ClearBridge Investments, an investment management company, released its “ClearBridge Small Cap Growth Strategy” Q4 2025 investor letter. A copy of the letter can be downloaded here. The Strategy underperformed the Russell 2000 Growth Index in the fourth quarter, after a strong first three quarters of 2025. Market’s overreactions to earnings disappointments in the technology sector and a biotech rally drove the relative underperformance of the Strategy in the quarter. In a volatile year, dominated by a narrow set of themes, the small caps failed to outperform large caps, echoing the past two years, although broadening appears to be emerging. Heading to 2026, the Strategy is optimistic about the favorable backdrop for small-cap growth stocks following years of narrow market leadership and performance disparities. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, ClearBridge Small Cap Growth Strategy highlighted stocks like Wix.com Ltd. (NASDAQ:WIX). Wix.com Ltd. (NASDAQ:WIX) is an Israel-based cloud-based web development platform for registered users and creators. On March 27, 2026, Wix.com Ltd. (NASDAQ:WIX) stock closed at $87.14 per share. One-month return of Wix.com Ltd. (NASDAQ:WIX) was 20.09%, and its shares lost 46.66% over the past 52 weeks. Wix.com Ltd. (NASDAQ:WIX) has a market capitalization of $5.08 billion.

ClearBridge Small Cap Growth Strategy stated the following regarding Wix.com Ltd. (NASDAQ:WIX) in its fourth quarter 2025 investor letter:

"We saw this in several of our software investments, particularly security software company Varonis and Wix.com Ltd. (NASDAQ:WIX), a website and application creation platform, both of which had minor disappointments that led to material stock price overreactions. We continue to have conviction in the idiosyncratic growth opportunities at each of these profitable and attractively valued businesses, both of which can benefit from the proliferation of AI adoption."

Wix.com Ltd. (NASDAQ:WIX) is not on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 45 hedge fund portfolios held Wix.com Ltd. (NASDAQ:WIX) at the end of the fourth quarter, compared to 71 in the previous quarter. In Q4 2025, Wix.com Ltd. (NASDAQ:WIX) reported revenue of $524 million, marking an increase of 14% year over year. While we acknowledge the potential of Wix.com Ltd. (NASDAQ:WIX) 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 Wix.com Ltd. (NASDAQ:WIX) and shared a bullish thesis 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: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

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