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, with high-beta stocks outperforming while quality companies lagged, affecting Conestoga’s strategies. Management is confident that speculative leadership won’t endure as monetary policy tightens and expects high-quality growth businesses to regain prominence as market leadership broadens. The Conestoga SMid Cap Composite returned 7.04% (net) in the second quarter, underperforming the Russell 2500 Growth Index, which returned 24.02%. A combination of factor and sector-specific headwinds drove the underperformance, along with stock selection challenges, particularly within Technology and Industrials. 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 DT Midstream, Inc. (NYSE:DTM). DT Midstream, Inc. (NYSE:DTM), an energy infrastructure company that provides integrated natural gas services in the United States, was added to the firm’s SMid Cap Composite this quarter. On August 6, 2026, DT Midstream, Inc. (NYSE:DTM) closed at $132.92 per share, reflecting a market capitalization of $13.56 billion. DT Midstream, Inc. (NYSE:DTM) posted a one-month return of -8.44%, while its shares gained 27.10% over the past 52 weeks.
Conestoga Capital Advisors stated the following regarding DT Midstream, Inc. (NYSE:DTM) in its Q2 2026 investor letter:
“DT Midstream, Inc. (NYSE:DTM) owns and operates an integrated network of natural gas pipelines, gathering systems, and storage assets across key U.S. markets. We believe the company is well positioned to benefit from increasing natural gas demand driven by LNG exports, electric power generation, and data center development. Its growing backlog of long-term, contracted expansion projects and strategically located pipeline network provide attractive visibility into future earnings and cash flow growth. It is also a well-regarded operator in its space.”
DT Midstream, Inc. (NYSE:DTM) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 34 hedge fund portfolios held DT Midstream, Inc. (NYSE:DTM) at the end of the first quarter, the same as in the previous quarter. While we acknowledge the risk and potential of DT Midstream, Inc. (NYSE:DTM) 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 DT Midstream, Inc. (NYSE:DTM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered DT Midstream, Inc. (NYSE:DTM) and shared the list of most profitable natural gas stocks to buy. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
