Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTSoumya EswaranWed, August 5, 2026 at 5:02 PM GMT+2 3 min readConestoga Capital Advisors, an asset management company, released its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The letter reports a positive market shift towards Small Caps, with the Russell 2000 Index achieving its best first half since 1991 and the Russell 2000 Growth Index up 25.7% in Q2, fueled by AI enthusiasm and semiconductor stocks. However, market leadership was uneven, mirroring the Tech Bubble, as high-beta stocks outperformed while high-quality companies lagged, impacting Conestoga's quality-focused strategies. Management expressed confidence in long-term outcomes, noting that speculative leadership won't last as monetary policy tightens and market breadth improves. The firm remains committed to high-quality growth businesses, expecting these to regain favor as leadership broadens. The Conestoga Small Cap Composite returned 14.32% net-of-fees in the second quarter, with 25.71% for the Russell 2000 Growth Index. Narrow Index leadership hurt the relative results, but it also hid Composite improvements. In addition, please check the Strategy's top five holdings to know its best picks in 2026.In its Q2 2026 investor letter, Conestoga Capital Advisors highlighted Kodiak Gas Services, Inc. (NYSE:KGS). Kodiak Gas Services, Inc. (NYSE:KGS), an independent contract compression infrastructure provider for customers in the oil and gas industry, was added to the firm's Small Cap Composite this quarter. On August 4, 2026, Kodiak Gas Services, Inc. (NYSE:KGS) closed at $59.54 per share, reflecting a market capitalization of $6.01 billion. Kodiak Gas Services, Inc. (NYSE:KGS) posted a one-month return of -14.77%, while its shares gained 86.24% over the past 52 weeks.Conestoga Capital Advisors stated the following regarding Kodiak Gas Services, Inc. (NYSE:KGS) in its Q2 2026 investor letter:"Kodiak Gas Services, Inc. (NYSE:KGS) provides contract natural gas compression and distributed power solutions to energy infrastructure customers. We believe the company is well positioned to benefit from growing demand for natural gas infrastructure, LNG exports, and power generation supporting AI-related data center development. Long term customer contracts, industry-leading fleet utilization, and expansion into distributed power provide multiple avenues for durable growth and cash flow generation."Kodiak Gas Services (KGS) Agrees to Acquire Distributed Power SolutionsKodiak Gas Services, Inc. (NYSE:KGS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 38 hedge fund portfolios held Kodiak Gas Services, Inc. (NYSE:KGS) at the end of the first quarter, up from 34 in the previous quarter. While we acknowledge the potential of Kodiak Gas Services, Inc. (NYSE:KGS) 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.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info