Conestoga Capital Advisors, an asset management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets started the year with a rally due to optimism about a strong economy and expectations of moderating inflation and lower interest rates. However, concerns over slowing earnings from major Technology companies, geopolitical tensions, and an upcoming announcement on tariffs led to a sharp decline in equities by the end of the first quarter. Investors sought safety, driving U.S. Treasury yields down. The Conestoga Small Cap Composite returned -11.35% (net) in the first quarter compared to the Russell 2000 Growth Index’s -11.12% return. The Conestoga SMid Cap Composite returned -5.73% compared to the Russell 2500 Growth Index’s -10.80% return. The Conestoga Micro-Cap Composite returned -8.24% vs the Russell Microcap Growth Index’s return of -17.75%. Finally, the Conestoga Mid Cap Composite returned 0.96% (net), compared to the Russell Midcap Growth Index’s -7.12% return. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its first-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Merit Medical Systems, Inc. (NASDAQ:MMSI). Merit Medical Systems, Inc. (NASDAQ:MMSI) designs, develops, manufactures, and markets single-use medical products. The one-month return of Merit Medical Systems, Inc. (NASDAQ:MMSI) was -9.72%, and its shares gained 27.10% of their value over the last 52 weeks. On April 28, 2025, Merit Medical Systems, Inc. (NASDAQ:MMSI) stock closed at $95.44 per share with a market capitalization of $5.64 billion.

Conestoga Capital Advisors stated the following regarding Merit Medical Systems, Inc. (NASDAQ:MMSI) in its Q1 2025 investor letter:

"Merit Medical Systems, Inc. (NASDAQ:MMSI) delivered strong quarterly results, exceeding expectations for both sales and earnings growth. The company's vertically integrated business model continued to provide manufacturing stability and competitive advantage in both cardiovascular and endoscopy segments. Its OEM segment continued to resonate with customers’ persistent supply chain challenges in the industry. Gross and operating margins showed consistent improvement, positioning MMSI well to achieve its long term targets. We believe recent product launches along with strategic acquisitions enhance MMSI's position in higher-growth therapeutic markets."

A surgeon using endoscopy products to perform a medical procedure.

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Merit Medical Systems, Inc. (NASDAQ:MMSI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held Merit Medical Systems, Inc. (NASDAQ:MMSI) at the end of the fourth quarter, compared to 32 in the third quarter. In the first quarter of 2025, Merit Medical Systems, Inc. (NASDAQ:MMSI) reported $355.4 million in revenues, up 9.8% year-over-year on a GAAP basis and up 10.9% year-over-year on a constant currency basis. While we acknowledge the potential of Merit Medical Systems, Inc. (NASDAQ:MMSI) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered Merit Medical Systems, Inc. (NASDAQ:MMSI) and shared Riverwater Partners Small Cap Core Strategy's views on the company. In addition, please check out our hedge fund investor letters Q1 2025 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.

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