| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.15% | 22.16% | 13.44% |
The Conestoga Micro Cap Composite delivered a strong 22.16% net return in 2Q26, though it trailed the Russell Microcap Growth Index's exceptional 28.98% gain. Micro Cap Growth outperformed every major equity benchmark, reflecting improved investor sentiment toward smaller-cap stocks. However, benchmark strength was concentrated in a historically narrow group of high-beta, momentum-driven, and AI-related stocks, particularly in Technology which surged 82.8%. This speculative leadership proved challenging for the quality-focused portfolio. Health Care was the standout performer, with biotechnology holdings contributing over 600 basis points to returns, led by Twist Bioscience, Alpha Teknova, and Vericel. Industrials also performed well, with strong contributions from defense-related holdings. The manager does not expect speculative leadership to persist, noting that investor capital has crowded into narrow AI-related trades that history suggests typically normalize as supply constraints ease. The recent Russell Reconstitution reduced Small Cap AI exposure significantly. With the interest rate backdrop shifting toward potentially tighter policy, the manager believes companies with strong balance sheets, durable earnings growth, and high returns on capital will be better positioned to outperform as market leadership broadens.
Conestoga maintains a disciplined focus on high-quality, conservatively positioned micro cap growth companies with durable competitive advantages, strong balance sheets, and the ability to compound value over time, even when such characteristics are temporarily out of favor in speculative market environments.
The manager does not expect the speculative leadership which drove second quarter returns to persist. Investor capital has crowded into a relatively narrow set of AI-related trades centered around scarcity of goods, a dynamic that history suggests typically normalizes as supply constraints ease and market leadership broadens. The recent Russell Reconstitution further reduced Small Cap exposure to the AI theme. As the interest rate backdrop has shifted meaningfully toward potentially tighter monetary policy, companies with strong balance sheets, durable earnings growth, and high returns on capital are expected to be better positioned to outperform. The manager remains confident in the fundamental strength of portfolio holdings and believes the characteristics that have recently been out of favor – high quality, durable, and profitable growth – will become increasingly valuable as market leadership continues to broaden out.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jun 30 2026 | 2026 Q2 | AORT, CYRX, DGII, ELVA, ERII, GHM, HLMN, IRMD, NABL, NCNO, NPKI, ONT, PKE, PL, PLMR, TKNO, TRNS, TWST, USPH, VCEL | AI, Biotechnology, defense, Health Care, high beta, Microcap, Quality, technology | - | Conestoga's Micro Cap Composite returned 22.16% in 2Q26, trailing the benchmark's 28.98% gain driven by historically narrow, speculative AI-related leadership. Biotechnology holdings delivered exceptional performance, contributing over 600 basis points, while defense and industrial holdings also performed well. The manager maintains conviction in high-quality growth businesses, expecting market leadership to broaden as AI speculation normalizes and fundamentals reassert themselves in a shifting rate environment. |
| Apr 21 2026 | 2026 Q1 | MAMA, NABL, ODD, PHR, PL, QTWO, TRNS, TWST, UTI, WLDN | AI, defense, energy, Quality, small caps, software, valuation | - | Conestoga's micro cap strategy underperformed in Q1 2026 as geopolitical tensions drove rotation away from software toward energy and domestic-focused stocks. Software holdings declined 29% despite strong fundamentals due to AI disruption concerns and valuation compression. The firm selectively reduced software exposure while adding positions in quality businesses, maintaining focus on long-term value creation despite near-term volatility. |
| Jan 18 2026 | 2025 Q4 | BLFS, BWMN, COCO, CYX, DGII, ELVA, IIIV, IRMD, MAMA, MEG, PHR, PL, PLMR, QTWO, ROAD, TKNO, TRNS, UTI, VCEL, WLDN | Biotech, consumer, defense, energy, growth, Micro Cap, Quality, small cap |
PL IRMD MAMA COCO IIIV BWMN ELVA ODD |
Conestoga Micro Cap posted 16.24% annual returns despite challenging market dynamics favoring speculative stocks. Portfolio benefited from exceptional performance in Planet Labs (388% return) and consumer staples holdings, while limited biotech exposure hindered Q4 results. Strategy maintained discipline through volatile periods, positioning for potential quality leadership rotation as Small Caps show compelling fundamentals with 32% projected 2026 earnings growth. |
| Oct 13 2025 | 2025 Q3 | AAON, BCPC, CSWI, CWST, DSGX.TO, ESE, EXPO, FSV.TO, HLIO, HLMN, MIR, MRCY, NOVT, QTWO, RBC, ROAD, SLP, SPSC, STVN, VERX | Beta, defense, industrials, profitability, Quality, small caps, software, technology |
WLDN US BWMN US |
Conestoga's quality-focused small cap strategy faced headwinds from extreme low-quality factor outperformance in Q3, with unprofitable stocks dramatically outperforming profitable peers. The historically narrow rally is consistent with early small cap cycles but challenges the firm's disciplined approach. Management remains confident that market leadership will eventually shift back toward quality fundamentals and sustainable growth drivers. |
