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 Vertex, Inc. (NASDAQ:VERX). Vertex, Inc. (NASDAQ:VERX) offers enterprise tax technology solutions for retail trade, wholesale trade, and manufacturing industries. The one-month return Vertex, Inc. (NASDAQ:VERX) was 2.46%, and its shares gained 114.87% of their value over the last 52 weeks. On February 10, 2025, Vertex, Inc. (NASDAQ:VERX) stock closed at $56.02 per share, with a market capitalization of $8.455 billion.
Conestoga Capital Advisors stated the following regarding Vertex, Inc. (NASDAQ:VERX) in its Q4 2024 investor letter:
“Vertex, Inc. (NASDAQ:VERX) is the market leader in tax automation software which helps enterprises calculate and comply with various sales tax and value added tax rules. VERX’s stock has doubled in 2024 (with continued strong quarterly results) as it continued to demonstrate double-digit growth with improvements in its Earnings Before Taxes Interest Depreciation and Amortization (EBTIDA) margin. VERX had realized high returns on investments it had made in the last few years in the areas of sales/marketing and new products.”
A finance executive overseeing the implementation of a tax solution.
Vertex, Inc. (NASDAQ:VERX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held Vertex, Inc. (NASDAQ:VERX) at the end of the third quarter which was 14 in the previous quarter. In the third quarter, Vertex, Inc. (NASDAQ:VERX) reported $170.4 million in revenues, up 17.5% year-over-year. While we acknowledge the potential of Vertex, Inc. (NASDAQ:VERX) 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 Vertex, Inc. (NASDAQ:VERX) and shared The Brown Capital Management Small Company’s 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.