| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.21% | -5.8% | -4.7% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| -4.7% | 4.4% | 22.8% | -29.7% | 17.6% | 31.3% |
The Conestoga Mid Cap Composite delivered -5.75% net returns in Q4 2025, underperforming the Russell Midcap Growth Index return of -3.70%. For the full year, the strategy returned -4.73% versus the benchmark's 8.66% gain. Performance was significantly impacted by a market environment that persistently favored low-quality, high-beta, and unprofitable companies, particularly following the April market bottom. The Index experienced remarkably narrow leadership, with gains concentrated in AI-related hardware, defense, and power infrastructure stocks. Negative stock selection in Technology and Industrials sectors drove underperformance, with quality software names like Bentley Systems and Tyler Technologies facing valuation compression as capital flowed to more speculative AI names. Generac and AAON also detracted due to company-specific challenges. Offsetting these were gains in Utilities and Health Care, led by Waste Connections' stability and strong performance from Repligen and IDEXX. The manager maintains conviction in their quality-focused approach, expecting high-quality stocks to eventually reclaim leadership.
Focus on high-quality, steady-earning companies with defensive growth characteristics and strong fundamentals, despite near-term headwinds from market preference for speculative and AI-related names.
The manager expects quality stocks to eventually reclaim leadership after periods of low-quality outperformance, though acknowledges the timing remains uncertain.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 18 2026 | 2025 Q4 | AAON, AZTA, BCPC, BLFS, BMI, BSY, BWMN, COCO, CPRT, CSGP, CSW, CWAN, CWST, CYX, DGII, DSGX, ELVA, ESE, FSV, GNRC, GWRE, HEI.A, IDXX, IIIV, IRMD, IT, JKHY, KRMN, LMAT, MAMA, MEG, MLAB, MMSI, NGEN, NOVT, ODD, OLO, PHR, PL, PLMR, POOL, QTWO, RBC, RGEN, ROAD, ROL, ROP, SPSC, SSTI, STVN, TKNO, TREX, TRNS, TYL, UTI, VCEL, VEEV, VERX, VRSK, WCN, WLDN, WSO, WST | AI, Biotech, defense, healthcare, industrials, mid cap, Quality, technology |
JKHY RGEN ROL IDXX WST POOL VEEV CSGP BSY GNRC |
Conestoga's Mid Cap strategy underperformed in Q4 and 2025 due to market preference for low-quality, AI-related, and defense stocks over traditional quality names. Technology and Industrial holdings faced headwinds while Health Care and Utilities provided some offset. The manager maintains conviction in quality fundamentals despite near-term market dynamics favoring speculation. |
| 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 | defense, growth, Quality, small caps, software, value |
WST US IDXX US |
Conestoga's quality-focused Small Cap strategy faced significant headwinds in Q3 as extreme low-quality factor outperformance drove market leadership. Unprofitable, high beta stocks dramatically outperformed, creating historically narrow market leadership. While challenging near-term, management believes this dynamic is consistent with early Small Cap cycle stages and maintains confidence in their disciplined approach for when fundamentals reassert. |
| 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, industrials, infrastructure, Quality, small cap, tariffs, technology |
BSY HEI.A GWRE IDXX VEEV CPRT WCN WSO ROP POOL AAON FICO NET MTD |
Conestoga's Small Cap Growth strategy returned 4.76% in 2Q25, underperforming the 11.97% benchmark return as unprofitable, high-beta stocks led the market rally following tariff policy relief. The portfolio's quality-focused approach faced headwinds, but management remains confident given small caps' attractive valuations and accelerating earnings growth after years of contraction. |
| May 1 2025 | 2025 Q1 | ALGN, BFAM, CPRT, CSGP, FTNT, GNRC, GWRE, HEI.A, IT, RGEN, ROL, ROP, TECH, TYL, VRSK, WCN, WSO, WST | growth, healthcare, industrials, mid cap, Quality, technology | - | Conestoga's Mid Cap strategy outperformed significantly in Q1 2025, gaining 0.96% versus the benchmark's 7.12% decline. The portfolio's emphasis on high-quality, recession-resistant companies with recurring revenue and strong cash flows proved advantageous during market volatility. Strong stock selection across Consumer Discretionary, Industrials, and Technology sectors drove outperformance, while avoiding volatile semiconductor exposure benefited relative returns. |
| Dec 31 2024 | 2024 Q4 | AAPL, AMZN, EXPO, FOXF, GOOG, JBT, META, MSFT, MSTR, NVDA, PRO, ROAD, SITE, SLP, SMCI, SPSC, SSD, TRNS, TSLA, VCEL | AI, growth, mid cap, small cap, technology, valuation | - | Conestoga's Mid Cap strategy underperformed in Q4 due to not owning speculative AI stocks like Palantir and AppLovin that surged over 100%. The firm maintains conviction in high-quality companies and believes small caps are positioned for outperformance in 2025 based on historical valuation gap analysis showing 96% probability of outperformance. |
| Oct 23 2024 | 2024 Q3 | ANSS, CPRT, CSGP, FIVN, FTNT, GWRE, HEI.A, IDXX, IT, PCOR, POOL, RGEN, ROL, ROP, TFX, TYL, VEEV, VRSK, WCN, WST | growth, healthcare, industrials, mid cap, software, technology | - | Conestoga Mid Cap outperformed in Q3 2024 driven by strong software holdings led by Fortinet's cybersecurity strength and successful SaaS transitions at Guidewire and Tyler Technologies. Healthcare also contributed despite sector weakness. The manager maintains conviction in mid cap outperformance potential given earnings growth expectations and attractive relative valuations versus large caps. |