| Jul 22 2025 | 2025 Q2 | AAON, AGYS, BFAM, CWAN, CWST, DGII, DSGX, ESE, EXPO, FSS, FSV, JBTM, MLAB, MMSI, NEOG, NOVT, RBC, ROAD, SLP, STVN | growth, healthcare, industrials, infrastructure, Quality, small cap, tariffs, technology | TWST | Conestoga's Small Cap strategy underperformed in 2Q25 as markets favored low-quality, unprofitable stocks following tariff uncertainty and subsequent rally. The quality-focused approach faced headwinds despite strong performance from infrastructure-exposed holdings like Construction Partners. With small caps at attractive valuations and earnings growth resuming, the firm maintains conviction in its conservative growth positioning. |
| May 1 2025 | 2025 Q1 | AAON, ALTR, AZTA, CWST, DSGX, ESE, GGG, HEI.A, JKHY, MMM, MMSI, NEOG, PAYX, PYCR, RBC, ROAD, SPSC, TRNS, VERX, WSO | Micro Cap, Outperformance, Quality, small caps, tariffs, uncertainty | - | Conestoga's Micro Cap strategy significantly outperformed during Q1's broad market selloff, declining 8.24% versus benchmark's 17.75% drop. High-quality companies with strong margins and profitability provided downside protection. Strong stock selection in Industrials and underweight to struggling Technology sectors drove outperformance. Domestic revenue exposure and quality characteristics position portfolio well for tariff environment and policy changes. |
| Dec 31 2024 | 2024 Q4 | AAPL, AMZN, EXPO, FOXF, GOOG, JBT, META, MSFT, NEOG, NOVT, NVDA, QTWO, ROAD, SITE, SSD, TRNS, TSLA, VCEL, VERX, WK | Attribution, growth, healthcare, industrials, Micro Cap, Performance, technology | - | Conestoga's Micro Cap strategy returned 9.91% in Q4 but lagged benchmarks due to AI speculation favoring high-beta stocks. Alpha Teknova led gains on improving biotech conditions while Montrose Environmental declined on regulatory uncertainty. Despite 2024 underperformance, the firm maintains conviction in high-quality positioning and expects small cap outperformance ahead. |
| Oct 23 2024 | 2024 Q3 | BLFS, BWMN, COCO, DGII, ERII, HLMN, IRMD, MAMA, MEG, OLO, PHR, PLMR, PRO, QTWO, ROAD, SLP, TCYSF, THBRF, TKNO, TRNS, USPH, VCEL, WLDN | growth, healthcare, industrials, Microcap, technology, volatility | - | Conestoga's micro cap strategy returned 7.60% in Q3, slightly trailing the benchmark but demonstrating strong downside protection during volatile periods. Health care led performance with biotech names benefiting from improving funding conditions. Infrastructure spending continues driving Construction Partners' outperformance. Technology faced headwinds while environmental services encountered regulatory uncertainty. Portfolio maintains focus on secular growth themes with strong competitive positioning. |
| Jun 30 2024 | 2024 Q2 | BLFS, CYRX, DGII, DH, ERII, HLMN, MEG, MLAB, MODN, PHR, PLMR, PRO, QTWO, SLP, SSTI, TCYSF, TKNO, TRNS, UTI, WLDN | Biotechnology, Environmental, growth, healthcare, Industrial, Micro Cap, technology | - | Conestoga Micro Cap declined -8.52% in Q2, underperforming due to Industrial and Telecom stock selection. CryoPort and Digi International were key detractors facing sector headwinds. Q2 Holdings, Simulations Plus, and Montrose Environmental led gains. The manager sees improving biotech funding, PFAS regulation tailwinds, and Industrial IoT normalization ahead. |
| Apr 15 2024 | 2024 Q1 | BWMN, DGII, HLMN, NVEE, PHR, PLMR, PLOW, QTWO, ROAD, SMLR, SSTI, TCYSF, TKNO, TRNS, USPH, VCEL, WLDN | growth, healthcare, industrials, infrastructure, Micro Cap, technology | - | Conestoga's micro cap strategy gained 4.93% but lagged benchmarks due to challenging stock selection in Industrials and Health Care. Palomar Holdings and Digi International drove outperformance while regulatory headwinds hit healthcare names. The manager actively repositioned the portfolio, selling challenged positions and adding Bowman Consulting to capitalize on infrastructure spending trends. |
| Dec 31 2023 | 2023 Q4 | DGII, HLMN, IIIV, IRMD, MLAB, NVEE, OLO, PHR, PL, PLOW, PRO, QTWO, ROAD, SLP, SMLR, SSTI, TCYSF, TRNS, USPH, VCEL | Biotech, growth, healthcare, industrials, Microcap, technology, underperformance | - | Conestoga's Micro Cap strategy underperformed in 2023 due to style headwinds favoring unprofitable biotech companies over quality businesses. Stock selection challenges in Healthcare and Industrials offset Technology gains. Management remains optimistic about portfolio positioning given high-quality underlying businesses with improving margins and attractive valuations despite market preference for lower-quality names. |
| Sep 30 2023 | 2023 Q3 | BLFS, DGII, DH, HLMN, IIIV, MODN, NSTG, NVEE, PHR, PLMR, PRO, QTWO, ROAD, SLP, THBRF, TKNO, TRNS, USPH, VCEL, WLDN | Biotechnology, growth, healthcare, infrastructure, Micro Cap, small cap, software | - | Conestoga's Micro Cap strategy underperformed in Q3 as micro caps faced the greatest market headwinds. Health Care holdings struggled with bioprocessing industry challenges while Construction Partners benefited from infrastructure spending tailwinds. The strategy maintains focus on higher-quality companies with strong fundamentals, positioning for potential outperformance despite near-term macro pressures on smaller capitalization stocks. |
