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 that Twist Bioscience Corporation (NASDAQ: TWST ) contributed positively during the quarter. Twist Bioscience Corporation (NASDAQ:TWST) is a leading biotechnology company specializing in the manufacture and sale of synthetic DNA-based products. On October 28, 2026, Twist Bioscience Corporation (NASDAQ:TWST) closed at $173.45 per share with a market capitalization of $11.42 billion. Despite a 7.83% pullback over the past month, Twist Bioscience Corporation (NASDAQ:TWST) remains up 456.05% over the past year.
Conestoga Capital Advisors stated the following regarding Twist Bioscience Corporation (NASDAQ:TWST) in its Q3 2026 investor letter:
"Twist Bioscience Corporation(NASDAQ:TWST) develops synthetic DNA products used across biotechnology, pharmaceutical research and next generation sequencing applications. Shares surged as a strong fiscal 3Q highlighted accelerating demand across several of the company's end markets. In addition, the market has become more convinced that TWST is an AI winner and that the demand for their products for AI applications is durable, leading to the multiple expansion witnessed during the quarter. Improving gross margins and a $12 million increase to full-year revenue guidance further strengthened investor confidence."
Twist Bioscience Corporation (NASDAQ: TWST) is not on our list of the 40 Most Popular Stocks Among Hedge Funds . As per our database, 42 hedge fund portfolios held Twist Bioscience Corporation (NASDAQ: TWST) at the end of the second quarter which was 30 in the previous quarter. While we acknowledge the potential of Twist Bioscience Corporation (NASDAQ:TWST) 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 discussed Twist Bioscience Corporation (NASDAQ:TWST) and shared Alger Small Cap Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.
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This article is originally published at Insider Monkey .
