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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.