| Jun 30 2023 | 2023 Q2 | CYRX, DGII, HCAT, IIIV, MEG, MLAB, MODN, NSTG, NVEE, OLO, PL, PRO, ROAD, SSTI, THBRF, TRNS, USPH, VCEL | Biotech, defense, growth, healthcare, industrials, infrastructure, Micro Cap, technology | - | Conestoga's Micro Cap strategy underperformed in Q2 as speculative stocks led gains. Industrials faced political and supply chain headwinds while biotech holdings struggled with funding pressures and inventory destocking. Infrastructure and IoT positions provided bright spots. Management maintains conviction in portfolio quality, expecting biotech recovery in 2024 and supply chain normalization to drive improved performance. |
| May 23 2023 | 2023 Q1 | AAON, ALTR, AXON, AZTA, CWAN, CWST, DGII, DSGX, EXPO, FOXF, FSV, MMM, MODN, NEOG, NOVT, PLOW, QTWO, SPSC, SSD, STVN | Banking, growth, healthcare, industrials, Quality, small cap, technology | DGII | Conestoga Small Cap delivered 12.26% in Q1 2023, outpacing the Russell 2000 Growth by 619 basis points through strong stock selection and favorable sector allocation. Top performers included AAON, Axon Enterprise, and Stevenato Group. The firm maintains focus on quality companies with strong balance sheets and sustainable growth rates amid banking sector pressures and potential recession risks. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI-related hardware and infrastructure companies drove extreme Technology sector returns (+82.8%) in the quarter, particularly in semiconductors (+95.6%), computer services (+68.1%), and electronic components (+161.9%). The manager has limited exposure to these highly speculative areas. Biotechnology holdings benefited from AI-enabled drug discovery, with Twist Bioscience delivering strong growth driven by accelerating demand for its DNA synthesis platform and growing adoption in AI-enabled drug discovery. |
AI Semiconductors Drug Discovery Infrastructure |
BiotechnologyBiotechnology was the standout performer within Health Care, with three holdings (Twist Bioscience, Alpha Teknova, and Vericel) contributing more than 600 basis points to Composite returns. The manager has historically avoided biotechnology due to lack of profitability and binary outcomes, but has identified a small number of businesses meeting quality standards. Improving biotech funding and increasing customer activity supported a return to sustainable growth. |
Biotechnology Clinical Solutions Gene Therapy Life Science Tools | |
DefenseDefense-related holdings performed well, with Graham Corp. benefiting from strong execution, record orders, and record backlog of $533 million supporting outlook for meaningful revenue growth. Park Aerospace was added based on growing exposure to missile defense programs, recovering commercial aerospace demand, and long-term sole-source positions on next-generation aircraft and engine platforms. |
Defense Aerospace Missile Defense Defense Components | |
QualityThe manager remains committed to high-quality growth businesses with durable competitive advantages despite recent underperformance. The quarter saw historically narrow market leadership favoring high-beta, high-momentum, and thematically driven stocks, which proved challenging for a high-quality, conservatively positioned growth portfolio. The manager is confident that focus on quality positions the portfolio well as market leadership broadens and fundamentals reassert themselves. |
Quality Durable Growth Competitive Advantages | |
Small CapsMicro Cap Growth outperformed every major equity benchmark in the quarter, including the S&P 500, Nasdaq Composite, and the Magnificent 7, reflecting continued improvement in investor sentiment toward smaller-cap stocks. The Russell Microcap Growth Index gained 28.98% in the quarter. The manager believes this reflects the continued improvement in investor sentiment toward smaller-cap stocks, with Micro Caps leading the advance. |
Small Caps MicroCap Market Leadership | |
| 2026 Q1 |
AIAI-driven drug discovery trends are benefiting companies like Twist Bioscience, which provides synthetic DNA infrastructure for the genomics industry. Planet Labs has integrated generative AI for automated object detection and intelligence platforms. However, software companies face concerns about AI-driven disruption compressing traditional software moats. |
Drug Discovery Synthetic Biology Intelligence Platforms Software Disruption Automation |
Defense SpendingDefense and aerospace companies continue to benefit from robust demand and growing backlogs. RBC Bearings saw aerospace and defense revenue increase over 40% with strong program visibility. ESCO Technologies experienced accelerating orders with 143% growth in entered orders, particularly in Aerospace & Defense. |
Aerospace Defense Contractors Backlog Growth Program Visibility Military Spending | |
EnergyEnergy was the strongest performing sector in the quarter, driven by geopolitical tensions including escalation of conflict involving Iran, which contributed to higher oil prices. The firm's lack of exposure to energy detracted from relative performance as energy stocks delivered strong returns. |
Oil Prices Geopolitical Risk Energy Stocks Iran Conflict Sector Performance | |
SoftwareSoftware companies experienced broad-based declines driven by valuation compression and reduced investor appetite for future-oriented earnings streams. More than 80% of software stocks in the Index underperformed. Companies like Q2 Holdings, N-able, and TECSYS declined approximately 29% despite posting strong EBITDA growth. |
Valuation Compression Multiple Contraction SaaS Growth Stocks Technology Sector | |