| Jun 30 2024 | 2024 Q2 | CPRT, CSGP, GWRE, HEI.A, IDXX, IT, LSPD, POOL, RGEN, ROL, ROP, TYL, VEEV, VRSK, WCN, WST | growth, healthcare, mid cap, software, technology | - | Conestoga's Mid Cap strategy underperformed in Q2 amid continued small cap pessimism. The firm sees current conditions as peak negativity similar to past cycles, with small cap valuations at early 2000s lows. Healthcare and Real Estate holdings detracted while Industrials outperformed. Management maintains conviction in long-term outperformance potential despite challenging environment. |
| Apr 15 2024 | 2024 Q1 | AAPL, AXON, CCCS, CWST, DGII, EXPO, MRCY, MSTR, NEOG, NVDA, PLOW, PRO, PYCR, ROAD, SLP, SMCI, SPSC, TSLA, VCEL, WK | growth, healthcare, industrials, mid cap, Performance, technology | - | Conestoga's Mid Cap strategy returned 5.44% in Q1 but lagged the benchmark's 9.50% as markets favored higher growth, more speculative names. Stock selection challenges in Technology and Industrials offset gains from waste management and salvage auction leaders. The team maintains their disciplined growth approach despite market preference for momentum-driven performance. |
| Dec 31 2023 | 2023 Q4 | ALGN, ANSS, CGNX, CPRT, CSGP, EXPO, FIVN, FTNT, HEI.A, IDXX, IT, JKHY, MTD, MTN, ROL, ROP, VEEV, VRSK, WCN, WST | growth, healthcare, industrials, mid cap, Quality, technology | - | Conestoga's Mid Cap strategy returned 11.00% in Q4, trailing the benchmark's 14.55% as low-quality stocks outperformed. Health Care and Technology holdings faced headwinds while sector allocation helped. The firm maintains its quality-focused approach, seeking companies with sustainable earnings growth and strong competitive advantages despite market volatility and valuation concerns. |
| Sep 30 2023 | 2023 Q3 | BALL, CGNX, CPRT, CSGP, FDS, FTNT, GGG, GNRC, GWRE, HEI.A, IDXX, POOL, RGEN, ROL, ROP, VEEV, VRSK, WCN, WST | growth, healthcare, interest rates, mid cap, Quality, technology |
CSWI OMCL |
Conestoga's Mid Cap strategy underperformed in Q3 due to weak stock selection in Industrials and Technology, particularly Fortinet's billing miss and Graco's demand challenges. Health Care holdings like Repligen and Veeva provided relative strength. The manager maintains focus on quality companies with strong fundamentals to navigate higher rates and potential recession. |
| Jun 30 2023 | 2023 Q2 | AAPL, ANSS, CPRT, CSGP, FDS, GGG, GWRE, HEI.A, IDXX, MSFT, MTD, RGEN, ROL, ROP, TSCO, VRSK, WCN, WST | consumer discretionary, growth, healthcare, industrials, mid cap, technology | - | Conestoga's Mid Cap strategy outperformed in Q2 2023 with an 8.70% return, driven by strong stock selection in Consumer Discretionary and Health Care. Technology holdings showed mixed results while biotech-related positions faced industry headwinds. The team maintains its high-quality growth focus and expects improvement in challenged sectors by 2024. |
| 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, Outperformance, Performance, small cap, stock selection, technology | DGII | Conestoga's small cap growth strategy outperformed significantly in Q1 2023, rising 12.26% versus 6.07% for the Russell 2000 Growth Index. Technology stocks rebounded after 2022 underperformance while banking turmoil highlighted the value of quality companies with strong balance sheets. AAON and Axon Enterprise led performance with record results and strong growth trajectories. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 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. Given anticipated economic growth tailwinds from pro-growth and deregulatory government policies, there is a compelling case for Small Caps to outperform Large Caps for the first time since 2020. |
Small Caps Earnings Growth Valuation Discount |
QualityThe market experienced extreme leadership concentrated in historically narrow segments, with low-quality, high-beta, speculative stocks dominating returns. Historically, new Small Cap bull markets start with low-quality leadership in the first six months, followed by high-quality stocks gradually closing the gap and reclaiming leadership. From mid-October to year-end, profitable stocks outperformed unprofitable counterparts by over 5%. |
Quality Profitable Stocks Market Leadership | |
BiotechnologySmall Cap Biotech/Pharmaceutical stocks emerged as significant outperformers in the fourth quarter, representing 132% of the Russell 2000 Growth Index's total returns in Q4 alone, after comprising just 11% through the third quarter. The gains in Small Cap Biotech/Pharmaceutical stocks more than offset combined losses in Technology, Industrial, and Consumer Discretionary stocks. |
Biotechnology Pharmaceuticals Healthcare | |
Trade PolicyThe White House announced a comprehensive new tariff strategy in February, causing stock prices to plummet by over 20% in weeks. By early April, potential modifications to tariff policies that could mitigate their impact led to a dramatic turnaround, with the Russell 2000 Growth Index surging nearly 50% over six months. The U.S. and China agreed to temporarily halt newly introduced tariffs and begin negotiations on a broader deal. |
Tariffs Trade Policy China | |
Credit StressConcerns about credit quality in the private credit and regional banking sectors emerged in the fourth quarter, underscored by the bankruptcy filing of auto parts supplier First Brands and allegations of fraud at subprime auto lender Tricolor. JPMorgan CEO Jamie Dimon remarked that when you see one cockroach, there are probably more, leading to a 10% correction in the Russell 2000 Growth Index. |
Credit Quality Regional Banking Private Credit | |
| 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 performing 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. The firm believes this is consistent with early stages of new Small Cap cycles. |
