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 started with optimism about the domestic economy and attractive small-cap valuations, but was marked by volatility amid geopolitical unrest in the Middle East and shifting expectations for 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 first quarter saw high volatility in the Russell Microcap Growth Index, which rose over +11% by late January, then fell -18% to a -4.25% quarter-end loss, compared to -7.14% for the Conestoga Micro Cap Composite. Initial positive relative performance declined as the war in the Middle East escalated, leading investors to unwind popular momentum trades and to cover significant short positions in biotechnology. 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 Oddity Tech Ltd. (NASDAQ:ODD). Oddity Tech Ltd. (NASDAQ:ODD), a consumer tech company, builds a digital-first brand for the beauty and wellness market. On May 7, 2026, Oddity Tech Ltd. (NASDAQ:ODD) closed at $14.89 per share. One-month return of Oddity Tech Ltd. (NASDAQ:ODD) was 2.48%, and its shares lost 79.03% over the past 52 weeks. Oddity Tech Ltd. (NASDAQ:ODD) has a market capitalization of $855.26 million.
Conestoga Capital Advisors stated the following regarding Oddity Tech Ltd. (NASDAQ:ODD) in its Q1 2026 investor letter:
“Oddity Tech Ltd. (NASDAQ:ODD) operates a direct-to-consumer beauty platform. The stock sold off as management flagged a disruption in customer acquisition tied to changes in advertising platform algorithms. While the business has historically delivered strong growth, the sharp increase in acquisition costs is expected to drive a ~30% revenue decline in the near term. The issue raises questions around the predictability of the model and the company’s ability to efficiently scale customer growth going forward.”
Oddity Tech Ltd. (NASDAQ:ODD) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 25 hedge fund portfolios held Oddity Tech Ltd. (NASDAQ:ODD) at the end of the fourth quarter, compared to 31 in the previous quarter. While we acknowledge the risk and potential of Oddity Tech Ltd. (NASDAQ:ODD) 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 Oddity Tech Ltd. (NASDAQ:ODD) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Oddity Tech Ltd. (NASDAQ:ODD) and shared Baron Small Cap Fund’s views on the company. 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.
