Here’s Why Conestoga Capital Advisors Sold Omnicell (OMCL)

Conestoga Capital Advisors, an asset management company, released its “Small Cap Strategy” third-quarter 2023 investor letter. A copy of the same can be downloaded here. The Small Cap Composite returned -6.72% net-of-fees in the third quarter, compared to the Russell 2000 Growth Index’s -7.32% return. The strategy’s outperformance was driven by positive stock selection effects, while sector allocation effects were modestly negative. In addition, please check the fund’s top five holdings to know its best picks in 2023.

Conestoga Small Cap Composite highlighted stocks like Omnicell, Inc. (NASDAQ:OMCL) in the Q3 2023 investor letter. Headquartered in Santa Clara, California, Omnicell, Inc. (NASDAQ:OMCL) is a medication management solutions and adherence tools provider for healthcare systems. On November 14, 2023, Omnicell, Inc. (NASDAQ:OMCL) stock closed at $33.06 per share. One-month return of Omnicell, Inc. (NASDAQ:OMCL) was -22.01%, and its shares lost 40.81% of their value over the last 52 weeks. Omnicell, Inc. (NASDAQ:OMCL) has a market capitalization of $1.503 billion.

Conestoga Small Cap Composite made the following comment about Omnicell, Inc. (NASDAQ:OMCL) in its Q3 2023 investor letter:

Omnicell, Inc. (NASDAQ:OMCL): OMCL is a provider of medication control solutions and medication adherence packaging. The company is facing short-term challenges in the form of hospital spending freezes but we believe the more significant, longer-term concern centers around the business transformation that is underway. Management’s goal of creating a more recurring revenue stream remains in its early stages, and we believe the imbalance between decreasing hardware revenue (medication cabinets) and a ramp in recurring Advanced Services revenue (software) may create a multi-year drag on sales growth and margin expansion. The proceeds of the sale were invested in more attractive companies within the portfolio.”

Omnicell, Inc. (NASDAQ:OMCL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Omnicell, Inc. (NASDAQ:OMCL) at the end of second quarter which was 18 in the previous quarter.

We discussed Omnicell, Inc. (NASDAQ:OMCL) in another article and shared Renaissance Small Cap Growth Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q3 2023 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.