Profitable Sustainable Growth Conservative Fundamentals | |
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 is 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. The company reported solid fiscal 2Q results with organic revenue increases and record backlog figures. |
Infrastructure Construction Federal Roads Backlog |
Trade PolicyTariff policies created significant market volatility during the quarter, with Liberation Day announcements causing initial declines followed by relief rallies. Multiple portfolio companies including Merit Medical, Descartes Systems, and Simulations Plus were impacted by tariff concerns, particularly those with Chinese operations or supply chain exposure. |
Tariffs China Trade Supply Chain Policy | |
QualityThe portfolio emphasizes profitable companies with conservative growth characteristics, which underperformed during periods when unprofitable, high-beta stocks led market gains. Loss-making stocks in the Russell 2000 rose 13.1% while profitable companies rose 6.8%, creating headwinds for the high-quality growth approach. |
Profitable Conservative Growth Beta Fundamentals | |
| 2025 Q1 |
QualityConestoga's emphasis on higher-quality, conservative growth companies with higher recurring revenue, more stable product cycles, and less capital-intensive investment requirements was key to outperformance. The 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. |
Recurring Revenue ROIC EBITDA Conservative Growth |
ResilienceThe commentary emphasizes companies with recession-resistant business models and defensive characteristics that are highly valued during uncertain market periods. Companies like Rollins, Waste Connections, and Verisk are highlighted for their stable, sustainable growth and strong free cash flow generation that provides stability during volatile markets. |
Recession Resistant Defensive Stable Growth Free Cash Flow | |
| 2024 Q4 |
AIEnthusiasm for Artificial Intelligence created a speculative investing environment that proved challenging for Conestoga's strategies. AI-related hardware demand drove computer hardware industry surge over 100% in Russell 2000 Growth Index. Conestoga's lack of exposure to AI hardware was a key source of underperformance. |
Hardware Speculation Technology |
Small CapsConestoga believes small cap stocks are better positioned headed into 2025. Large caps outperformance over past 14 years caused valuation gap where small caps trade at discount to large caps. Historical analysis shows 96% probability of small cap outperformance over subsequent five years when valuation gaps this large exist. |
Valuation Outperformance Positioning | |
Infrastructure SpendingConstruction Partners benefited from robust demand in road maintenance and infrastructure market, partially driven by Federal government infrastructure investment. The company made platform acquisition in Texas boosting revenue by $530 million at over 22% margin, enabling them to meet fiscal 2027 targets two years early. |
Federal Roads Acquisition | |
| 2024 Q3 |
CybersecurityFortinet led portfolio returns as the cybersecurity leader reported significant beats on billings and accelerating bookings growth, indicating the firewall product cycle may have turned positive. The company is managing inventory well and operating margins surprised to the upside. |
Cybersecurity Software Networking Enterprise Software |
Enterprise SoftwareSoftware holdings were top contributors with Guidewire, Tyler Technologies, and Fortinet all reporting better-than-expected results. These companies have become key suppliers to their respective industries with strong conversion to SaaS models driving scale benefits and earnings growth. |
SaaS Vertical Software Cloud | |
Waste ManagementWaste Connections was the sole utilities holding but failed to keep pace with strong index utilities returns. The company remains a long-time holding in the waste hauling sector. |
Waste Management Utilities | |
| 2024 Q2 |
Small CapsManager discusses the prolonged underperformance of small cap stocks versus large caps, noting this feels like peak pessimism for small caps. They believe the current environment parallels past cycles like the Nifty Fifty and Dot Com eras, with small cap valuations near early 2000s lows. |
Valuation Cycle Outperformance |
| 2024 Q1 |
AIThe market's advance remained heavily dependent on AI-related stocks, with NVIDIA continuing its meteoric rise and Super Micro Computer benefiting from the surge in artificial intelligence-related stocks. The AI theme contributed significantly to market performance across multiple cap segments. |
Artificial Intelligence NVIDIA Data Centers Technology |
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 Government Spending Backlog | |
Waste ManagementWaste management companies performed well given the consistency of their business models, with favorable price vs. cost dynamics, improved labor, and solid volumes. Casella Waste Systems is uniquely positioned with excess landfill capacity in a capacity constrained region. |
Waste Landfill Pricing Power Utilities | |
| 2023 Q4 |
QualityConestoga focuses on higher-quality companies with durable competitive advantages, balance sheet strength, and capable management teams. The portfolio faced stylistic headwinds as low-quality, unprofitable businesses outperformed during the quarter, particularly after the October 27th market bottom. |
Quality Competitive Advantages Balance Sheet Management |
Healthcare SoftwareHealthcare technology positions including Veeva Systems faced challenges from a worsening macro environment due to war, inflation, political uncertainty, and challenging funding environment. The company reduced revenue outlook for fiscal years 2024 and 2025. |
