Conestoga Capital Advisors, an asset management company, released its third-quarter 2026 investor letter. The letter can be downloaded here. Conestoga Capital Advisors released its third-quarter 2026 investor letter, outlining a shifting macroeconomic backdrop for small-cap equities. After a strong start to 2026, 3Q26 headwinds—including elevated oil prices, persistent inflation, and a September Fed rate hike—drove a 9.4% quarterly drop in the Russell 2000 Growth Index (vs. +2.3% for the S&P 500). Small caps remain up 10.7% YTD, trailing large caps (+12.7%). As the market pivots toward higher-quality growth, short-term volatility should create compelling opportunities for disciplined stock selection. The Conestoga Micro Cap Composite delivered strong relative performance in 3Q, falling only -0.83% net against a -12.15% benchmark decline, bringing YTD returns to +12.50% (vs. +8.50% for the index). Outperformance was driven by robust stock selection in Health Care and Technology (where software holdings rose +16.8%), offsetting macro and execution drag in consumer-exposed positions. The strategy enters 4Q encouraged by underlying operational strength across portfolio companies. Also, check the Fund’s top five holdings to see its best picks for 2026.
In its Q3 2026 investor letter, Conestoga Capital Advisors highlighted Universal Technical Institute, Inc. (NYSE:UTI). Universal Technical Institute, Inc. (NYSE:UTI) is an educational institution that provides training and support services for students in transportation, skilled trades, and healthcare education programs. On October 29, 2026, Universal Technical Institute, Inc. closed at $23.61, with a $1.3 billion market capitalization. Universal Technical Institute, Inc. posted a 12.07% YTD pullback, trading within a 52-week range of $18.02 to $51.34.
Conestoga Capital Advisors stated the following regarding Universal Technical Institute, Inc. (NYSE:UTI) in its Q3 2026 investor letter:
“Universal Technical Institute, Inc. (NYSE:UTI) provides post-secondary education and workforce training in transportation, skilled trades and healthcare. The stock came under significant pressure after management lowered its fiscal 2026 outlook, primarily due to weaker than-expected high school enrollments in its automotive and diesel programs. We remain encouraged by healthy underlying demand, strong enrollment at newer campuses and management’s expectation that the near-term shortfall will not alter its longer-term financial targets.”
