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 Rollins, Inc. (NYSE:ROL). Rollins, Inc. (NYSE:ROL) offers pest and wildlife control services to residential and commercial customers. The one-month return of Rollins, Inc. (NYSE:ROL) was 6.23%, and its shares gained 12.86% of their value over the last 52 weeks. On February 11, 2025, Rollins, Inc. (NYSE:ROL) stock closed at $49.94 per share, with a market capitalization of $24.186 billion.
Conestoga Capital Advisors stated the following regarding Rollins, Inc. (NYSE:ROL) in its Q4 2024 investor letter:
“Based in Atlanta, GA, Rollins, Inc.’s (NYSE:ROL) 3Q24 results were mixed. The company continued to show above-average revenue growth of 9.1% but profitability was less than expected. The company decided to make some additional investments which reduced EBITDA margins. The company’s incremental investment was in the sales and marketing area, particularly building out the residential and commercial salesforces as well as incremental ad spending. While those investments position the company well over the long term, they lowered EBITDA margins in the quarter.”
A pest control service technician spraying insecticide in a residential property.
Rollins, Inc. (NYSE:ROL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held Rollins, Inc. (NYSE:ROL) at the end of the third quarter which was 31 in the previous quarter. Rollins, Inc.’s (NYSE:ROL) third-quarter financial performance was highlighted by a 9% increase in revenue to $916 million. While we acknowledge the potential of Rollins, Inc. (NYSE:ROL) 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 Rollins, Inc. (NYSE:ROL) and shared Andvari Associates’ views on the company 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.