| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.56% | 0.74% | 0.74% |
Palm Valley Capital Fund returned 0.74% in Q1 2026, underperforming small-cap benchmarks amid market volatility driven by AI disruption fears, Iran war impacts, and private credit concerns. The fund maintained a defensive 77% cash position while holding concentrated positions in undervalued companies across staffing, energy, food, and technology sectors. Key detractors included Amdocs, which fell despite the managers' view that its embedded telecom infrastructure provides AI protection, and staffing companies facing structural concerns. Top contributors were Chord Energy, Heartland Express, and Farmland Partners, though positions were trimmed as valuations approached targets. The managers added Rayonier as an inflation hedge following its merger with PotlatchDeltic. Despite widespread AI employment displacement predictions, they remain skeptical of extreme scenarios, viewing current fears as creating opportunities in oversold quality businesses. The portfolio's average company age of 73 years reflects focus on established enterprises with proven durability through multiple cycles.
Palm Valley Capital focuses on acquiring undervalued small-cap companies with long operating histories trading at significant discounts to intrinsic value, maintaining high cash levels during periods of uncertainty while selectively investing in quality businesses with durable competitive advantages.
The managers express cautious optimism about their undervalued holdings while maintaining significant cash reserves. They expect continued market volatility around AI disruption fears but believe this creates opportunities in oversold quality businesses. The portfolio is positioned defensively with high cash levels while selectively adding to discounted positions.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 1 2026 | 2026 Q1 | CHRD, DOX, FLO, FPI, HTLD, KELYA, LKQ, PHYS, RGP, RYN, TFX | AI, Cyclical, small cap, Staffing, undervalued, value |
DOX RYN CHRD |
Palm Valley delivered modest gains while maintaining 77% cash amid AI disruption fears and geopolitical volatility. The fund holds undervalued small-caps including embattled staffing companies and defensive positions like Rayonier timberland. Managers remain skeptical of extreme AI displacement scenarios, viewing current fears as creating opportunities in quality businesses trading at significant discounts to intrinsic value. |
| Jan 6 2026 | 2025 Q4 | AMDOCS, AVA, CRI, DOM, FLO, FORR, FPI, HTLD, INGR, KELYA, LAS/A, LKQ, MAN, NWN, PHYS, PSLV, PVCMX, RES, UTZ, WHGLY | capital preservation, Cash, optionality, Patience, valuation |
DOM LN UTZ INGR FLO HTLD |
Palm Valley Capital maintains 76% cash while selectively buying undervalued small caps during market dislocations. Despite Q4 underperformance, equity-only returns reached 8.81% in 2025 driven by precious metals gains. New positions in Domino's, Utz, and Ingredion offer quality businesses at attractive valuations. High cash position provides flexibility as portfolio trades at largest discount to fair value in five years. |
| Oct 7 2025 | 2025 Q3 | AAPL, AMD, AMZN, AVA, AVGO, BRK-A, DOX, FLO, GOOGL, INTC, LKQ, META, MSFT, NVDA, PHYS, PSLV, RHI, SEB, TFX, TSLA | AI, Bull Market, Fed policy, gold, small caps, technology, Valuations | - | Palm Valley delivered 2.35% in Q3 while maintaining 74% cash amid what they call the most enduring bull market ever. Mega caps trade at 35x earnings representing 80% of GDP. They question AI valuations and focus on neglected small cap opportunities like Teleflex, Robert Half, and LKQ while avoiding overvalued quality businesses, expecting market discipline to eventually return. |
| Jul 8 2025 | 2025 Q2 | CHRD, CRI, DOX, HCSG, HTLD, KELYA, MAN, NWN, PHYS, PSLV, PZZA, RES, SEB, WHG | Cash, energy, inflation, Silver, small caps, Staffing, Trade Policy, value |
HCSG CHRD RES PZZA PSLV HCSG CHRD RES PZZA |
