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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Oct 19, 2026
The Conestoga Micro Cap Composite delivered strong relative capital preservation during the third quarter of 2026, declining -0.83% net of fees compared to a -12.15% drop for the benchmark Russell Microcap Growth Index, generating over 1,100 basis points of outperformance. Year-to-date through September 30, 2026, the strategy generated a net return of +12.50% net of fees, outpacing the benchmark return of +8.50%. The strategy maintained a concentrated portfolio of quality micro-cap growth equities, ending the period with a cash weighting of 3.4% and total composite assets of $56.2 million across 4 member portfolios within the firm's $3.8 billion institutional asset base. The broader market backdrop was heavily dictated by macroeconomic volatility, characterized by stubborn inflation prints, resilient labor conditions, and a 25 basis point rate hike by the Federal Reserve in September that lifted the federal funds rate to 3.75%-4.00%. Long-duration benchmark assets faced aggressive valuation compression, exacerbated by geopolitical friction in the Middle East that pushed crude oil prices above $100 per barrel. Despite these headwinds, the portfolio benefited from disciplined stock selection across secular growth niches, which shielded capital against factor rotations away from low-quality, unprofitable speculative equities. Relative outperformance was anchored by strong operational gains in Health Care, Technology, and Financials. Core contributors included bioprocessing and synthetic biology providers Twist Bioscience and BioLife Solutions, alongside enterprise software businesses. The strategy actively deployed capital by initiating new positions in Standex International and EZCORP, while exiting Hillman Solutions due to slowing organic growth and rising balance sheet leverage, and harvesting Bowman Consulting Group following an announced take-private acquisition.
Conestoga's investment philosophy focuses on owning high-quality micro-cap companies with durable business models, conservative growth profiles, strong management teams, and the capacity to compound earnings sustainably through full market cycles.
Conestoga believes the market will increasingly reward companies with durable business models, strong management teams, and the ability to grow through a higher-cost operating environment as earnings growth moderates.
Moderate Conviction Bullish
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