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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 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 12.40%, and its shares gained 34.67% of their value over the last 52 weeks. On April 28, 2025, Vertex, Inc. (NASDAQ:VERX) stock closed at $39.35 per share with a market capitalization of $6.225 billion.
Conestoga Capital Advisors stated the following regarding Vertex, Inc. (NASDAQ:VERX) in its Q1 2025 investor letter:
"Vertex, Inc. (NASDAQ:VERX) is a market leader in providing tax compliance software that helps corporations determine the correct amount of indirect taxes such as sales taxes and value added taxes. The stock corrected after they announced some targeted investments in new products that could further accelerate growth going forward. After recently attending VERX’s first ever analyst day, we are confident in the company's outlook."
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, 23 hedge fund portfolios held Vertex, Inc. (NASDAQ:VERX) at the end of the fourth quarter, compared to 16 in the third quarter. In the fourth quarter, Vertex, Inc. (NASDAQ:VERX) reported revenue of $178.5 million, up 15.2% 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.