Conestoga Capital Advisors , an asset management company, released its third-quarter 2026 investor letter. The letter can be downloaded here . In 2026, Small Caps initially outperformed but faced challenges in the third quarter, marked by the Russell 2000 Growth Index's -9.4% decline versus the S&P 500's +2.3% rise. Factors such as rising Treasury yields and higher oil prices due to geopolitical tensions, especially in Iran, played a role. The Federal Reserve's policy shifts influenced market sentiment, leading to a selloff in AI and semiconductor stocks, although a stable Fed outlook provided a temporary recovery. The Conestoga Small Cap Composite fell -11.22% in the quarter, underperforming the Russell 2000 Growth Index's -9.39% return, impacted by exposure to struggling sectors like Industrials and Consumer Discretionary, while Health Care and Technology showed resilience. The firm remains committed to owning high-quality companies with strong competitive moats and resilient growth, driving long-term value creation. Also, check the Fund's top five holdings to see its best picks for 2026.
In its Q3 2026 investor letter, Conestoga Capital Advisors noted that RBC Bearings Incorporated (NYSE: RBC ) detracted from performance during the quarter despite strong operating performance. RBC Bearings Incorporated (NYSE:RBC) is an industrial company that focuses on manufacturing and marketing engineered precision bearings, components, and systems for aerospace, defense, and industrial markets. On October 27, 2026, RBC Bearings Incorporated (NYSE:RBC) closed at $483.59, with a $15.31 billion market capitalization. RBC Bearings Incorporated (NYSE:RBC) posted a 6.71% YTD gain, trading within a 52-week range of $401.90 to $667.69.
Conestoga Capital Advisors stated the following regarding RBC Bearings Incorporated (NYSE:RBC) in its Q3 2026 investor letter:
"RBC Bearings Incorporated(NYSE:RBC) lagged during the quarter as rising yields pressured industrial stocks, despite continued strong operating performance. The company supplies highly engineered, mission critical components across aerospace, defense, and industrial markets. Aerospace and defense demand remains strong, while industrial activity remains healthy. Record backlog, margin expansion, and sustained strength across commercial aerospace and defense reinforce our confidence in the company's long-term growth outlook."
RBCBearings Incorporated (NYSE: RBC) is not on our list of the 40 Most Popular Stocks Among Hedge Funds . As per our database, 60 hedge fund portfolios held RBCBearings Incorporated (NYSE: RBC) at the end of the second quarter, which was 51 in the previous quarter. While we acknowledge the potential of RBC Bearings Incorporated (NYSE:RBC) 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 RBC Bearings Incorporated (NYSE:RBC) 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 .