Small CapsSmall Cap equities initially performed well but momentum faded due to rising energy prices and geopolitical uncertainty. High quality small cap equities are trading at historically low relative valuations following broad-based multiple contraction. The Russell 2000 finished the quarter modestly higher at +0.89% but outperformed Large Caps by more than five percentage points. |
Russell 2000 Valuation Multiples Quality Stocks Market Leadership Relative Performance | |
| 2025 Q4 |
Small CapsSmall Caps achieved nearly 9% earnings growth in 2025 and are projected to grow by an additional 32% in 2026, contrasting with 13% growth expected for Large Caps. Small Caps are trading at a nearly 25% discount to Large Caps. The manager believes there is a compelling case for Small Caps to outperform Large Caps for the first time since 2020. |
Small Cap Earnings Growth Valuation Discount Outperformance |
QualityThe manager emphasizes their high quality, low beta, conservative growth investment discipline. They note that historically, new Small Cap bull markets start with low quality leadership, but high quality stocks gradually close the gap and reclaim leadership. From mid-October to year-end, profitable stocks outperformed unprofitable counterparts by over 5%. |
High Quality Low Beta Profitable Conservative Growth | |
BiotechnologySmall Cap Biotech/Pharmaceutical stocks represented 132% of the Russell 2000 Growth Index's total returns in the fourth quarter alone, after comprising just 11% through the third quarter. The manager had minimal exposure to this sector, which hindered relative performance. The sector experienced sharp outperformance driven by stabilized interest-rate expectations. |
Biotech Pharmaceuticals Sector Rotation | |
DefenseThe manager added Karman Holdings, a defense technology company specializing in highly engineered, mission-critical systems for space, missiles, hypersonic, and defense programs. The company generates mid-teens organic revenue growth complemented by acquisitions, with over 90% of revenue being IP protected and nearly 90% bought on a sole source basis. |
Defense Technology Space Missiles IP Protected | |
| 2025 Q3 |
Small CapsSmall cap stocks reached new all-time highs in Q3, with the Russell 2000 rising 12% and significantly outperforming the S&P 500. The rally has been characterized by historically narrow leadership, with the top 20 stocks representing 78% of the Russell 2000 Growth Index's gains year-to-date. This concentration is more extreme than during the COVID rally in 2020. |
Russell 2000 Outperformance Leadership Concentration |
QualityThe current market environment has been challenging for Conestoga's high-quality conservative growth approach, which focuses on profitable companies with sustainable earnings growth. Low-quality factor outperformance has been extreme, with unprofitable stocks outperforming profitable peers by over 1600 basis points in Q3. This dynamic is consistent with early stages of small cap cycles. |
Profitable Sustainable Growth Conservative Beta Margins | |
DefenseMercury Systems was a top performer, benefiting from optimism around defense spending, strong order momentum, and easing supply chain pressures. The company saw improved delivery and margins, with expectations of accelerating growth in secure, mission-critical defense electronics driving investor sentiment higher. |
Defense Spending Electronics Supply Chain Order Growth | |
| 2025 Q2 |
Infrastructure SpendingFederal infrastructure investment driving robust demand in road maintenance and construction markets. Construction Partners has been a leader in seven of the past nine quarters due to this infrastructure spending tailwind. |
Infrastructure Construction Federal Roads Maintenance |
Trade PolicyTariff policies created significant market volatility with Liberation Day announcements causing initial declines followed by rally when 90-day pause was announced. Companies with China exposure like Merit Medical and Mesa Labs faced headwinds from potential tariff costs. |
Tariffs China Trade Liberation Day Policy | |
QualityHigh quality growth characteristics emphasized as portfolio positioning. Low quality stocks outperformed during the quarter with unprofitable companies rising 12.9% versus 6.9% for profitable peers, creating headwinds for the quality-focused strategy. |
Quality Profitable Growth Conservative Characteristics | |
| 2025 Q1 |
Small CapsSmall capitalization stocks declined nearly 11% in the first quarter and were down roughly 20% from their post-election highs. The firm expects their investment approach to outperform in periods of heightened uncertainty, which proved true for most strategies in Q1. |
Russell 2000 Volatility Uncertainty Outperformance Market Cap |
QualityThe portfolio benefited from high-quality factor leadership as profitable companies measured by Return on Invested Capital and EBITDA margins declined less significantly than their high beta, non-earning counterparts during the market selloff. |
ROIC EBITDA Profitability Beta Margins | |
ResilienceCompanies are well positioned to handle tariff challenges with strong pricing power, highly differentiated products or services, and strong balance sheets that enable them to take advantage of economic uncertainty. |
Pricing Power Balance Sheets Differentiation Cash Flow | |
| 2024 Q4 |
