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 Q2 Holdings, Inc. (NYSE:QTWO) in the second quarter 2024 investor letter. Q2 Holdings, Inc. (NYSE:QTWO) offers cloud-based digital solutions to regional and community financial institutions. The one-month return of Q2 Holdings, Inc. (NYSE:QTWO) was 8.61%, and its shares gained 119.37% of their value over the last 52 weeks. On August 15, 2024, Q2 Holdings, Inc. (NYSE:QTWO) stock closed at $72.15 per share with a market capitalization of $4.349 billion.
Conestoga Capital Advisors stated the following regarding Q2 Holdings, Inc. (NYSE:QTWO) in its Q2 2024 investor letter:
“Q2 Holdings, Inc. (NYSE:QTWO): Based in Austin, TX. QTWO’s 1Q24 results were slightly above consensus estimates on revenue and significantly above consensus estimates at the adjusted EBITDA line. The company also posted another solid quarter of bookings. The company signed four new digital banking contracts with Tier 1 financial institutions and expansion deals with two Tier 1 financial institutions. Total backlog increased 26% and annual recurring revenue increased 13%.”
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 31 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Q2 Holdings, Inc. (NYSE:QTWO) at the end of the first quarter which was 23 in the previous quarter. In the second quarter, Q2 Holdings, Inc. (NYSE:QTWO) reported $165.5 million in revenues, an increase of 8% year-over-year. 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 Conestoga Capital Advisors’ views on the company in the previous quarter. 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.
