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Conestoga Capital Advisors, an asset management company, released its first-quarter 2026 investor letter. A copy of the letter is available to download here. The first quarter of 2026 started with optimism about the domestic economy and attractive small-cap valuations, but it was affected by volatility due to geopolitical unrest in the Middle East and shifting expectations regarding interest rates. This unrest drove up energy prices and created a cautious global market. 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 Smid Cap Composite fell 10.24% net-of-fees, underperforming the Russell 2500 Growth Index’s -3.52% return. The decline was driven by negative stock selection and sector/industry-specific headwinds, notably within Technology, Industrials, and Health Care sectors. 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 Construction Partners, Inc. (NASDAQ:ROAD) as a notable contributor. Construction Partners, Inc. (NASDAQ:ROAD) is a civil infrastructure company that provides various products and services to public and private infrastructure projects. On May 5, 2026, Construction Partners, Inc. (NASDAQ:ROAD) closed at $131.62 per share. One-month return of Construction Partners, Inc. (NASDAQ:ROAD) was 14.47%, and its shares gained 46.36% over the past 52 weeks. Construction Partners, Inc. (NASDAQ:ROAD) has a market capitalization of $7.44 billion.
Conestoga Capital Advisors stated the following regarding Construction Partners, Inc. (NASDAQ:ROAD) in its Q1 2026 investor letter:
"Construction Partners, Inc. (NASDAQ:ROAD) is a vertically integrated infrastructure construction company focused on roadway projects across the Sunbelt. Shares outperformed following a strong start to fiscal 2026, driven by both robust organic growth and acquisition contributions. Revenue increased 44% year-over-year while adjusted EBITDA grew 63%, reflecting strong execution and operating leverage. Importantly, a record backlog and raised full-year guidance reinforced confidence in sustained demand and visibility, particularly against a favorable infrastructure spending backdrop."
Construction Partners, Inc. (NASDAQ:ROAD) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 26 hedge fund portfolios held Construction Partners, Inc. (NASDAQ:ROAD) at the end of the fourth quarter, the same as in the previous quarter. While we acknowledge the potential of Construction Partners, Inc. (NASDAQ:ROAD) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
In another article, we covered Construction Partners, Inc. (NASDAQ:ROAD) and shared the list of stocks positioned for breakout growth. 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.