AIEnthusiasm for Artificial Intelligence created a more speculative investing environment that proved challenging for Conestoga's investment strategies. AI is a key technology unlocking the true potential of Planet Labs and its vast data engine. |
Artificial Intelligence Speculation Technology |
Small CapsConestoga believes small cap stocks are better positioned headed into 2025. Large caps outperformance over the past 14 years has caused valuation gaps, with historical data showing 96% of similar periods followed by small cap outperformance over subsequent five years. |
Valuation Outperformance Positioning | |
BiotechnologyAlpha Teknova operates in the biotechnology sector providing critical reagents for biopharmaceutical product development. The company reported improving biotech funding environment and better customer order activity, with investors rallying behind promising developments. |
Reagents Funding Development | |
Environmental ServicesMontrose Environmental Group offers end-to-end environmental solutions but has underperformed since the Supreme Court's ruling overturning Chevron Deference, introducing fears about EPA regulation enforcement and environmental compliance requirements. |
EPA Regulation Compliance | |
| 2024 Q3 |
BiotechnologyThe Health Care sector was the largest contributor to relative returns with positions in Alpha Teknova, BioLife Solutions, and iRadimed leading the way. TKNO surged 253% after reporting solid results and calling out an improving biotech funding environment and better customer order activity. However, concerns persist about spending patterns within the biotech and pharmaceutical industry. |
Biotech Funding Reagents Pharmaceuticals Medical |
Infrastructure SpendingConstruction Partners has been a leader in three of the past four quarters, benefiting from U.S. infrastructure spending in two ways: the level of demand and funding available, and supply tightness in hot mixed asphalt plants leading to better pricing and expanding margins. The company complements strong organic growth with opportunistic M&A. |
Infrastructure Construction Asphalt Government Transportation | |
Environmental ServicesMontrose Environmental Group sold off roughly 40% during the quarter following the Supreme Court overturning Chevron Deference, introducing fears that the EPA won't be able to push new regulations or delay enforcement actions of existing environmental regulations. This created uncertainty around the regulatory environment for environmental services companies. |
Environmental Regulation EPA Compliance Services | |
| 2024 Q2 |
BiotechnologyThe portfolio includes multiple biotech-related holdings including BioLife Solutions, Alpha Teknova, and CryoPort serving the life sciences industry. BioLife Solutions exceeded expectations and is seeing increased regulatory approvals for its bio-preservation media. Alpha Teknova provides critical reagents for biopharmaceutical development despite current market headwinds. |
Bio-preservation Reagents Cold Chain Life Sciences Regulatory Approvals |
Environmental ServicesMontrose Environmental Group performed well as a pure play environmental services company offering end-to-end solutions. The company raised full year guidance with largely organic growth and benefits from PFAS regulation momentum which may provide important revenue tailwinds. |
PFAS Environmental Solutions Remediation Treatment Regulation | |
Industrial IoTDigi International provides mission-critical Internet of Things connectivity products and services but faced headwinds as sales cycles took longer than anticipated at Industrial IoT customers. Management is incorporating software into existing hardware to create recurring revenue streams. |
IoT Connectivity Industrial Software Hardware | |
FinTechQ2 Holdings delivered strong results as a digital banking solutions provider, posting solid bookings and signing new contracts with Tier 1 financial institutions. The company's backlog increased 26% and annual recurring revenue grew 13%. |
Digital Banking Financial Technology Banking Software Recurring Revenue Financial Institutions | |
| 2024 Q1 |
Infrastructure SpendingThe Infrastructure Investment and Jobs Act (IIJA) is creating significant demand for construction, repair, and maintenance of America's surface infrastructure. Construction Partners has benefited with 13 consecutive quarters of backlog growth as strong demand offsets seasonal weakness. |
Infrastructure Construction IIJA Backlog Government |
BiotechnologyEarly-stage biopharma companies continue to preserve capital, creating headwinds for companies like Alpha Teknova. However, the company is seeing green shoots and expects a more positive second half of 2024. |
Biopharma Capital Reagents Recovery | |
Healthcare ITHealthcare technology companies face mixed conditions with some regulatory challenges. Semler Scientific experienced reduced visibility due to CDC guidance on reimbursement for peripheral arterial disease testing. |
Healthcare Technology Reimbursement Regulation | |
| 2023 Q4 |
BiotechnologyThe biotechnology and pharmaceuticals industries significantly outperformed the broader market during Q4, creating headwinds for the portfolio due to its large underweight to these areas. The manager notes these are typically unprofitable businesses with zero or insignificant earnings and negative cash flows that benefit from lower interest rates. |
Biotech Pharmaceuticals Unprofitable Interest rates Duration |
