The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Oct 19, 2026
In 3Q26, the Conestoga Small Cap Composite returned -11.22% net of fees, trailing the -9.39% return of the benchmark Russell 2000 Growth Index and bringing year-to-date net performance to -3.58% net of fees compared to +10.71% for the index. The portfolio faced substantial valuation headwinds as higher interest rates sparked broad-based multiple compression across premium-valued equities, with the highest P/E quintile of the benchmark underperforming the lowest quintile by more than 17 percentage points. Negative stock selection and an overweight position in Industrials—the market's worst-performing sector—further hindered relative results, while strong performance in Technology and Health Care served as key offsets. The broader macroeconomic environment during the quarter was dictated by hawkish central bank expectations, elevated inflation data, and surging energy costs, highlighted by WTI crude climbing past $100 per barrel following geopolitical strife in the Middle East. With 10-year and 30-year Treasury yields reaching 25-year highs and the Federal Reserve increasing the federal funds rate by 25 basis points in September, market leadership remained tightly clustered in narrow, large-cap artificial intelligence infrastructure beneficiaries and mega-cap technology names. Portfolio activity reflected disciplined rebalancing, adding to 11 positions and trimming 12. Conestoga initiated new long holdings in Allegro Microsystems, Cavco Industries, and VSE Corp., citing robust secular drivers across automotive electrification, affordable housing, and aviation aftermarket services. Conversely, the team completely exited Bright Horizons Family Solutions and Workiva due to international operating setbacks and perceived long-term artificial intelligence disruption risks, respectively.
Conestoga focuses on owning high-quality, conservative growth companies characterized by durable business models, high returns on invested capital, strong balance sheets, and competitive moats capable of generating superior long-term compounding across full market cycles.
Conestoga expects the market environment to increasingly reward companies with durable business models, disciplined management teams, and the capacity to generate earnings growth within a higher-cost operating regime.
Moderate Conviction Bullish
Market Conviction
Growth Outlook
Risk Appetite
Capital Deployment
Forward Guidance
Language Signal
Perceived Risk
Opportunity Density
Time Horizon
Top Conviction Themes
Key Catalysts
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