Core Insights - The Alger Small Cap Focus Fund's third-quarter 2025 investor letter indicates that U.S. equity markets continued to rise, with the S&P 500 Index increasing by 8.12% due to improving economic conditions, solid corporate earnings, and expectations for monetary easing [1] - The fund's class A shares underperformed compared to the Russell 2000 Growth Index during the same period [1] Company Overview: Q2 Holdings, Inc. (NYSE:QTWO) - Q2 Holdings, Inc. is a digital solutions provider for financial institutions, offering secure, cloud-based digital banking software and related services [3] - The stock experienced a one-month return of 17.90%, but it has lost 31.35% of its value over the past 52 weeks, closing at $71.73 per share with a market capitalization of $4.485 billion as of November 27, 2025 [2] Performance Analysis - Despite reporting solid second-quarter results and raising its full-year outlook, Q2 Holdings' shares detracted from performance due to mixed signals, including higher-than-typical churn and a slight dip in gross margin related to cloud-migration costs [3] - The company is believed to be well-positioned to benefit from the ongoing digitization of banking and expanding relationships with larger institutions, despite the recent valuation reset and mixed sell-side signals [3] Hedge Fund Interest - Q2 Holdings, Inc. was held by 28 hedge fund portfolios at the end of the third quarter, a decrease from 29 in the previous quarter [4] - While the potential of Q2 Holdings as an investment is acknowledged, certain AI stocks are considered to offer greater upside potential with less downside risk [4]