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: high-beta stocks outperformed while high-quality companies lagged, affecting 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 Micro-Cap Composite achieved a solid second quarter with a 22.16% net return, although it underperformed the Russell Microcap Growth Index’s 28.98% return. During this period, Micro-Cap Growth surpassed all major equity benchmarks, which reflects improved investor sentiment towards smaller-cap stocks, but the gains were primarily driven by a limited set of high-beta, high-momentum stocks. 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 Planet Labs PBC (NYSE:PL). Headquartered in San Francisco, California, Planet Labs PBC (NYSE:PL), an earth imaging company that provides high-cadence geospatial data delivered to customers through its online platform, was divested from The Conestoga Micro-Cap Composite during the quarter. On August 6, 2026, Planet Labs PBC (NYSE:PL) closed at $22.72 per share, reflecting a market capitalization of $8.1 billion. Planet Labs PBC (NYSE:PL) posted a one‑month return of -12.78%, while its shares gained 255.00% over the past 52 weeks.
Conestoga Capital Advisors stated the following regarding Planet Labs PBC (NYSE:PL) in its Q2 2026 investor letter:
“Planet Labs PBC (NYSE:PL) provides satellite imagery and geospatial analytics that support defense, intelligence, commercial, and environmental applications. We sold the position following a period of exceptional share price appreciation as the company continued to execute well and investor enthusiasm surrounding its defense, AI, and satellite services opportunities drove a significant expansion in valuation. While we remain constructive on the long-term outlook, we believed the shares more fully reflected the company’s growth prospects.”
Planet Labs PBC (NYSE:PL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 43 hedge fund portfolios held Planet Labs PBC (NYSE:PL) at the end of the first quarter, compared to 50 in the previous quarter.While we acknowledge the risk and potential of Planet Labs PBC (NYSE:PL) 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 Planet Labs PBC (NYSE:PL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Planet Labs PBC (NYSE:PL) and shared the list of best space technology 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.
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Disclosure: None. This article is originally published at Insider Monkey.