Healthcare Software SaaS Life Sciences Funding | |
CybersecurityFortinet, the worldwide market share leader in network security firewalls, faced weaker demand following three consecutive years of elevated growth. Billings growth missed expectations for the second consecutive quarter, resulting in lowered 2023/2024 guidance. |
Cybersecurity Firewalls Network Security Billings | |
| 2023 Q3 |
QualityConestoga emphasizes higher-quality companies with positive earnings, higher margins, higher returns on equity, and lower debt levels. This quality focus is positioned to outperform in an environment facing higher interest rates and potential recession. |
Profitability Margins Debt Returns |
RatesHigher interest rates are a central concern affecting market performance and company valuations. The Federal Reserve's higher-for-longer positioning is impacting market sentiment and creating headwinds for interest rate sensitive industries. |
Federal Reserve Interest Rates Borrowing Costs | |
| 2023 Q2 |
GrowthThe manager focuses on high quality conservative growth companies with sustainable earnings growth and strong balance sheets. They employ a time horizon arbitrage approach by identifying higher quality companies capable of growing through multiple business cycles. |
Quality Earnings Small Caps |
AIInvestor enthusiasm for Artificial Intelligence provided momentum for large technology stocks, with seven large tech stocks responsible for nearly all of the S&P 500's return in the first six months of 2023. |
Technology Momentum | |
| 2023 Q1 |
BankingSilicon Valley Bank's unprecedented depositor flight and transition to FDIC receivership created banking sector turmoil. Rising interest rates created asset-liability mismatches for banks as depositors sought higher returns while limiting uninsured deposits. Many small- to medium-sized banks saw sharp stock price declines as investors reassessed viability. |
Regional Banks Credit Risk Interest Rates Deposits FDIC |
TechnologyTechnology sector benefited from rotation back to growth stocks after underperforming in 2022. Higher-growth technology stocks rebounded as market favored profitable companies. Software companies like ALTR, SPSC, and MODN showed resilience with strong revenue growth and margin expansion despite macroeconomic pressures. |
Software Growth Stocks Cloud SaaS Revenue Growth | |
HVACAAON demonstrated strong performance with 86% sales growth and record results. Company successfully managed supply chain issues and passed through price increases to customers. Demand remained strong with backlogs up over 110% organically. |
HVAC Equipment Supply Chain Pricing Power Backlogs | |
HealthcareHealthcare sector showed positive performance with medical supplies companies like Stevenato Group and West Pharmaceuticals posting strong results. Strategy benefited from underweight to weak-performing biotechnology industry while medical device and supply companies demonstrated resilience. |
Medical Devices Medical Supplies Biotechnology Healthcare Equipment |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 18, 2026 | Fund Letters | Derek Johnston | POOL | Pool Corp. | Industrials | Trading Companies & Distributors | Bear | NASDAQ | cashflow, Discretionary, Distribution, Housingcycle, Margins | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | VEEV | Veeva Systems Inc. | Information Technology | Application Software | Bear | New York Stock Exchange | cloud, Execution, lifesciences, Software, valuation | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | CSGP | CoStar Group, Inc. | Real Estate | Real Estate Services | Bear | NASDAQ | Competition, Investment spend, Margins, Marketplaces, realestate | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | BSY | Bentley Systems, Inc. | Information Technology | Application Software | Bear | NASDAQ | infrastructure, Recurringrevenue, Reinvestment, Software, valuation | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | GNRC | Generac Holdings, Inc. | Industrials | Electrical Components & Equipment | Bear | New York Stock Exchange | Cyclicality, datacenters, Energyresiliency, Margins, Power generation | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | JKHY | Jack Henry & Associates, Inc. | Information Technology | Application Software | Bull | NASDAQ | Corebanking, Longduration, Modernization, Recurringrevenue, stability | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | RGEN | Repligen Corp. | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | biologics, Bioprocessing, Consumables, Destocking, Margins | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | ROL | Rollins, Inc. | Consumer Discretionary | Commercial Services & Supplies | Bull | New York Stock Exchange | cashflow, defensive, Pricingpower, Recurringrevenue, services | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | IDXX | IDEXX Laboratories, Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | Defensiveness, diagnostics, Margins, Recurringrevenue, Veterinary | Login |
| Jan 18, 2026 | Fund Letters | Derek Johnston | WST | West Pharmaceutical Services, Inc. | Health Care | Health Care Supplies | Bull | New York Stock Exchange | biologics, healthcare, Injectables, Margins, Packaging | Login |
| Oct 13, 2025 | Fund Letters | Derek Johnston | WST US | West Pharmaceutical Services, Inc. | Health Care | Health Care Equipment | Bull | NYSE | biologics, FCF, growth, innovation, Margins, Packaging, pharma | Login |
