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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 Workiva Inc. (NYSE:WK). Workiva Inc. (NYSE:WK) is a software services company that offers cloud-based reporting solutions. The one-month return of The Workiva Inc. (NYSE:WK) was -3.44%, and its shares lost 6.80% of their value over the last 52 weeks. On April 28, 2025, The Workiva Inc. (NYSE:WK) stock closed at $73.44 per share with a market capitalization of $4.095 billion.
Conestoga Capital Advisors stated the following regarding The Workiva Inc. (NYSE:WK) in its Q1 2025 investor letter:
"The Workiva Inc. (NYSE:WK) is a global software services company that provides a cloud-based platform for financial reporting, ESG, audit, risk, and compliance. WK was a leader in the fourth quarter, but shares were pressured in January as the European Union limited the scope of their Corporate Sustainability Reporting Directive. This was essentially a mandated reporting framework for ESG, which has been one of WK’s top booking solutions for the past two-plus years. It turns out the change in scope will not affect the enterprise-sized business targets, however, shares remained weak. WK did report strong fourth quarter results."
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The Workiva Inc. (NYSE:WK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held The Workiva Inc. (NYSE:WK) at the end of the fourth quarter, compared to 20 in the third quarter. he Workiva Inc. (NYSE:WK) generated subscription revenue growth of 22% and total revenue growth of 20% in Q4 2024 compared to Q4 2023. While we acknowledge the potential of The Workiva Inc. (NYSE:WK) 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.