Healthcare ITSeveral healthcare technology companies in the portfolio faced challenges, with companies like Phreesia showing strong rebounds after focusing on profitability over pure growth. The sector demonstrated mixed performance with some names benefiting from improved margin profiles. |
Healthcare software SaaS Profitability Margins | |
Industrial ServicesIndustrial companies faced headwinds from economic slowdown concerns, with management teams expressing worries about a weakening economy. Companies like Mesa Laboratories were adversely impacted by slowdowns in pharmaceutical and biotech spending, while others like Construction Partners benefited from infrastructure spending. |
Economic slowdown Infrastructure Spending Margins | |
| 2023 Q3 |
BiotechnologyThe bioprocessing industry continues to be negatively impacted by inventory destocking and elongated sales cycles. Companies like BioLife Solutions and Repligen faced challenges from inventory overhang and longer purchase-approval timeframes. Despite near-term headwinds, the longer-term prospects for bioprocessing tools remain bright. |
Bioprocessing Life Sciences Reagents Filtration Bio Preservation |
Healthcare SoftwareHealthcare technology companies showed mixed performance with Phreesia facing investor skepticism about reaching revenue targets while Definitive Healthcare was added as a new position. The healthcare commercial intelligence and patient processing automation sectors present opportunities despite near-term execution challenges. |
Healthcare IT Patient Processing Commercial Intelligence Revenue Cycle | |
Infrastructure SpendingConstruction Partners benefited significantly from the 2021 Federal infrastructure bill, with project requests for proposals only beginning to increase. The company achieved record backlog levels and beat earnings estimates despite difficult weather conditions, demonstrating the early stages of infrastructure spending impact. |
Infrastructure Road Construction Federal Spending Backlog | |
| 2023 Q2 |
BiotechnologyThe portfolio faced challenges in biotech holdings with inventory destocking headwinds prevalent across the industry. Companies like CryoPort and NanoString experienced pressure from the challenging funding environment and weakened biotech demand, though some recovery is expected in 2024. |
Bioprocessing Life Sciences Funding Environment Inventory Destocking Cold Chain |
Healthcare ITHealthcare technology positions showed mixed results with some companies facing budget pressures from health systems that had strong COVID years. Health Catalyst was sold due to concerns about its shift toward tech-enabled services being a less attractive business model. |
Health Systems Data Analytics Outsourcing Budget Pressure COVID Impact | |
DefenseDefense technology holdings like SoundThinking faced political headwinds with the election of Brandon Johnson as Chicago mayor threatening to eliminate the city's gunshot detection contract. Mercury Systems struggled with supply chain disruptions and defense program delays due to budget uncertainty. |
Gunshot Detection Political Risk Defense Programs Budget Uncertainty Supply Chain | |
Infrastructure SpendingConstruction Partners benefited from broad-based demand for road maintenance and expected future demand from the Infrastructure Investment and Jobs Act. The company posted 34% revenue growth with half being organic growth. |
Road Maintenance IIJA Infrastructure Act Construction Organic Growth | |
| 2023 Q1 |
QualityConestoga focuses on companies with stronger balance sheets, positive cash flows, and more sustainable growth rates, which may be preferred in the current environment of banking sector pressures and financial instability. |
Balance Sheets Cash Flow Sustainable Growth |
HVACAAON, a manufacturer of HVAC systems, was a top contributor with record fourth quarter results, successfully managing supply chain issues and passing through price increases to customers. |
HVAC Supply Chain Pricing Power | |
DefenseAxon Enterprise, maker of TASERs and body cameras for police officers, continued strong growth and was a top contributor for the third consecutive quarter, with management raising 2025 targets significantly. |
Defense Law Enforcement Body Cameras | |
Medical DevicesStevenato Group, which manufactures medical glass vials and delivery systems, was the top contributor in Health Care after posting fourth quarter revenues and earnings that surpassed expectations. |
Medical Devices Packaging Healthcare |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 18, 2026 | Fund Letters | David Neiderer | PL | Planet Labs PBC | Industrials | Commercial Services & Supplies | Bull | New York Stock Exchange | backlog, defense contracts, Geospatial Data, operating leverage, Satellite Imagery | Login |
| Jan 18, 2026 | Fund Letters | David Neiderer | IRMD | IRadimed Corporation | Health Care | Health Care Equipment | Bull | NASDAQ | dividends, earnings growth, Healthcare Technology, Medical devices, Niche Leadership | Login |
| Jan 18, 2026 | Fund Letters | David Neiderer | MAMA | Mama’s Creations, Inc. | Consumer Staples | Packaged Foods | Bull | NASDAQ | Acquisitions, brand growth, consumer staples, margin leverage, retail expansion | Login |
| Jan 18, 2026 | Fund Letters | David Neiderer | COCO | Vita Coco Company, Inc. | Consumer Staples | Beverages | Bull | NASDAQ | Beverages, Brand Power, cash generation, consumer demand, Pricing Discipline | Login |
