Conestoga Capital Advisors, an asset management company, released its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The letter reports a positive market shift towards Small Caps, with the Russell 2000 Index achieving its best first half since 1991 and the Russell 2000 Growth Index up 25.7% in Q2, fueled by AI enthusiasm and semiconductor stocks. However, market leadership was uneven, mirroring the Tech Bubble: high-beta stocks outperformed while high-quality companies lagged, affecting Conestoga’s quality-focused strategies. Management expressed confidence in long-term outcomes, noting that speculative leadership won’t last as monetary policy tightens and market breadth improves. The firm remains committed to high-quality growth businesses, expecting these to regain favor as leadership broadens. The Conestoga Micro-Cap Composite achieved a solid second quarter with a 22.16% net return, although it underperformed the Russell Microcap Growth Index’s 28.98% return. During this period, Micro-Cap Growth surpassed all major equity benchmarks, which reflects improved investor sentiment towards smaller-cap stocks, but the gains were primarily driven by a limited set of high-beta, high-momentum stocks. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Conestoga Capital Advisors highlighted NCino, Inc. (NASDAQ:NCNO) as a newly added position in its Micro Cap Composite. NCino, Inc. (NASDAQ:NCNO) is a software-as-a-service company that provides software solutions to financial institutions. On August 06, 2026, NCino, Inc. (NASDAQ:NCNO) closed at $18.99 per share, reflecting a market capitalization of $2.08 billion. NCino, Inc. (NASDAQ:NCNO) posted a one-month return of 11.77%, while its shares lost 27.49% over the past 52 weeks.
Conestoga Capital Advisors stated the following regarding NCino, Inc. (NASDAQ:NCNO) in its Q2 2026 investor letter:
“NCino, Inc. (NASDAQ:NCNO) provides cloud-based software that enables banks and financial institutions to automate lending, account opening, and other core banking workflows. We believe the company is well positioned to benefit from increasing adoption of AI-enabled banking solutions, supported by its deep customer relationships and mission-critical platform. Growing subscription revenue, expanding profitability, and multiple opportunities to monetize new AI capabilities provide a potential runway for long-term growth.”
NCino, Inc. (NASDAQ:NCNO) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 40 hedge fund portfolios held NCino, Inc. (NASDAQ:NCNO) at the end of the first quarter, compared to 47 in the previous quarter. In Q1 2026, NCino, Inc.’s (NASDAQ:NCNO) total revenues were $159.4 million, an increase of 11% year over year. While we acknowledge the risk and potential of NCino, Inc. (NASDAQ:NCNO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NCino, Inc. (NASDAQ:NCNO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered NCino, Inc. (NASDAQ:NCNO) and shared Spyglass Growth Strategy’s insight on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
