Conestoga Capital Advisors, an asset management company, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. For the second consecutive year, U.S. equity indices ended the year with double-digit returns after generating modest returns in the fourth quarter of 2024. Conestoga’s investment plans were hindered by the enthusiasm for everything artificial intelligence (AI) related, which the firm believes led to a more speculative investing climate. The Conestoga Small Cap Composite surged 1.67% (net) in the fourth quarter compared to the Russell 2000 Growth Index’s 1.70% return. The Conestoga SMid Cap Composite returned -0.68% (net) trailing the Russell 2500 Growth Index’s 2.43% return. The Conestoga Micro Cap Composite advanced 9.91% (net) vs the Russell Microcap Growth Index’s return of 11.55%. Finally, the Conestoga Mid Cap Composite returned -4.63% (net) underperforming the Russell Midcap Growth Index’s 8.14% return. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2024.
In its fourth quarter 2024 investor letter, Conestoga Capital Advisors emphasized stocks such as The Descartes Systems Group Inc. (NASDAQ:DSGX). Headquartered in Waterloo, Canada, The Descartes Systems Group Inc. (NASDAQ:DSGX) provides cloud-based logistics and supply chain solutions. The one-month return The Descartes Systems Group Inc. (NASDAQ:DSGX) was 8.85%, and its shares gained 42.03% of their value over the last 52 weeks. On February 10, 2025, The Descartes Systems Group Inc. (NASDAQ:DSGX) stock closed at $122.50 per share, with a market capitalization of $10.479 billion.
Conestoga Capital Advisors stated the following regarding The Descartes Systems Group Inc. (NASDAQ:DSGX) in its Q4 2024 investor letter:
“The Descartes Systems Group Inc. (NASDAQ:DSGX) is a leading provider of cloud-based logistics and supply chain solutions with over 26,000 customers worldwide. DSGX reported third quarter results which were bolstered by its customers’ navigation of the constantly evolving supply chain landscape. Wars in Ukraine and Israel, tariffs, and restrictions on goods sold to nations deemed as bad actors, all necessitates using technology to be able to dynamically and efficiently transport goods. DSGX reported 17% revenue growth and 43% EBITDA margins while converting over 83% of Adjusted EBITDA to cash from operations during the third quarter.”
A warehouse filled with packages and parcels, signifying the scale of e-commerce enablement.
The Descartes Systems Group Inc. (NASDAQ:DSGX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held The Descartes Systems Group Inc. (NASDAQ:DSGX) at the end of the third quarter which was 11 in the previous quarter. The Descartes Systems Group Inc.’s (NASDAQ:DSGX) third quarter revenue increased 17% year-over-year to $168.8 million. While we acknowledge the potential of The Descartes Systems Group Inc. (NASDAQ:DSGX) 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 addition, please check out our hedge fund investor letters Q3 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.