Conestoga Capital Advisors, an asset management company, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The first quarter of 2026 began with optimism about the domestic economy and attractive Small Cap valuations, but was impacted by volatility from Middle East geopolitical unrest and changing interest rate expectations. This unrest drove energy prices up and created cautious global markets. Energy, Basic Materials, and Industrials performed well, while software companies faced challenges due to AI disruption concerns. Market sensitivity to geopolitical events, energy prices, and inflation remains high. The Conestoga Small Cap Composite fell 5.01%, underperforming the Russell 2000 Growth’s -2.81% return. The decline was driven by negative stock selection and headwinds in Technology and Health Care, with sector allocation benefits insufficient to offset losses. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Conestoga Capital Advisors highlighted stocks like Vertex, Inc. (NASDAQ:VERX). Vertex, Inc. (NASDAQ:VERX) is a US-based software company that provides enterprise tax technology solutions for retail trade, wholesale trade, and manufacturing industries. On April 27, 2026, Vertex, Inc. (NASDAQ:VERX) closed at $12.56 per share. One-month return of Vertex, Inc. (NASDAQ:VERX) was 5.63%, and its shares lost 68.75% over the past 52 weeks. Vertex, Inc. (NASDAQ:VERX) has a market capitalization of $2.01 billion.
Conestoga Capital Advisors stated the following regarding Vertex, Inc. (NASDAQ:VERX) in its Q1 2026 investor letter:
“Vertex, Inc. (NASDAQ:VERX) provides tax compliance software and services. We sold the position as growth expectations have become more balanced and the valuation no longer reflects a favorable risk-reward. Growth has moderated, and we see more compelling opportunities in businesses with stronger momentum and visibility.”
Vertex, Inc. (NASDAQ:VERX) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 19 hedge fund portfolios held Vertex, Inc. (NASDAQ:VERX) at the end of the fourth quarter, compared to 22 in the previous quarter. While we acknowledge the risk and potential of Vertex, Inc. (NASDAQ:VERX) 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 Vertex, Inc. (NASDAQ:VERX) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Vertex, Inc. (NASDAQ:VERX) and shared the list of stocks insiders are buying. In addition, please check out our hedge fund investor letters Q1 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.