| Jan 18, 2026 | Fund Letters | David Neiderer | IIIV | i3 Verticals, Inc. | Information Technology | Application Software | Neutral | NASDAQ | execution risk, growth visibility, public sector, recurring revenue, vertical software | Login |
| Jan 18, 2026 | Fund Letters | David Neiderer | BWMN | Bowman Consulting Group Ltd. | Industrials | Engineering & Construction Services | Neutral | NASDAQ | consolidation, engineering, execution risk, Infrastructure Services, project pipeline | Login |
| Jan 18, 2026 | Fund Letters | David Neiderer | ELVA | Electrovaya, Inc. | Industrials | Electrical Equipment | Bull | New York Stock Exchange | battery technology, Electrification, Industrial Mobility, Manufacturing Scale, order growth | Login |
| Jan 18, 2026 | Fund Letters | David Neiderer | ODD | Oddity Tech Ltd. | Consumer Discretionary | Personal Care Products | Bull | NASDAQ | Artificial Intelligence, Beauty Technology, Consumer Data, direct-to-consumer, operating margins | Login |
| Oct 13, 2025 | Fund Letters | David Neiderer | WLDN US | Willdan Group, Inc. | Industrials | Engineering & Construction Services | Bull | NASDAQ | backlog, energy efficiency, growth, infrastructure, Margins, Sustainability, valuation | Login |
| Oct 13, 2025 | Fund Letters | David Neiderer | BWMN US | Bowman Consulting Group, Ltd. | Industrials | Engineering & Construction Services | Bull | NASDAQ | backlog, engineering, growth, infrastructure, M&A, Margins, valuation | Login |
| Jul 22, 2025 | Fund Letters | David Neiderer | TWST | Twist Bioscience Corp. | Health Care | Biotechnology | Bull | NASDAQ | Antibodies, DNA, Ngs, profitability, Syntheticbiology | Login |
| Mar 31, 2023 | Fund Letters | Conestoga Micro Cap Composite | DGII | Digi International, Inc. | Technology Hardware & Equipment | Communications Equipment | Bull | NASDAQ | Asset Monitoring, Enterprise software, IoT, recurring revenue, SaaS, subscription model, technology hardware, Wireless Communication | Login |
| TICKER | COMMENTARY |
|---|---|
| TWST | TWST develops synthetic DNA products and genomic tools for life sciences research and drug discovery. The company delivered another strong quarter, driven by accelerating demand for its DNA synthesis platform and growing adoption in AI-enabled drug discovery. Revenue increased 19% year-over-year, reinforcing confidence that TWST's technology leadership and expanding product portfolio continue to drive market share gains. |
| CYRX | CYRX provides temperature-controlled supply chain solutions for the cell and gene therapy industry. The company reported broad-based growth across its services and products businesses, prompting management to raise full-year revenue guidance. Investors were encouraged by continued expansion of CYRX's clinical trial portfolio and commercial therapy pipeline, reinforcing confidence in the company's long-term growth trajectory. |
| TKNO | TKNO develops critical reagents, media, and other products used in life science research, diagnostics, and biopharmaceutical manufacturing. The stock moved higher as improving biotech funding and increasing customer activity supported a return to sustainable growth. Clinical Solutions revenue increased 85%, reinforcing management's view that customers are shifting from cash preservation toward advancing research and clinical programs. |
| DGII | DGII provides industrial IoT connectivity products, services, and software. The stock moved higher after the company reported record revenue and continued progress shifting toward a more recurring revenue-oriented business model. Annualized recurring revenue increased 50%, reinforcing management's expectation that higher-quality revenue will continue supporting margin expansion and earnings growth. |
| GHM | GHM designs and manufactures highly engineered equipment for the defense, space, energy, and process industries. The company benefited from another quarter of strong execution, as record orders and backlog reinforced confidence in the durability of demand across its core end markets. Record backlog of $533 million supported management's outlook for another year of meaningful revenue growth as recent capacity investments began contributing to improved operating leverage. |
| AORT | AORT develops medical devices and implantable tissues used in the treatment of aortic disease. The stock weakened after first quarter stent graft sales fell short of expectations, reflecting slower-than-anticipated AMDS product adoption and softer international demand. Management indicated reorder activity remains strong and expects adoption to accelerate as additional hospitals complete the approval process. We continue to believe AORT's expanding aortic portfolio and product pipeline provide meaningful long-term growth opportunities. |
| ONT | ONT provides environmental testing, consulting, and remediation services to commercial and government customers. The stock declined after first quarter revenue fell short of the prior year as lower environmental emergency response activity and severe winter weather weighed on results. Management maintained full-year guidance, noting underlying demand remained healthy despite these temporary headwinds. We continue to believe ONT's integrated environmental services platform and expanding client relationships support an attractive long-term outlook. |