| Oct 13, 2025 | Fund Letters | Derek Johnston | IDXX US | IDEXX Laboratories, Inc. | Health Care | Diagnostics & Research | Bull | NASDAQ | Consumables, diagnostics, growth, innovation, Margins, Software, Veterinary | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | NET | Cloudflare, Inc. | Information Technology | IT Services | Bull | NYSE | cloud, cybersecurity, Edge, growth, Platforms | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | BSY | Bentley Systems, Inc. | Information Technology | Application Software | Bull | NASDAQ | ARR, Government, growth, infrastructure, Software | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | MTD | Mettler-Toledo International Inc. | Health Care | Health Care Equipment | Bear | NYSE | China, Cyclicality, Geopolitics, instruments, valuation | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | HEI.A | HEICO Corp. | Other | Aerospace & Defense | Bull | NYSE | Aerospace, aftermarket, Aviation, compounding, Maintenance | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | GWRE | Guidewire Software, Inc. | Information Technology | Application Software | Bull | NYSE | cloud, Insurance, Margins, Modernization, SaaS | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | IDXX | IDEXX Laboratories, Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | Consumables, diagnostics, Margins, Secular, Veterinary | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | VEEV | Veeva Systems Inc. | Health Care | Health Care Technology | Bull | NYSE | CRM, pharma, Recurring, SaaS, Workflows | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | CPRT | Copart, Inc. | Industrials | Diversified Support Services | Bull | NASDAQ | Auctions, compounding, Insurance, Margins, Salvage | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | WCN | Waste Connections, Inc. | Industrials | Environmental & Facilities Services | Bull | NYSE | cashflow, Contracts, Pricing, Recycling, waste | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | WSO | Watsco, Inc. | Industrials | Trading Companies & Distributors | Bull | NYSE | Distribution, HVAC, Replacement, Sunbelt, Transition | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | ROP | Roper Technologies, Inc. | Information Technology | Application Software | Bull | NASDAQ | Acquisitions, cashflow, compounder, Recurring, Software | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | POOL | Pool Corporation | Industrials | Distributors | Bull | NASDAQ | cashflow, Distribution, Interest rates, Leisure, Maintenance | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | AAON | AAON, Inc. | Industrials | Building Products | Bull | NASDAQ | datacenters, efficiency, growth, HVAC, Secular | Login |
| Jul 22, 2025 | Fund Letters | Derek Johnston | FICO | Fair Isaac Corporation | Information Technology | Data Processing & Outsourced Services | Bull | NYSE | analytics, Credit, Moats, Scoring, Software | Login |
| Sep 30, 2023 | Fund Letters | Conestoga Mid Cap Composite | CSWI | CSW Industries, Inc. | Industrials | Industrial Machinery | Bull | NASDAQ | Earnings Compounder, high margins, HVAC, Industrial, Maintenance, Niche Products, Repair, Residential, Return on Investment, Value-added products | Login |
| Sep 30, 2023 | Fund Letters | Conestoga Mid Cap Composite | OMCL | Omnicell, Inc. | Health Care | Health Care Technology | Bear | NASDAQ | business transformation, Hardware to Software, Healthcare Technology, Hospital Spending, margin pressure, Medication Management, recurring revenue, Revenue Mix | Login |
| Mar 31, 2023 | Fund Letters | Conestoga Mid 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 |
|---|---|
| AAON | AAON declined after the company reported operational challenges related to a recent system rollout. |
| AZTA | but it was outweighed by weakness in Vericel Corp. (VCEL), Neogen Corp. (NGEN), and Azenta, Inc. (AZTA). |
| BMI | BMI is a leading provider of water meters and connected smart-metering solutions primarily for municipal water utilities. The company exhibits hallmarks of high quality, operating in an oligopolistic water-metering market providing must-have solutions, replacement-driven recurring revenue, healthy capital structure, and good management. |
| BSY | BSY provides infrastructure engineering software used in the design and operation of transportation, utilities, and industrial assets. The stock traded lower as revenue growth decelerated modestly and margins were affected by increased investment in product development and go-to-market initiatives. |
| BWMN | BWMN provides multi-disciplinary engineering, planning, and consulting services to the built environment. Shares retraced gains in the fourth quarter after the company reported third-quarter revenue that significantly missed consensus estimates, despite an earnings beat. The revenue shortfall, combined with subsequent insider selling activity in December, contributed to negative sentiment. Bowman Consulting Group, Ltd. (BWMN) also suffered after reporting weaker-than-expected third quarter revenue results which weighed on investor sentiment in what had been a strong year-to-date performer. |
| COCO | Coconut beverage producer Vita Coco returned nearly +25% for the quarter on better-than-expected earnings and reduced concerns around potential tariff risks. |
| CPRT | we recently trimmed some of our mega-cap tech holdings and other outperformers and used the proceeds to buy more of our underperforming holdings such as Copart, Inc. |
| CSGP | The shares of CoStar Group, Inc., the global leader in digitizing real estate, declined in the fourth quarter, due to concerns that the company's residential Homes.com platform will continue to require significant capital investment and competitive worries that Google's new real estate advertisement format and Zillow's OpenAI partnership could divert traffic from Homes.com in the years ahead. |
