Conestoga Capital Advisors, an asset management company, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The second quarter began with a historically poor start but gained momentum later as tariff fears subsided and market volatility dropped precipitously. Conestoga Micro Cap Composite appreciated 15.65% net-of-fees in the second quarter but underperformed the Russell Microcap Growth Index’s 20.92% return. In a highly volatile market led by high-beta and lower-quality stocks, the firm does not expect the fund to align with index performance. Please review the fund’s top 5 holdings to gain insight into their key selections for 2025.
In its second quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Simulations Plus, Inc. (NASDAQ:SLP). Simulations Plus, Inc. (NASDAQ:SLP) focuses on the development of drug discovery and development software that utilizes artificial intelligence and machine learning based technology for modeling and simulation, and prediction of molecular properties. The one-month return of Simulations Plus, Inc. (NASDAQ:SLP) was -24.18%, and its shares lost 67.12% of their value over the last 52 weeks. On July 25, 2025, Simulations Plus, Inc. (NASDAQ:SLP) stock closed at $13.23 per share, with a market capitalization of $266.282 million.
Conestoga Capital Advisors stated the following regarding Simulations Plus, Inc. (NASDAQ:SLP) in its second quarter 2025 investor letter:
“In early June, Simulations Plus, Inc. (NASDAQ:SLP) announced that it was executing a restructuring plan that would eliminate 10% of its workforce to improve operating efficiency and lower costs. The company estimated that these actions would save approximately $4.3 million. This action signaled continued end market weakness. The company also announced that it had named a new Chief Revenue Officer. In the middle of June, the company announced preliminary 3Q results which were significantly below estimates. The combination of these announcements caused us to reduce our position in the company.”
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Simulations Plus, Inc. (NASDAQ:SLP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 13 hedge fund portfolios held Simulations Plus, Inc. (NASDAQ:SLP) at the end of the first quarter compared to 13 in the previous quarter. Simulations Plus, Inc. (NASDAQ:SLP) reported revenue growth of 10% in fiscal Q3 of 2025 to $20.4 million. While we acknowledge the potential of Simulations Plus, Inc. (NASDAQ:SLP) 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.
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