Conestoga Capital Advisors, an asset management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets started the year with a rally due to optimism about a strong economy and expectations of moderating inflation and lower interest rates. However, concerns over slowing earnings from major Technology companies, geopolitical tensions, and an upcoming announcement on tariffs led to a sharp decline in equities by the end of the first quarter. Investors sought safety, driving U.S. Treasury yields down. The Conestoga Small Cap Composite returned -11.35% (net) in the first quarter compared to the Russell 2000 Growth Index’s -11.12% return. The Conestoga SMid Cap Composite returned -5.73% compared to the Russell 2500 Growth Index’s -10.80% return. The Conestoga Micro-Cap Composite returned -8.24% vs the Russell Microcap Growth Index’s return of -17.75%. Finally, the Conestoga Mid Cap Composite returned 0.96% (net), compared to the Russell Midcap Growth Index’s -7.12% return. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.
In its first-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as ESCO Technologies Inc. (NYSE:ESE). ESCO Technologies Inc. (NYSE:ESE) is a global distributor of engineered filtration and fluid control products, and integrated propulsion systems. The one-month return of ESCO Technologies Inc. (NYSE:ESE) was -2.50%, and its shares gained 49.09% of their value over the last 52 weeks. On April 28, 2025, ESCO Technologies Inc. (NYSE:ESE) stock closed at $155.14 per share with a market capitalization of $4.004 billion.
Conestoga Capital Advisors stated the following regarding ESCO Technologies Inc. (NYSE:ESE) in its Q1 2025 investor letter:
“ESCO Technologies Inc. (NYSE:ESE) is a diversified industrial that provides diagnostic equipment to utility companies, filtration/flow devices to the aerospace/defense industry and develops testing equipment for the electronics/telecommunication segments. ESE reported strong Q4 results with a nice recovery in its Test segment with orders in the quarter up a 43% year-over-year. Also, the recently announced acquisition of SM&P, which expands ESE’s defense business, has been very well received by the market.”
An industrial tech facility with robotic arms for precision machining components.
ESCO Technologies Inc. (NYSE:ESE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held ESCO Technologies Inc. (NYSE:ESE) at the end of the fourth quarter, compared to 8 in the third quarter. While we acknowledge the potential of ESCO Technologies Inc. (NYSE:ESE) 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 covered ESCO Technologies Inc. (NYSE:ESE) and shared the list of best scientific instruments stocks to buy. In addition, please check out our hedge fund investor letters Q1 2025 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.