Conestoga Capital Advisors, an asset management company, released its first-quarter 2026 investor letter. A copy of the letter is available to download here. The first quarter of 2026 started with optimism about the domestic economy and attractive small-cap valuations, but it was affected by volatility due to geopolitical unrest in the Middle East and shifting expectations regarding interest rates. This unrest drove up energy prices and created a cautious global market. 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 Smid Cap Composite fell 10.24% net-of-fees, underperforming the Russell 2500 Growth Index’s -3.52% return. The decline was driven by negative stock selection and sector/industry-specific headwinds, notably within Technology, Industrials, and Health Care sectors. 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 Tyler Technologies, Inc. (NYSE:TYL). Tyler Technologies, Inc. (NYSE:TYL) is a leading integrated software and technology solutions provider for the public sector in the United States. On May 5, 2026, Tyler Technologies, Inc. (NYSE:TYL) closed at $327.82 per share. One-month return of Tyler Technologies, Inc. (NYSE:TYL) was -0.57%, and its shares gained 41.55% over the past 52 weeks. Tyler Technologies, Inc. (NYSE:TYL) has a market capitalization of $13.77 billion.
Conestoga Capital Advisors stated the following regarding Tyler Technologies, Inc. (NYSE:TYL) in its Q1 2026 investor letter:
“Tyler Technologies, Inc. (NYSE:TYL) provides software solutions to state and local governments. Shares underperformed not because of a clear fundamental break, but due to a lack of incremental positive surprise in a higher-expectations environment. The earnings release itself contained limited new financial detail, reinforcing a perception of steady but unspectacular execution. In a market favoring clearer acceleration or upside revisions, the absence of a compelling catalyst led to relative weakness despite the company’s consistent, high-quality profile.”
Tyler Technologies, Inc. (NYSE:TYL) 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 Tyler Technologies, Inc. (NYSE:TYL) at the end of the fourth quarter, compared to 44 in the previous quarter. While we acknowledge the risk and potential of Tyler Technologies, Inc. (NYSE:TYL) 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 Tyler Technologies, Inc. (NYSE:TYL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Tyler Technologies, Inc. (NYSE:TYL) and shared the list of tech stocks that could make you a millionaire. 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.
