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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Artisan Partners Small Cap Fund 2024 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Artisan Partners Small Cap Fund)

Primary Source Intelligence • Q2 2024 Letter Analysis

Artisan Partners Small Cap Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Artisan Partners Small Cap Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD-4.45%

YTD+4.56%

Annualized+8.91%

Positioning StanceConstructive

Market CapSmallCap

GeographyUS

Digest Analysis

Quick Take

"Artisan Small Cap underperformed in Q2 due to cyclical pressures on semiconductor holdings and software weakness from AI spending prioritization. The fund avoided major index winners Super Micro and MicroStrategy on governance and conviction concerns."

Executive Summary

Artisan Small Cap Fund generated a negative absolute return of -4.45% in Q2 2024, underperforming the Russell 2000 Growth Index due to negative security selection in industrials and healthcare, partially offset by outperformance in consumer discretionary. The portfolio faced headwinds from not owning two major index constituents, Super Micro Computer and MicroStrategy, which contributed 257 basis points to the index return before being reconstituted out. Top detractors included Lattice Semiconductor, hurt by cyclical pressures and customer destocking, and Iovance Biotherapeutics, facing commercial execution concerns after FDA approval. Top contributors were Twist Bioscience and Guidewire, both reporting strong earnings. The manager initiated new positions in Insmed and VitaCoco while exiting Bentley Systems and Etsy. Despite AI-driven market concentration favoring mega-cap technology, the team remains patient with semiconductor and software holdings, believing cyclical headwinds will ease and cloud franchises will leverage AI advances to enhance platforms.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

72%

CautiousHigh

High Conviction (72%)

The manager demonstrates high conviction through concentrated positions in named holdings (Lattice 4.7%, Guidewire 5.2%), detailed investment theses for each position, and willingness to add to positions during weakness. The Garden/Crop/Harvest framework shows systematic position sizing based on conviction levels.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager acknowledges solid US economic activity and a sturdy labor market, with potential for Fed rate cuts if inflation moderates. However, they also note uncertainty about geopolitical unrest, elections, and economic slowdown, creating a mildly positive but cautious outlook.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

The portfolio is selectively adding to positions with compelling valuations but also trimming winners approaching full valuation. The manager describes being 'cautiously adding' and maintaining discipline, indicating a measured risk appetite rather than aggressive deployment.

Capital Deployment

20%

De-riskingDeploying

De-risking (20%)

The manager initiated two new positions (Insmed, VitaCoco), added to existing positions (Twist, Inspire), but also exited two positions (Bentley, Etsy) and trimmed others (Workiva, Wingstop). This represents modest net deployment with significant rotation activity.

Forward Guidance

10%

CautiousExpansionary

Cautious (10%)

The manager explicitly states they are 'remaining patient' with current holdings and will 'cautiously add' to strong franchises. This suggests a wait-and-see approach rather than aggressive deployment, with emphasis on patience over action.

Language Signal

20%

BearishBullish

Bearish (20%)

The letter contains balanced language with both opportunity-focused terms (attractive valuations, compelling, strong franchises) and risk-aware language (uncertainty, headwinds, challenging). The net balance leans slightly positive but is largely neutral.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

The manager identifies multiple specific risks including geopolitical unrest, elections across large markets, economic slowdown, inflation uncertainty, and sector-specific headwinds in semiconductors and software. These risks are discussed in detail with meaningful concern expressed.

Opportunity Density

45%

ScarceAbundant

Selective (45%)

The manager sees selective opportunities in companies with compelling valuations facing temporary headwinds, but also notes challenging conditions in key sectors like semiconductors and software. The opportunity set is characterized as requiring selectivity and patience rather than abundance.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The manager emphasizes medium-to-long-term conviction, discusses multi-year profit cycles, and states gratitude for the ability to look past short-term performance considerations. The focus on franchise characteristics and patient capital suggests a 2-4 year investment horizon.