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 Paylocity Holding Corporation (NASDAQ:PCTY). Headquartered in Schaumburg, Illinois, Paylocity Holding Corporation (NASDAQ:PCTY) is a software company that provides cloud-based human capital management and payroll software solutions. The one-month return Paylocity Holding Corporation (NASDAQ:PCTY) was 6.88%, and its shares gained 21.59% of their value over the last 52 weeks. On February 11, 2025, Paylocity Holding Corporation (NASDAQ:PCTY) stock closed at $209.13 per share, with a market capitalization of $11.688 billion.
Conestoga Capital Advisors stated the following regarding Paylocity Holding Corporation (NASDAQ:PCTY) in its Q4 2024 investor letter:
“Based in Schaumburg, IL, Paylocity Holding Corporation (NASDAQ:PCTY) is a leading cloud HCM software provider serving 40,000+ small and mid-sized businesses. We initiated a position in Q4, attracted by its business model featuring consistent double-digit recurring revenue growth and retention rates in the mid-90s. The strategic Airbase acquisition expands spend management capabilities, while AI-enhanced workflows drive platform differentiation. With consistent margin expansion and a large, growing $20B+ addressable market, plus Conestoga’s firsthand experience (Conestoga uses PCTY for our own payroll processing), we see compelling long-term potential.”
A business operations manager, looking over the expense management system that helps simplifies the financials for the company.
Paylocity Holding Corporation (NASDAQ:PCTY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Paylocity Holding Corporation (NASDAQ:PCTY) at the end of the third quarter which was 36 in the previous quarter. Paylocity Holding Corporation’s (NASDAQ:PCTY) strong results continued in the fiscal second quarter of 2025, with recurring and other revenue growing by 17%. While we acknowledge the potential of Paylocity Holding Corporation (NASDAQ:PCTY) 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 Paylocity Holding Corporation (NASDAQ:PCTY) and shared Polen U.S. Small Company Growth Strategy’s views on the company. 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.