| CSW | CSW Industrials, Inc. (CSW) is a diversified industrial growth company focused on niche, value added products across three segments: Contractor Solutions, Specialized Reliability Solutions, and Engineered Building Solutions. The portfolio is oriented around products that help customers do the job faster, avoid failures, and protect expensive assets—with core end markets spanning HVAC/R, plumbing, electrical, architecturally-specified building products, and industrial reliability. The core business is Contractor Solutions (~72% of TTM revenue, ~84% of Adj. EBITDA), which sells a broad set of replacement parts, installation accessories, and maintenance and repair tools predominantly used by residential and commercial HVAC and plumbing contractors. Products include HVAC motors and capacitors, evaporator coils, air handlers, condensate pads, pans, pumps, line-set covers, thread sealants, and maintenance chemicals – supported by well-known brands such as RectorSeal, Aspen, MARS, and others. Contractors often ask for CSW products by name and have been using the brands for many years, resulting in pricing power for CSW. Also, management has successfully executed an acquisition playbook in this segment, adding products which immediately benefit from gaining broader distribution through CSW's distribution network. |
| CWAN | With Clearwater, the market was overly focused on the debt and large acquisitions while missing how core Clearwater was growing strongly still and had a tailwind from rate cuts. Clearwater Analytics ended getting bought out and would've netted me a large gain but in the meantime due to the size of the position I took and the options leverage, the weak performance was causing me to question my conviction until I decided to sell my position for a 30% loss, 2 weeks before the buyout news came through. |
| CWST | The fortunes of Casella Waste Systems waxed and waned during the quarter. At the beginning of the quarter, Casella's shares slipped ahead of its fiscal quarterly report. After showing revenues and earnings higher than anticipated, along with better full-year guidance, its share price recovered and ended the quarter up 3% for this provider of solid waste collection, transfer, disposal, and recycling services for residential, commercial, municipal, and industrial customers. |
| DGII | DGII provides connectivity solutions, including routers, gateways, and embedded systems. The stock performed well in the quarter as recurring services revenue grew faster than expected and margins expanded with mix shift toward software and subscriptions. Improved demand visibility in industrial and infrastructure end markets, along with disciplined expense management, supported earnings upside. |
| DSGX | In terms of full year performance effects, stock selection was most challenging in Technology, where fears of the AI eating Software theme gripped the market and caused significant multiple contraction across the group, with SPS Commerce, Inc. (SPSC), Vertex, Inc. (VERX), and Descartes Systems Group, Inc. (DSGX) experiencing the largest negative effects in our portfolio. |
| ELVA | ELVA designs and manufactures lithium-ion battery systems for industrial mobility and energy storage applications. Shares traded higher as order activity strengthened and progress toward commercial scale improved revenue visibility. Advancements in customer adoption and manufacturing execution supported optimism around future growth. The market responded positively to their differentiated battery technology and increasing exposure to electrification trends across material handling and industrial end markets. |
| FSV | Our lone position in Real Estate during the fourth quarter, FirstService, was the portfolio's largest negative contributor. The company specializes in residential management and storm restoration, but it struggled following a soft Q3, as its newly acquired commercial roofing business experienced a slower than expected conversion of its backlog. Additionally, certain large projects have been on hold following a volatile macro environment. This has been happening for several quarters, and the lack of progress has been disappointing. We expect growth to bottom in Q4 and then pick back up, driven by expansion in its remaining business lines. |
| GNRC | Generac Holdings, Inc. (GNRC) was a bottom performer in the SMID Cap strategy in the fourth quarter. Generac's most profitable product group is Home Standby (HSB) generators, and in 2025, the U.S. experienced the fewest power outages (related to weather or other grid failures) since 2015. The lower demand for HSB will also create slightly lower margins for the year. The Commercial and Industrial segment is doing well with sales increasing 9% over last year. |
| GWRE | Shares of P&C insurance software vendor Guidewire Software, Inc. declined during the quarter following strong gains earlier in the year, as the broader software sector came under pressure. After a multi-year transition period, we think Guidewire's cloud migration is largely complete. We believe cloud will be the sole path forward, with annual recurring revenue benefiting from new customer wins and migrations of existing customers to InsuranceSuite Cloud. |
| HEI.A | HEICO Corp. (HEI.A), IDEXX Laboratories, Inc. (IDXX) and Rollins, Inc. (ROL) were the three largest contributors to portfolio returns for the year. |
| IDXX | Veterinary diagnostics leader IDEXX Laboratories, Inc. contributed to performance after again reporting better-than-expected financial results. Foot traffic to veterinary clinics in the U.S. remains modestly negative but is poised to recover over the next several years. Even so, IDEXX's excellent execution has enabled the company to continue delivering robust performance. |
