TSCM U.S. Small Cap Growth Strategy Exited Vaxcyte (PCVX) as Its Infant Trial was Less Than Compelling

TimesSquare Capital Management, an equity investment management company, released its “U.S. Small Cap Growth Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the fund returned 11.28% (gross) and 11.02% (net), compared to the Russell 2000 Growth Index by 11.97%. Equities posted double-digit returns in the second quarter as global economic activity measures lifted. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, TimesSquare Capital Small Cap Growth Strategy highlighted stocks such as Vaxcyte, Inc. (NASDAQ:PCVX). Vaxcyte, Inc. (NASDAQ:PCVX) is a clinical-stage biotechnology vaccine company that focuses on developing novel protein vaccines to prevent or treat bacterial infectious diseases. The one-month return of Vaxcyte, Inc. (NASDAQ:PCVX) was 1.10%, and its shares lost 71.50% of their value over the last 52 weeks. On September 11, 2025, Vaxcyte, Inc. (NASDAQ:PCVX) stock closed at $33.06 per share, with a market capitalization of $4.292 billion.

TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding Vaxcyte, Inc. (NASDAQ:PCVX) in its second quarter 2025 investor letter:

"Our preferences among Health Care stocks are those companies providing novel therapies for unmet needs that deserve premium pricing, or specialized service providers. Vaxcyte, Inc. (NASDAQ:PCVX) is engaged in the development of vaccines for infectious diseases. Data from a recent infant trial was less than compelling and we decided to exit. The stock dropped -14% while held during the month."

Vaxcyte, Inc. (NASDAQ:PCVX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held Vaxcyte, Inc. (NASDAQ:PCVX) at the end of the second quarter, which was 45 in the previous quarter. While we acknowledge the potential of Vaxcyte, Inc. (NASDAQ:PCVX) 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 Vaxcyte, Inc. (NASDAQ:PCVX) and shared the list of best future stocks to buy. 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.