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 Novanta Inc. (NASDAQ:NOVT). Novanta Inc. (NASDAQ:NOVT) offers precision medicine and manufacturing, medical solutions, and robotics and automation solutions. The one-month return Novanta Inc. (NASDAQ:NOVT) was -0.38%, and its shares lost 4.85% of their value over the last 52 weeks. On February 10, 2025, Novanta Inc. (NASDAQ:NOVT) stock closed at $147.66 per share, with a market capitalization of $5.304 billion.
Conestoga Capital Advisors stated the following regarding Novanta Inc. (NASDAQ:NOVT) in its Q4 2024 investor letter:
“Novanta Inc. (NASDAQ:NOVT) designs and manufactures advanced photonic, vision, and precision motion components and subsystems, sold primarily for the healthcare market. NOVT’s normally stable financial results have been volatile in 2024 due to several events. The company’s largest customer in each of the robotic surgery, EUV technology, and DNA sequencing channels delayed orders due to short-term issues. The macroeconomic situation domestically and internationally has affected results. The company called out German government turmoil and Chinese stimulus not reinvigorating growth. Altogether, NOVT still sees 2025 organic revenue growth accelerating back to the high single digits, and potentially higher with any economic recovery in their end markets.”
A closeup of a CO2 laser cutting through a piece of metal, demonstrating precision motion.
Novanta Inc. (NASDAQ:NOVT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held Novanta Inc. (NASDAQ:NOVT) at the end of the third quarter which was 11 in the previous quarter. While we acknowledge the potential of Novanta Inc. (NASDAQ:NOVT) 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 Novanta Inc. (NASDAQ:NOVT) and shared the list of most profitable small-cap stocks to invest in. 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.