Palm Valley Capital maintains 73.6% cash positioning, viewing small caps as overvalued despite four-year stagnation. The fund opportunistically invested during April's selloff in healthcare services, energy, and restaurants but quickly harvested gains. Managers await deeper market stress to deploy capital more aggressively, expecting Fed rate cuts but questioning their economic impact amid elevated valuations and consumer credit stress. |
| Apr 4 2025 | 2025 Q1 | AVA, CRI, FLO, FORR, HTLD, KELYA, LAS.TO, MNRO, NWN, PHYS, PSLV, REYN, RGP, TBI, WHGLY | Cyclical, fiscal policy, gold, Government Spending, Quality, small caps, Staffing, value |
FORR REYN MNRO FLO |
Palm Valley outperformed small caps with 0.57% returns versus -8.93% for the index, maintaining 76% cash while selectively adding quality positions. The managers warn of unsustainable government spending and elevated market valuations, particularly in small caps where quality names trade at 17x multiples. They're positioned defensively for eventual market cycles that will create better opportunities. |
| Jan 5 2025 | 2024 Q4 | 0288.HK, CHD, CRD-A, CRI, DOX, EL, FPI, HELE, HTLD, KELYA, LAS.TO, MAN, NVDA, NWN, PHYS, PLTR, PSLV, SEB, SSRM, STT, TBI | Cash, crypto, Cyclical, gold, small caps, Staffing, Valuations, value |
KELYA SEB HTLD |
Palm Valley Capital maintains disciplined value investing with 78% cash, selectively adding undervalued small-caps like Kelly Services and Seaboard Corporation. Small cap earnings remain depressed while valuations stay elevated at 17.5x EV/EBIT. Managers see concerning parallels to historical bubbles with crypto mania and record government deficits, positioning defensively for eventual market correction. |
| Oct 1 2024 | 2024 Q3 | DOX, EQC, HELE, LAS.TO, NATH, RGP, TBI, WHGLY, WLY | Commercial real estate, Fed policy, rates, small caps, Staffing, value |
TBI RGP LAS.TO DOX WHGLY HELE |
Palm Valley underperformed in Q3 with 2.43% returns versus 8-10% for small cap benchmarks, maintaining 81.5% cash amid Fed-driven market rotation. Staffing holdings declined while Lassonde, Amdocs, and WH Group contributed positively. Managers view current environment as unsustainable Fed-induced bubble, maintaining disciplined value approach with double-digit return thresholds and defensive cash positioning. |
| Jul 9 2024 | 2024 Q2 | 0288.HK, AAPL, AVA, CHTR, CMCSA, CRI, DISH, DOX, EQC, HOFT, KELYA, LAI.TO, MAN, NVDA, NWN, PHYS, PSLV, RGP, T, TBI | consumer, Precious Metals, small caps, Staffing, Utilities, value |
RGP DOX TBI CRI |
Palm Valley outperformed small caps in Q2 with 0.79% returns versus -3.11% for the SmallCap 600, maintaining 81% cash amid limited opportunities. The fund focuses on undervalued small caps and staffing companies betting on cyclical recovery, while holding precious metals as Fed policy hedge. Managers see selective value in struggling companies but view overall markets as expensive. |
| Apr 19 2024 | 2024 Q1 | AAP, AVA, CRD-A, DOX, EQC, GENC, KELYA, LAS.TO, MLR, MSCI, NWN, PHYS, PSLV, SMCI, SSRM, TBI, WHG, WLY | AI, Bubble, Cash, Financialization, gold, small caps, Valuations, value | NWN | Palm Valley Capital maintains 82% cash amid elevated small cap valuations, selling five positions in Q1 including three above intrinsic value. The disciplined value manager focuses on cyclical, out-of-favor names with risk compensation while avoiding AI bubble speculation. Current market conditions characterized by full valuations and speculative fervor warrant continued defensive positioning. |
| Jan 7 2024 | 2023 Q4 | AAP, AVA, CRD-A, CRD-B, CRI, DOX, KELYA, LAS.TO, MLR, MNRO, NGS, TRUE, WHGLY, WLY | Fed policy, Inequality, inflation, liquidity, small caps, value |
LAS/A CN|MLR|MNRO|NGS|WHGLY|WLY LAS/A CN|MLR|MNRO|NGS|WHGLY|WLY |
Palm Valley underperformed in Q4 due to 80% cash positioning but managers remain defensive given small cap quality deterioration. Despite 26% rally from October lows, 40% of Russell 2000 remains unprofitable with stagnant earnings. Fund selectively added quality names like Wiley at attractive valuations while warning of systemic inequality risks from Fed policies. |
