Key Points
Pennsylvania-based Conestoga Capital Advisors reduced its Novanta stake by 168,907 shares for an estimated $20.1 million in the third quarter.
The transaction represented 0.3% of Conestoga’s 13F reportable AUM.
Following the sale, Conestoga reported owning about 1.4 million Novanta shares valued at $141.3 million, or about 2.3% of fund assets.
Conestoga Capital Advisors disclosed the sale of 168,907 shares of Novanta (NASDAQ:NOVT) for an estimated $20.1 million trade in the third quarter.
What Happened
According to a filing with the U.S. Securities and Exchange Commission released on Friday, Pennsylvania-based Conestoga Capital Advisors sold 168,907 shares of Novanta in the third quarter. The estimated value of the transactions, based on the average price during the quarter, was approximately $20.1 million. After the trade, Conestoga reported holding just over 1.4 million shares of Novanta.
What Else to Know
This sale leaves Novanta representing 2.3% of Conestoga’s reportable U.S. equity assets under management as of September 30.
Top holdings after the filing:
- NASDAQ:CWST: $272.9 million (4.4% of AUM)
- NASDAQ:ROAD: $270.8 million (4.3% of AUM)
- NASDAQ:DSGX: $248.3 million (4% of AUM)
- NYSE:RBC: $244.3 million (3.9% of AUM)
- NASDAQ:FSV: $233 million (3.7% of AUM)
As of Friday, Novanta shares were priced at $128.65, down 26% over the past year and vastly underperforming the S&P 500's nearly 17% gain over the same period.
Company Overview
| Metric | Value |
|---|---|
| Revenue (TTM) | $956.9 million |
| Net Income (TTM) | $61.4 million |
| Price (as of market close Friday) | $128.65 |
| One-Year Price Change | -26% |
Company Snapshot
- Novanta designs and manufactures photonics, vision, and precision motion components and subsystems, with product lines including laser scanning, beam delivery, medical visualization, and motion control solutions.
- It generates revenue primarily through sales of proprietary hardware and integrated systems to original equipment manufacturers, leveraging direct sales, distributors, and system integrators.
- The company serves medical and industrial OEMs globally, targeting sectors such as medical imaging, life sciences, industrial processing, and automation.
Novanta Inc. is a technology company specializing in advanced photonics, vision, and precision motion solutions for the medical and industrial markets. The company leverages a diversified portfolio of proprietary technologies to address complex application needs, supporting OEM customers worldwide.
Foolish Take
Conestoga’s decision to scale back its stake in Novanta likely reflects frustration with the stock’s weak relative performance and sector headwinds rather than a loss of conviction in the company’s fundamentals. The Pennsylvania-based growth investor sold roughly 169,000 shares—about $20 million worth—in the third quarter, trimming a long-held position that still makes up more than 2% of its U.S. equity assets.
In its latest investor letter, Conestoga cited Novanta as one of several technology names that dragged on returns amid a market led by “low-quality” and “high-beta” stocks. The firm noted that software and precision technology companies—like Novanta and Descartes Systems—lagged behind cyclical and semiconductor names during the quarter.
Operationally, Novanta’s second-quarter results showed flat organic growth and a sharp decline in GAAP profit to $4.5 million from $13.8 million a year prior, though adjusted earnings held steady at $0.76 per share. For long-term investors, Conestoga’s move likely suggests a short-term rotation rather than a fundamental shift. Novanta’s diversified exposure to medical imaging and robotics still aligns with secular growth themes—but its ability to reignite organic growth will likely determine whether institutional investors rebuild positions.
Glossary
13F reportable AUM: The portion of a fund's assets under management disclosed in quarterly SEC Form 13F filings.
AUM (Assets Under Management): The total market value of investments managed by a fund or investment firm.
Proprietary hardware: Equipment or devices designed and owned by a company, often using unique technology or intellectual property.
Original Equipment Manufacturer (OEM): A company that produces components or products used in another company's end products.
System integrators: Firms or individuals that combine various components and subsystems into a complete, functioning solution for customers.
Photonics: The science and technology of generating, controlling, and detecting light, often used in advanced imaging and communications.
Precision motion: Technologies enabling highly accurate movement and positioning, often for industrial or medical equipment.
Beam delivery: Systems or components that guide and control laser beams for industrial or medical applications.
Life sciences: Industries and research focused on biology, medicine, and healthcare technologies.
TTM: The 12-month period ending with the most recent quarterly report.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Descartes Systems Group. The Motley Fool recommends FirstService. The Motley Fool has a disclosure policy.
