset Fund also mentioned same points on Palantir Technologies Inc. (NASDAQ:PLTR) in its Q2 2025 investor letter. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.