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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 Gartner, Inc. (NYSE:IT). Established in 1979, Gartner, Inc. (NYSE:IT) is a research and advisory company that operates through research, conferences, and consulting segments. The one-month return of Gartner, Inc. (NYSE:IT) was 9.49%, and its shares lost 2.11% of their value over the last 52 weeks. On May 1, 2025, Gartner, Inc. (NYSE:IT) stock closed at $419.60 per share with a market capitalization of $32.334 billion.
Conestoga Capital Advisors stated the following regarding Gartner, Inc. (NYSE:IT) in its Q1 2025 investor letter:
"Gartner, Inc. (NYSE:IT) is a research and advisory company, which equips business leaders with insights, advice, and tools to improve their businesses. IT reported strong 4Q results, with revenue, EBITDA, and EPS coming ahead of consensus expectations, mitigated by a conservative 2025 guide. Management has historically outperformed its initial guide, which we expect will continue this year. Also weighing on the shares is the possible reduction in U.S. Federal Government spending, which represents approximately 5% of the company’s contract value. This potential reduction does not change our positive long-term view of the company."
Gartner, Inc. (NYSE:IT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held Gartner, Inc. (NYSE:IT) at the end of the fourth quarter which was 35 in the previous quarter. Gartner, Inc.’s (NYSE:IT) fourth quarter revenue was $1.7 billion, representing an 8% year-over-year increase. While we acknowledge the potential of Gartner, Inc. (NYSE:IT) 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.