Here’s Why Conestoga Capital Advisors Sold Proto Labs Inc. (PRLB)

Conestoga Capital Advisors, a boutique, independent investment management firm, published its fourth-quarter 2020 ‘Small Cap Growth & SMid Cap Growth’ Investor Letter – a copy of which can be downloaded here. A net return of 31% was recorded by Conestoga’s Small Cap Growth fund and 19.72% return by its SMid Cap Growth Fund for the the end year 2020. Both performed below their Russell 2000 Growth and Russell 2500 Growth benchmarks that delivered a 34.63% and 25.89% return respectively. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Conestoga Capital Advisors, in their Q4 2020 investor letter, emphasized that they sold their position in Proto Labs, Inc. (NYSE: PRLB) last year. Proto Labs, Inc. is a Minnesota-based digital manufacturing company that offers low-volume 3D printed custom parts for prototyping purposes. It currently has a $3.6 billion market capitalization. Since the beginning of the year, PRLB is down -14.28%, however its 12-month gains are still up by 56.31%. As of March 5, the stock closed at $131.49 per share.

Here is what Conestoga Capital Advisors has to say about Proto Labs, Inc. in their Q4 2020 investor letter:

“We eliminated PRLB in the portfolio in order to make room for Simulations Plus, Inc. (SLP). The strategy had been operating with 50 companies, the top of its stated 45-50 company range. PRLB had been a Conestoga holding since 2012, but we believe that SLP has a lower fundamental risk profile than PRLB. While we believe that PRLB will continue to be a beneficiary of the trend toward additive manufacturing, the visibility in its business is one of the most limited in the portfolio. It has been one of the strategy’s most cyclical names given its exposure to industrial manufacturing. We believe we improved the risk return profile of the portfolio by making this swap.”


In December 2020, we published an article about Cathie Wood’s top 10 small-cap stock picks and Proto Labs, Inc. (NYSE: PRLB) is part of it. PLRB delivered a -3.38% return in the past 3 months.

Our calculations show that Proto Labs, Inc. (NYSE: PRLB) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Proto Labs, Inc. was in 16 hedge fund portfolios.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.