Conestoga Capital Advisors, an asset management company, released its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The letter reports a positive market shift towards Small Caps, with the Russell 2000 Index achieving its best first half since 1991 and the Russell 2000 Growth Index up 25.7% in Q2, fueled by AI enthusiasm and semiconductor stocks. However, market leadership was uneven, mirroring the Tech Bubble, as high-beta stocks outperformed while high-quality companies lagged, impacting Conestoga’s quality-focused strategies. Management expressed confidence in long-term outcomes, noting that speculative leadership won’t last as monetary policy tightens and market breadth improves. The firm remains committed to high-quality growth businesses, expecting these to regain favor as leadership broadens. The Conestoga Small Cap Composite returned 14.32% net-of-fees in the second quarter, with 25.71% for the Russell 2000 Growth Index. Narrow Index leadership hurt the relative results, but it also hid Composite improvements. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Conestoga Capital Advisors highlighted Perimeter Solutions, Inc. (NYSE:PRM) as a newly added position in the small cap composite. Perimeter Solutions, Inc. (NYSE:PRM) is a leading manufacturer of firefighting products, electronic components, lubricant additives, and engineered machinery. On August 4, 2026, Perimeter Solutions, Inc. (NYSE:PRM) closed at $33.25 per share, reflecting a market capitalization of $5.44 billion. Perimeter Solutions, Inc. (NYSE:PRM) posted a one-month return of 0.95%, while its shares gained 115.61% over the past 52 weeks.
Conestoga Capital Advisors stated the following regarding Perimeter Solutions, Inc. (NYSE:PRM) in its Q2 2026 investor letter:
“Perimeter Solutions, Inc. (NYSE:PRM) provides mission-critical fire safety and specialty chemical solutions. We initiated a position based on the company’s durable earnings profile, disciplined capital allocation, and strong competitive position in niche markets. Recent long-term contract wins, including a five-year agreement with the Defense Logistics Agency, reinforce confidence in PRM’s ability to generate predictable cash flow while continuing to expand its earnings base through both organic growth and acquisitions.”
Perimeter Solutions, Inc. (NYSE:PRM) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 37 hedge fund portfolios held Perimeter Solutions, Inc. (NYSE:PRM) at the end of the first quarter, up from 33 in the previous quarter. While we acknowledge the risk and potential of Perimeter Solutions, Inc. (NYSE:PRM) 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 Perimeter Solutions, Inc. (NYSE:PRM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Perimeter Solutions, Inc. (NYSE:PRM) and shared a bullish thesis on the company. In addition, please check out our hedge fund investor letters Q2 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.
