Wasatch Global Investors, an asset management company, released its “Wasatch Long/Short Alpha Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. US small caps experienced modest gains in Q4, driven by presidential election and anticipated economic growth and less regulation. However, markets fell in December as the Federal Reserve hinted that it could have to maintain interest rates higher in 2025 than investors had first anticipated. In this case, the fund fell -8.28% and trailed the benchmark Russell 2500™ Index, which returned 0.62%. In addition, please check the fund’s top five holdings to know its best picks in 2024.

In its fourth quarter 2024 investor letter, Wasatch Long/Short Alpha Fund emphasized stocks such as IonQ, Inc. (NYSE:IONQ). IonQ, Inc. (NYSE:IONQ) is a US-based quantum computers and networks developer. The one-month return of IonQ, Inc. (NYSE:IONQ) was -33.57%, and YTD its shares lost 45.70% of their value. On March 18, 2025, IonQ, Inc. (NYSE:IONQ) stock closed at $22.68 per share with a market capitalization of $5.418 billion.

Wasatch Long/Short Alpha Fund stated the following regarding IonQ, Inc. (NYSE:IONQ) in its Q4 2024 investor letter:

"Among shorts, detractors are those stocks that rose in price. One of the largest among this group was IonQ, Inc. (NYSE:IONQ), a quantum computing company. IonQ announced a new contract win during the period. But the stock’s rise was likely due more to news that Google had unveiled a new quantum chip that drastically reduces computation times. This news heightened investor enthusiasm for the field of quantum computing. However, we believe enthusiasm surrounding the company is out of touch with the company’s fundamentals, and we continue to hold a short position in the stock."

A quantum computer on a countertop in an engineering laboratory with a technician at work.

IonQ, Inc. (NYSE:IONQ) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held IonQ, Inc. (NYSE:IONQ) at the end of the fourth quarter compared to 17 in the third quarter. IonQ, Inc. (NYSE:IONQ) recorded an exceptional $11.7 million in revenue during the fourth quarter. For the entire year, the revenue was $43.1 million, which was up 95% from previous year. While we acknowledge the potential of IonQ, Inc. (NYSE:IONQ) 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 IonQ, Inc. (NYSE:IONQ) and shared the list of best quantum computing stocks to buy. In addition, please check out our hedge fund investor letters Q4 2024 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.