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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 OrthoPediatrics Corp. (NASDAQ:KIDS). Headquartered in Warsaw, Indiana, OrthoPediatrics Corp. (NASDAQ:KIDS) provides anatomically appropriate implants, instruments, and specialized braces for children with orthopedic conditions. OrthoPediatrics Corp.'s (NASDAQ:KIDS) one-month return was -18.09%, and its shares lost 30.57% of their value over the last 52 weeks. On April 29, 2025, OrthoPediatrics Corp. (NASDAQ:KIDS) stock closed at $21.55 per share with a market capitalization of $535.12 million.
Conestoga Capital Advisors stated the following regarding OrthoPediatrics Corp. (NASDAQ:KIDS) in its Q1 2025 investor letter:
OrthoPediatrics Corp. (NASDAQ:KIDS) is the first company to focus solely on orthopedic care for the pediatric market. KIDS reported better than expected fourth quarter results and reiterated guidance. The company has excellent momentum across all three business segments, trauma and deformity, bracing, and spine. KIDS also executed on their plan to drive higher profitability, with EBITDA crossing into positive territory and FCF to follow this year.
A cutting edge medical device in a sterile surgical setting, being operated by a skilled surgeon.
OrthoPediatrics Corp. (NASDAQ:KIDS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held OrthoPediatrics Corp. (NASDAQ:KIDS) at the end of the fourth quarter, compared to 11 in the third quarter. OrthoPediatrics Corp. (NASDAQ:KIDS) reported revenue of $52.7 million in the fourth quarter of 2024, representing 40% growth from the comparable period. While we acknowledge the potential of OrthoPediatrics Corp. (NASDAQ:KIDS) 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.