| PLMR | PLMR is a specialty property and casualty insurance company focused on catastrophe-related risks. Despite another quarter of strong premium growth and profitability, the stock underperformed as investors remained cautious toward the property and casualty insurance sector following an extended period of outperformance. We remain encouraged by PLMR's disciplined underwriting approach, diversified specialty portfolio, and ability to historically deploy capital into attractive growth opportunities. |
| HLMN | HLMN provides hardware products, merchandising services, and robotic solutions to home improvement retailers. The stock weakened as softer consumer demand, unfavorable weather, and customer destocking weighed on core sales despite continued new business wins and reaffirmed profitability guidance. We continue to believe HLMN's expanding product portfolio, growing professional contractor business, and disciplined acquisition strategy position the company well for long-term growth. |
| IRMD | IRMD develops MRI-compatible intravenous infusion pumps and patient monitoring systems. The stock declined despite another quarter of double-digit revenue growth as investors focused on the pace of the new 3870 pump rollout rather than the company's solid financial performance. Management noted the replacement cycle is expected to build gradually over several quarters. We remain encouraged by the early demand for the 3870 platform and believe the replacement opportunity should support durable long-term growth. |
| NCNO | NCNO provides cloud-based software that enables banks and financial institutions to automate lending, account opening, and other core banking workflows. We believe the company is well positioned to benefit from increasing adoption of AI-enabled banking solutions, supported by its deep customer relationships and mission-critical platform. Growing subscription revenue, expanding profitability, and multiple opportunities to monetize new AI capabilities provide a potential runway for long-term growth. |
| NPKI | NPKI provides composite matting products and specialty infrastructure solutions serving utility, energy, and industrial markets. We were attracted to the company's consistent execution, expanding rental business, and favorable exposure to long-term utility and critical infrastructure investment. Manufacturing capacity expansion, growing market share, and a strong balance sheet position the company to benefit from sustained demand while supporting attractive revenue and cash flow growth. |
| PKE | PKE is a manufacturer of advanced composite materials and engineered products used in aerospace and defense applications. We initiated a position based on the company's growing exposure to missile defense programs, recovering commercial aerospace demand, and long-term sole-source positions on several next-generation aircraft and engine platforms. We believe increasing defense spending, expanding aerospace production rates, and a strong balance sheet provide an attractive foundation for durable earnings growth. |
| NABL | NABL provides cloud-based IT management, cybersecurity, and data protection software to managed service providers. We exited the position as we became more selective within the software sector, despite the company's continued operational execution. While N-able remains well positioned to benefit from growing cybersecurity demand and AI-enabled product innovation, we believe the portfolio's software exposure could be better concentrated in businesses with stronger long-term growth and return potential. |
| PL | PL provides satellite imagery and geospatial analytics that support defense, intelligence, commercial, and environmental applications. We sold the position following a period of exceptional share price appreciation as the company continued to execute well and investor enthusiasm surrounding its defense, AI, and satellite services opportunities drove a significant expansion in valuation. While we remain constructive on the long-term outlook, we believed the shares more fully reflected the company's growth prospects. |
| ERII | ERII develops energy recovery devices that improve the efficiency of desalination and industrial fluid systems. We exited the position as increasing geopolitical uncertainty in the Middle East, project timing delays, and the withdrawal of full-year guidance reduced near-term earnings visibility. Although we continue to believe in the long-term fundamentals of the desalination market, we concluded the investment thesis had become more dependent on factors outside the company's control. |
| USPH | USPH operates outpatient physical therapy clinics and provides industrial injury prevention services. We sold the position as labor cost pressures, reimbursement uncertainty, and slower margin expansion tempered our long-term return expectations despite continued solid demand for rehabilitation services. While management remains focused on driving growth through acquisitions and new hospital partnerships, we believed other healthcare investments offered more compelling upside. |
| VCEL | Vericel Corp. was one of the three biotechnology holdings that contributed more than 600 basis points to Composite returns during the quarter. |
| ELVA | Electrovaya, Inc. was among the strong performers in the Industrials sector during the quarter. |
| TRNS | Transcat, Inc. is one of the top ten equity holdings in the Micro Cap Composite as of 6/30/26, representing 4.40% of assets. |
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