Headwaters Capital Management, an investment management company, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund returned 9.0% (+8.8% net) in the third quarter compared to a 9.2% return for the Russell Mid Cap Index. Interest rate reductions have generally driven small cap outperformance. Small caps benefited in Q3 after the Fed started the anticipated easing cycle with a 50-basis point rate drop in September. In addition, you can check the fund's top 5 holdings to determine its best picks for 2024.

Headwaters Capital Management highlighted stocks like  Fair Isaac Corporation (NYSE:FICO), in the third quarter 2024 investor letter. Fair Isaac Corporation (NYSE:FICO) develops analytic, software, and digital decision-making technologies and services. The one-month return of Fair Isaac Corporation (NYSE:FICO) was 8.75%, and its shares gained 126.93% of their value over the last 52 weeks. On October 9, 2024, Fair Isaac Corporation (NYSE:FICO) stock closed at $2,024.99 per share with a market capitalization of $49.65 billion.

Headwaters Capital Management stated the following regarding Fair Isaac Corporation (NYSE:FICO) in its Q3 2024 investor letter:

"Top Contributors: Fair Isaac Corporation (NYSE:FICO) +31%: FICO was the largest contributor to performance during Q3 given the size of the position in the portfolio. FICO’s stock performed well during the quarter as declining mortgage rates stimulated both refinance and purchase mortgage volumes."

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Fair Isaac Corporation (NYSE:FICO) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Fair Isaac Corporation (NYSE:FICO) at the end of the second quarter which was 45 in the previous quarter. In the third quarter of the fiscal year, Fair Isaac Corporation’s (NYSE:FICO) revenues increased by 12% to $448 million, while its GAAP net income decreased by 2% to $126 million, and GAAP earnings decreased by 1% to $5.05 per share. While we acknowledge the potential of Fair Isaac Corporation (NYSE:FICO) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Fair Isaac Corporation (NYSE:FICO) and shared the list of stocks that may be splitting soon. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.