Conestoga Capital Advisors, an asset management company, released its “Micro-Cap Strategy” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. The second quarter of 2024 may be regarded as a time of moderation. Economic indicators largely reflected slowing growth and easing inflation. The moderation theme also drives equity markets. Large-cap stocks, as measured by the S&P 500, rose 3.9% in the second quarter, however, small-cap stocks lagged again, with the Russell 2000 Index declining -3.3% and the Russell 2000 Growth Index declining -2.9%. The Micro Cap Strategy declined -8.52% net-of-fees in the quarter compared to a -5.57% return for the Russell Microcap Growth Index. Underperformance was mostly caused by negative stock selection effects in the Telecommunications and industrial sectors, with Health Care being the most addictive. Sector allocation effects influenced relative returns. Also, low-beta companies with cheap multiples, the quarter’s biggest winners, were a drag on the portfolio. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Conestoga Capital Advisors highlighted stocks like Digi International Inc. (NASDAQ:DGII), in the second quarter 2024 investor letter. Digi International Inc. (NASDAQ:DGII) provides business and mission-critical Internet of Things (IoT) products, services, and solutions. The one-month return of Digi International Inc. (NASDAQ:DGII) was 11.52%, and its shares lost 5.31% of their value over the last 52 weeks. On August 16, 2024, Digi International Inc. (NASDAQ:DGII) stock closed at $29.04 per share with a market capitalization of $1.057 billion.
Conestoga Capital Advisors stated the following regarding Digi International Inc. (NASDAQ:DGII) in its Q2 2024 investor letter:
“Digi International Inc. (NASDAQ:DGII): DGII provides mission-critical Internet of Things connectivity products, services, and solutions. DGII posted 2Q24 results that were slightly ahead of expectations for revenue, earnings per share, and adjusted EBITDA. However, with sales cycles taking longer than anticipated to close at Industrial IoT customers, management slightly lowered forward guidance. We continue to be optimistic about future growth as management incorporates software into its existing hardware base and turns the hardware sale into a recurring revenue sale.”
A close-up of a cellular router being tested and debugged in a laboratory setting.
Digi International Inc. (NASDAQ:DGII) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held Digi International Inc. (NASDAQ:DGII) at the end of the second quarter which was 11 in the previous quarter. As of the end of the third fiscal quarter, Digi International Inc.’s (NASDAQ:DGII) robust and broad portfolio of ROI-driven industrial IoT solutions generated record $113 million in annualized recurring revenue, or ARR, up 9% year over year. While we acknowledge the potential of Digi International Inc. (NASDAQ:DGII) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Digi International Inc. (NASDAQ:DGII) and shared Conestoga Capital Advisors’ views on the company. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
