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 Q2 Holdings, Inc. (NYSE:QTWO). Q2 Holdings, Inc. (NYSE:QTWO) offers cloud-based digital solutions to regional and community financial institutions. The one-month return Q2 Holdings, Inc. (NYSE:QTWO) was 1.96%, and its shares gained 126.02% of their value over the last 52 weeks. On February 10, 2025, Q2 Holdings, Inc. (NYSE:QTWO) stock closed at $94.25 per share, with a market capitalization of $5.693 billion.
Conestoga Capital Advisors stated the following regarding Q2 Holdings, Inc. (NYSE:QTWO) in its Q4 2024 investor letter:
“Based in Austin, TX, Q2 Holdings, Inc. (NYSE:QTWO) delivered another impressive quarter of results. 3Q24 revenue results slightly exceeded estimates and EBITDA beat consensus by $3.1 million. With 80% of the business now tied to subscription revenue, QTWO continued to show significantly improved margins and also raised subscription revenue growth guidance expectations coming into the year. The company has also seen strong bookings growth on a year-to-date basis, which positions the company well to achieve its long-term growth targets.”
A finance professional at their computer logging into the company’s branded digital banking platform.
Q2 Holdings, Inc. (NYSE:QTWO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Q2 Holdings, Inc. (NYSE:QTWO) at the end of the third quarter which was 20 in the previous quarter. While we acknowledge the potential of Q2 Holdings, Inc. (NYSE:QTWO) 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 Q2 Holdings, Inc. (NYSE:QTWO) and shared Alger Small Cap Growth Fund’s views on the company in the previous quarter. Q2 Holdings, Inc. (NYSE:QTWO) contributed to Conestoga Capital Advisors’ performance in the previous quarter. 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.