TimesSquare Capital U.S. Small Cap Growth Strategy's Stand on ACV Auctions (ACVA)

TimesSquare Capital Management, an equity investment management company, released its “U.S. Small Cap Growth Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the fund returned 2.26% (gross) and 2.01% (net), compared to the Russell 2000 Growth Index’s 12.19% return. During the quarter, all asset classes except fixed income outside the U.S. posted positive returns. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, TimesSquare Capital U.S. Small Cap Growth Strategy highlighted stocks such as ACV Auctions Inc. (NYSE:ACVA). ACV Auctions Inc. (NYSE:ACVA) provides a digital marketplace that enables buyers and sellers to connect for the online auction of wholesale vehicles. The one-month return for ACV Auctions Inc. (NYSE:ACVA) was 6.69%, and its shares lost 57.59% of their value over the last 52 weeks. On January 5, 2026, ACV Auctions Inc. (NYSE:ACVA) stock closed at $8.61 per share, with a market capitalization of $1.562 billion.

TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding ACV Auctions Inc. (NYSE:ACVA) in its third quarter 2025 investor letter:

"Pulling back by -39% was ACV Auctions Inc. (NYSE:ACVA), the leading commercial digital marketplace for buying or selling used vehicles. Revenues and earnings were less than anticipated, stemming from a lower rate of listings converting to transactions. That seemed tied to broader macroeconomic concerns—which ACV previously highlighted—and temporary in nature. However, management erred on the side of caution by reducing its guidance for the rest of 2025, and we are reevaluating ACV’s place in the strategy."

ACV Auctions Inc. (NYSE:ACVA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 39 hedge fund portfolios held ACV Auctions Inc. (NYSE:ACVA) at the end of the third quarter, up from 36 in the previous quarter. In Q3 2025, ACV Auctions Inc. (NYSE:ACVA) reported revenue of $200 million, marking an increase of 16% year-over-year. While we acknowledge the potential of ACV Auctions Inc. (NYSE:ACVA) 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 ACV Auctions Inc. (NYSE:ACVA) and shared a bullish thesis on the company. In addition, please check out our hedge fund investor letters Q3 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.