| IIIV | IIIV delivers integrated software and payment solutions to the public sector and healthcare markets. The stock faced pressure during the quarter after management issued a conservative growth forecast for fiscal 2026. The company cited timing delays in project implementations within its utilities and transportation verticals as a primary factor. i3 Verticals, Inc. (IIIV) sagged after providing lower than expected near-term guidance in their quarterly results, but we believe the longer-term outlook remains bright given their positioning for strong recurring revenue growth. |
| IRMD | IRMD develops, manufactures, and markets MRI-compatible medical devices, including infusion pump systems and patient monitors. The company delivered record third-quarter revenue and earnings, prompting management to raise full-year guidance. This strong operational performance, combined with the announcement of a special cash dividend, underscored the company's financial health and commitment to shareholder returns. |
| IT | Gartner is a global leader in research services, with a long history of delivering valuable insights and data to business and technology leaders. In our view, the company has the best brand in IT research, supported by its scale and a compelling customer value proposition. These advantages have driven a long history of strong organic growth and robust free-cash-flow conversion. The stock price has declined meaningfully from recent highs due to investor concerns surrounding AI-related disruption. We believe these concerns are overstated. In our view, Gartner is well-positioned to reaccelerate organic growth due to continued high customer engagement and the large opportunity to sell to new and existing customers. We took advantage of the opportunity to buy shares in this well-managed company at a bargain price. |
| JKHY | Jack Henry & Associates, Inc. is a leading provider of technology solutions for community banks and credit unions. Shares rose after the company reported better-than-expected quarterly results and raised financial guidance. Adjusted revenue grew 9% and earnings per share increased 21% in the quarter, reflecting a favorable demand environment, market share gains, and strong margin expansion. |
| KRMN | KRMN is a defense technology company specializing in the design and manufacturing of highly engineered, mission-critical systems for a diverse set of existing and next-generation space, missiles, hypersonic, and defense programs. KRMN generates mid-teens or better organic revenue growth that is complimented by tuck-in M&A. |
| LMAT | while Stevanato Group SpA (STVN) and LeMaitre Vascular, Inc. (LMAT) were the detractors. |
| MAMA | stocks scaling very nicely and entering the small-cap sweet spot (REAL, MAMA, CBLL, KRMD). |
| NGEN | but it was outweighed by weakness in Vericel Corp. (VCEL), Neogen Corp. (NGEN), and Azenta, Inc. (AZTA). |
| NOVT | Novanta (NOVT) supplies proprietary precision components and systems used in mission-critical medical and advanced industrial applications. |
| ODD | ODD is a consumer technology platform built to transform the global beauty and wellness industry. ODD builds and scales digital-first brands with artificial intelligence, molecular discovery, computer vision, and a data science-based online platform. The company monetizes all products on a direct-to-consumer basis and has no wholesale exposure. ODD has scaled their business quickly, achieving greater than 20% operating margins while still growing their revenue base by greater than 20% to an estimated $800 million in 2025. |
| PHR | PHR provides a SaaS-based platform that automates patient intake, payments, and clinical data for healthcare organizations. The stock declined in the fourth quarter following the release of fiscal third-quarter results. While PHR exceeded estimates for both revenue and earnings, the company provided forward revenue guidance that was viewed as conservative by investors, prompting valuation compression. Phreesia, Inc. (PHR) also struggled in the quarter on back of more conservative forward guidance provided in their third quarter results, though we were encouraged by their improving profitability and expanding network of clients. |
| PL | Top 3 contributors to absolute performance: ATEC, PL, AGX |
| POOL | Pool Corp. distributes swimming pool supplies, equipment, and accessories. The industry remains range-bound, with limited catalysts and sluggish trends in new-home sales and construction. We liquidated the position and redeployed the proceeds into other areas with better growth prospects. Pool sank by -25% while held in the quarter. |
| RBC | RBC Bearings, Inc. (RBC) manufactures engineered precision bearings and related products for customers in the aerospace, defense, and industrial markets. It is a market leader with a strong reputation for technical capabilities, product quality, and on-time delivery. RBC outperformed in 4Q as its quarterly results beat consensus estimates on both revenue and EPS. Its Aerospace and Defense business (A&D, 44% of total revenue) was particularly strong, essentially 'firing on all cylinders.' Management expects strong growth in its A&D backlog and is in the process of adding capacity to meet demand. Growth in its Industrial business (56% of total revenue) remains sluggish, but management has significantly improved the profit margins of this business and is now in the process of implementing growth initiatives. We continue to like RBC's leadership team, well-established strategic playbook, as well as its opportunities for growth and capital deployment. |
| RGEN | Other strong performers in the quarter, primarily driven by strong earnings results, included Repligen |
