Conestoga Capital Advisors Finds Rollins (ROL) Appealing Despite Concerns

Conestoga Capital Advisors Finds Rollins (ROL) Appealing Despite Concerns

Thu, August 6, 2026 at 5:00 PM GMT+3 3 min read

• ^RUT -0.59%
• ROL -0.63%

Conestoga 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, with high-beta stocks outperforming while quality companies lagged, affecting Conestoga's strategies. Management is confident that speculative leadership won't endure as monetary policy tightens and expects high-quality growth businesses to regain prominence as market leadership broadens. The Conestoga SMid Cap Composite returned 7.04% (net) in the second quarter, underperforming the Russell 2500 Growth Index, which returned 24.02%. A combination of factor and sector-specific headwinds drove the underperformance, along with stock selection challenges, particularly within Technology and Industrials. 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 Rollins, Inc. (NYSE:ROL). Rollins, Inc. (NYSE:ROL), a leading pest control company that provides pest and wildlife control services and protection to residential and commercial customers, detracted from portfolio performance during the quarter. On August 5, 2026, Rollins, Inc. (NYSE:ROL) closed at $37.57 per share, reflecting a market capitalization of $18.07 billion. Rollins, Inc. (NYSE:ROL) posted a one-month return of -16.08%, while its shares lost 35.79% over the past 52 weeks.

Conestoga Capital Advisors stated the following regarding Rollins, Inc. (NYSE:ROL) in its Q2 2026 investor letter:

"Rollins, Inc. (NYSE:ROL) underperformed during the quarter for several reasons. First, investor preference shifted toward higher-beta, more cyclical stocks, leaving this defensive pest control business out of favor. In addition, the company announced that its highly regarded CFO would be leaving to pursue another opportunity, creating uncertainty among investors. Finally, organic revenue growth has trailed the company's long term target over the past two quarters, raising questions about whether the recent slowdown represents a temporary headwind or a more sustained moderation in growth. While these concerns weighed on the shares, we continue to view ROL as a high-quality business with durable competitive advantages and attractive long-term growth prospects."

Rollins, Inc. (NYSE:ROL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 47 hedge fund portfolios held Rollins, Inc. (NYSE:ROL) at the end of the first quarter, compared to 57 in the previous quarter. While we acknowledge the potential of Rollins, Inc. (NYSE:ROL) 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 thebest short-term AI stock.

In another article, we covered Rollins, Inc. (NYSE:ROL) and shared a list of best large cap stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q2 2026 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.