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 Legence Corp. (NASDAQ:LGN). Legence Corp. (NASDAQ:LGN) is an engineering and construction services provider that engages in the engineering, installation, and maintenance services for mission-critical systems in buildings. On April 27, 2026, Legence Corp. (NASDAQ:LGN) closed at $81.43 per share. One-month return of Legence Corp. (NASDAQ:LGN) was 44.23%, and YTD its shares gained 89.20%. Legence Corp. (NASDAQ:LGN) has a market capitalization of $13.37 billion.
Conestoga Capital Advisors stated the following regarding Legence Corp. (NASDAQ:LGN) in its Q1 2026 investor letter:
“Legence Corp. (NASDAQ:LGN) is an established provider of engineering and maintenance services for mission-critical building systems. LGN specializes in high-complexity mechanical, electrical, and plumbing (MEP) infrastructure, particularly for data centers, life sciences, and healthcare facilities. Our investment is driven by the company’s mission critical role in the “AI infrastructure” build-out; as data centers require increasingly sophisticated cooling and power systems, LGN’s specialized expertise becomes a key bottleneck in the supply chain. LGN has a robust $3.7 billion backlog that is up 49% year-over-year.”
Legence Corp. (NASDAQ:LGN) 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 Legence Corp. (NASDAQ:LGN) at the end of the fourth quarter, up from 37 in the previous quarter. In Q4 2025, Legence Corp.’s (NASDAQ:LGN) revenues grew by 35% to a quarterly record of $738 million. While we acknowledge the risk and potential of Legence Corp. (NASDAQ:LGN) 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 Legence Corp. (NASDAQ:LGN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Legence Corp. (NASDAQ:LGN) and shared the list of best data center engineering and construction stocks to buy. 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.
