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BBH Select Mid Cap ETF cites Guidewire’s ARR timing as drag
Guidewire Software (GWRE) fell 17.7% in the quarter despite revenue growth of 27% and raised full-year guidance, according to the fund’s Q2 2026 investor letter.
BBH Select Mid Cap ETF highlighted Guidewire Software, Inc. as a key holding in its Q2 2026 investor letter, pointing to the insurer-software company’s annual recurring revenue timing as a factor behind its weaker stock performance in the quarter.
Guidewire declined 17.7% during Q2 2026 and ended the quarter with a 3.1% portfolio weight, even as Guidewire reported strong fiscal third-quarter results. The company posted revenue growth of 27% and profitability ahead of guidance, and management raised full-year guidance for both.
The fund said the shares fell because Guidewire’s ARR growth of 19% landed at the midpoint of its guidance range, and it was the first quarter since 2022 in which ARR did not meet or exceed the guidance. The letter also attributes broader fund performance to a focus on valuation and notes the fund increased 9.7% on a total return basis in Q2 2026 versus the Russell Midcap Index’s 13.8%.
At quarter end, the fund held positions in 27 companies, with 48% of assets concentrated in the top 10 holdings, and it uses a margin of safety approach, targeting firms priced below intrinsic value. On August 19, 2026, Guidewire closed at $181.18 per share, for a market capitalization of $15.08 billion.