Here's Why The Brown Capital Management Small Company Fund Sold Tandem Diabetes Care (TNDM)

Brown Capital Management, an investment management company, released its fourth quarter 2025 investor letter for “The Brown Capital Management Small Company Fund”. A copy of the letter can be downloaded here. In the fourth quarter of 2025, the Small Company Fund (Investor shares) fell 1.50%, behind the Russell 2000® Growth index's 1.22% gain. Real estate and telecommunications businesses led the benchmark's performance for the quarter. The Fund was down 11.46% in 2025, significantly lagging the Index’s 13.01% return. The firm’s investment decisions are driven by company fundamentals, and its holdings performed well in terms of revenue and earnings growth in 2025. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, The Brown Capital Management Small Company Fund highlighted stocks like Tandem Diabetes Care, Inc. (NASDAQ:TNDM). Headquartered in San Diego, California, Tandem Diabetes Care, Inc. (NASDAQ:TNDM) offers technology solutions for people living with diabetes. On February 20, 2026, Tandem Diabetes Care, Inc. (NASDAQ:TNDM) stock closed at $24.57 per share. One-month return of Tandem Diabetes Care, Inc. (NASDAQ:TNDM) was 21.63%, and its shares lost 24.77% over the past 52 weeks. Tandem Diabetes Care, Inc. (NASDAQ:TNDM) has a market capitalization of $1.666 billion.

The Brown Capital Management Small Company Fund stated the following regarding Tandem Diabetes Care, Inc. (NASDAQ:TNDM) in its fourth quarter 2025 investor letter:

"In the fourth quarter of 2025, we deleted two companies from the portfolio—PROS Holdings (PRO) and Tandem Diabetes Care, Inc. (NASDAQ:TNDM). Tandem Diabetes Care develops and manufactures insulin pumps that help patients manage their diabetes. The company’s insulin pumps have a more modern user interface, broader capabilities, and easier path to software upgrades compared to most other insulin pumps on the market. Tandem, in partnership with Continuous Glucose Monitoring (CGMs) providers, has one of the most advanced Automated Insulin Delivery (AID) systems on the market. Tandem’s revenue growth has not been as strong as we had expected in 2025, due to increasing competition and greater saturation of insulin pump usage among Type 1 diabetes patients. The company remained unprofitable during 2025 and has not followed our expected path towards profitability. Given the poorer revenue and profitability picture, we consider Tandem a mistake and sold it out of the portfolio."

Tandem Diabetes Care, Inc. (NASDAQ:TNDM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 33 hedge fund portfolios held Tandem Diabetes Care, Inc. (NASDAQ:TNDM) at the end of the fourth quarter, up from 26 in the previous quarter. In Q4 2025, Tandem Diabetes Care, Inc. (NASDAQ:TNDM) reported worldwide sales of $290 million, representing a 15% year-over-year growth. While we acknowledge the potential of Tandem Diabetes Care, Inc. (NASDAQ:TNDM) 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 Tandem Diabetes Care, Inc. (NASDAQ:TNDM) and shared Meridian Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

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