The Brown Capital Small Company Fund Exited Vicor (VICR) Due to Thesis Misalignment

Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” second quarter 2025 investor letter. A copy of the letter can be downloaded here. The small-cap US stocks rebounded in the second quarter following a challenging first quarter. The Small Company Fund returned 8.59% in the second quarter, lagging the Russell 2000® Growth index’s 11.97% return. The underperformance in the quarter occurred in the last few weeks of the period. In addition, check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, The Brown Capital Management Small Company Fund highlighted stocks such as Vicor Corporation (NASDAQ:VICR). Vicor Corporation (NASDAQ:VICR) develops modular power components and power systems for converting electrical power for use in electrically powered devices. The one-month return of Vicor Corporation (NASDAQ:VICR) was 5.49%, and its shares lost 38.15% of their value over the last 52 weeks. On September 12, 2025, Vicor Corporation (NASDAQ:VICR) stock closed at $50.77 per share, with a market capitalization of $2.281 billion.

The Brown Capital Management Small Company Fund stated the following regarding Vicor Corporation (NASDAQ:VICR) in its second quarter 2025 investor letter:

"There were no additions to the Small Company Fund in the second quarter of 2025, but there were three deletions—Helios Technologies (HLIO), Enfusion (ENFN) and Vicor Corporation (NASDAQ:VICR).

Vicor develops products for converting power in electronic systems, including between voltage or current levels, and between alternating current (AC) and direct current (DC). Vicor’s products deliver greater power in a smaller sized format with higher conversion efficiency, less magnetic interference and better reliability vs. many alternative products. Vicor’s products are used in high-performance computing, industrial equipment and automation, telecommunications and network infrastructure, vehicles and transportation, and aerospace and defense markets. Recently, Vicor has lost business from customers in the high-performance computing area and has subsequently pursued legal action against competitors that it believes have infringed on its patents. As a result, the level of future business from products and licensing royalties is uncertain, and Vicor’s legal expenditures have increased significantly. Additionally, the company has had repeated delays in launching its next generation products, which has hindered potential revenue growth. These factors have hurt the company’s durability of revenue and profitability. Recognizing that our investment thesis for Vicor, which we have owned since 2022, was no longer intact, we sold the company out of the portfolio."

Vicor Corporation (NASDAQ:VICR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 21 hedge fund portfolios held Vicor Corporation (NASDAQ:VICR) at the end of the second quarter, compared to 19 in the previous quarter. While we acknowledge the potential of Vicor Corporation (NASDAQ:VICR) 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 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.