| ROAD | ROAD is a vertically integrated civil infrastructure company constructing roadways and highways across the Sunbelt. The stock underperformed during the quarter following the release of fiscal fourth-quarter results, where earnings per share missed analyst estimates. |
| ROL | HEICO Corp. (HEI.A), IDEXX Laboratories, Inc. (IDXX) and Rollins, Inc. (ROL) were the three largest contributors to portfolio returns for the year. |
| ROP | After a decade-long partnership with Roper Technologies, we have made a strategic decision to exit our position. Our decision to sell was based on three factors. Firstly, Roper's organic growth rates have begun to lag its pure-play software peers. Secondly, we believe many of these businesses are approaching market saturation, which limits their future growth prospects. Lastly, the valuation no longer provides an attractive margin of safety given the first two challenges. |
| SPSC | SPSC reported a more muted near-term business outlook. Whereas there are certainly some environmental issues we think are temporary, we discovered recently that management made a poor acquisition. As a result, an activist has targeted the firm. We continue to believe the business is advantaged and see multiple avenues for value creation. |
| STVN | Pulling back by -22% was Stevanato Group, which manufactures glass packaging for syringes, autoinjectors, and other pharmaceutical needs. Recent revenues and earnings each exceeded expectations, though management was conservative and merely reaffirmed its guidance for the balance of its fiscal year. There may have been some advanced purchasing from customers, though Stevanato's core business grew well, and we added to our position on the weakness. |
| TKNO | Alpha Teknova (TKNO) was the largest detractor in our long book during the fourth quarter. Alpha Teknova is a leading producer of critical reagents for the discovery, development, and commercialization of novel therapies, vaccines, and molecular diagnostics. One of our favorite archetypes is companies that make the 'picks & shovels' of their industry. Alpha Teknova doesn't invent new medicines or vaccines, but it provides the tools like reagents and lab supplies for over 3,000 biotech customers to grow cells, mix chemical reactions, and run experiments. We believe the beauty of its business model is that Alpha Teknova's products generate recurring revenues with high switching costs since customers do not want to refile technical paperwork with the FDA on their drug development programs. Unfortunately, the company has faced macro headwinds, including a multi-year pandemic hangover, a poor biotech funding environment, and concerns about government and academic spending priorities, all of which have caused customer caution. Based on our analysis, we believe Alpha Teknova's recurring revenue model and end‑market positioning offer compelling upside potential as industry conditions normalize. |
| TREX | TREX Company, a leader in composite decking, was our biggest laggard in Industrials during the fourth quarter, as an increasingly competitive environment and weaker end-market trends led to poor Q3 results. TREX saw business fall off after Labor Day, which is inconsistent with results from other peers and surveys. It was quite surprising and may be a function of its higher DIY business. Regardless, this contradicts our thesis, so we exited the position. |
| TRNS | while Transcat, Inc. (TRNS) saw persistent organic service revenue weakness and margin compression following a series of acquisitions which weighed on profitability and investor sentiment. |
| TYL | TYL lagged in the quarter as investor preference shifted away from software names. While the company's long-term fundamentals and recurring revenue model remain intact, near-term growth visibility and valuation considerations weighed on relative performance. |
| UTI | Top 3 detractors to absolute performance: UTI, INOD, AMSC |
| VCEL | Vericel is a medical device company specializing in cartilage repair and burn care. VCEL's autologous cartilage repair product is differentiated and value-added for younger patients with knee cartilage defects of 2-4 cm. The company recently swung to profitability, and we see margin expansion as revenue ramps. Our intrinsic value estimate is $50 per share. |
| VEEV | Veeva Systems Inc. provides industry cloud solutions to the global life sciences industry. The company delivered solid fiscal third-quarter results and issued guidance above the Street. Veeva management reiterated confidence in achieving its 2030 financial targets, maintaining that the current focus on competitive dynamics with Salesforce.com in the customer relationship management (CRM) market (20% of Veeva's total revenues) does not undermine its long-term trajectory. Despite these positives, the stock sold off by -25% on competitive concerns in the CRM market as Veeva projected lower Vault CRM customer versus its initial expectations. |
| VERX | Vertex detracted from relative quarterly performance |
| VRSK | From a stock selection perspective, our positions in Verisk Analytics, Inc. (VRSK) and Watsco, Inc. (WSO) were the biggest laggards. |
| WCN | Our lone position in Utilities, Waste Connections, Inc. (WCN), was flat for the quarter but the stability of the company's earnings and cash flows provided the downside capture we've come to expect. |
| WLDN | Willdan Group, Inc. (WLDN) posted a full year total return of 172%, successfully capitalizing on surging demand for energy efficiency and grid modernization services, particularly from the AI-driven data center market and large government contracts. |
| WSO | Relative weakness was also driven by Watsco amid softer HVAC trends |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