| May 10 2023 | 2023 Q3 | AAP, AVA, CRD-A, CRD-B, EQC, FPI, LAS-A.TO, MLR, SSRM, TBI | Banking, Cash, credit, interest rates, real estate, small caps, valuation |
LAS.TO LAS/A CN|MLR|MNRO|NGS|WHGLY|WLY CRD.A AAP BHARATBIJ.NS ARGX BB|DAVA|DDOG|GLOB|ILMN|LOAR|MELI|NET|NU|NVDA|TSM FPI EQC SSRM |
Palm Valley outperformed in Q3 with 0.56% return versus declining small cap benchmarks, maintaining 81% cash position earning 5% yield. Managers believe higher rates will force valuation adjustments in overleveraged economy, particularly impacting commercial real estate and small cap banks. Fund remains patient, avoiding unprofitable companies while selectively adding quality names at asset value discounts. |
| Jun 7 2023 | 2023 Q2 | AAP, CRD-A, CRD-B, LAS.TO, NGS, ODC, PSLV, SSRM, TBI, WHGLY | AI, Banking, Buybacks, credit, Recession, small cap, value |
AAP BHARATBIJ.NS LAS.TO |
Palm Valley maintains 82% cash, viewing the AI-driven rally as another bubble. With banks tightening credit, recession indicators flashing, and small cap earnings declining, they believe defensive positioning is prudent. Added recession-resistant names like Advance Auto Parts and TrueBlue at attractive valuations while waiting for broader market opportunities. |
| Mar 31 2023 | 2023 Q1 | CRD/A, GENC, MLR, NGS, OR, WHGLY | - | - | |
| Jan 1 2023 | 2022 Q4 | - | - | - | |
| Nov 10 2022 | 2022 Q3 | KELYA, MAN, ODC, SNN, SSRM | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIThe letter extensively discusses AI's potential impact on employment, comparing current fears to historical automation concerns. The managers express skepticism about widespread job displacement predictions while acknowledging AI will affect many roles. They view AI disruption fears as creating investment opportunities in oversold stocks. |
Automation Employment Disruption Software Labor |
StaffingMultiple staffing companies are held including Kelly Services, Resources Connection, Robert Half, and Manpowergroup. The managers believe current weakness is cyclical rather than structural, despite AI concerns affecting the sector. They expect staffing demand to persist even in disrupted industries due to increased labor uncertainty. |
Temporary Labor Employment Cyclical AI Impact Flexibility | |
ValueThe fund focuses on undervalued companies trading at significant discounts to estimated intrinsic value. Portfolio holdings show substantial discounts across various sectors including food, software, medical devices, and auto parts. The managers emphasize buying quality businesses at attractive valuations. |
Undervalued Discounts Intrinsic Value Quality Opportunistic | |
| 2025 Q4 |
Small CapsFund focuses on small cap investing with 10% of SmallCap 600 trading near pandemic lows, providing improved sourcing opportunities. Most small caps remain fully valued at 18x EV/EBITDA and 22x P/E despite poor performance in bottom quintile. Fund sees meaningful discounts in holdings relative to intrinsic value estimates. |
Small Cap Value Discounts Russell 2000 SmallCap 600 |
InflationPersistent inflation affecting housing, healthcare, electricity, food, and education costs significantly higher than five years ago. Fed restarting QE with asset prices at all-time highs creates captive financial system. Washington accepts higher prices as part of debt management plan while consumer sentiment at lowest point ever. |
Inflation Fed QE Consumer Prices Healthcare | |
SilverSilver was Fund's largest weighting for several years and contributed significantly to performance. Physical silver shortages catapulted prices higher in Q4 to record levels. Fund completely sold silver position near quarter end due to feverish price action moving too far, too fast. |
Silver Precious Metals Physical Shortages Record Prices | |
AIAI chatbots improved significantly in 2025, posing legitimate risk to research firms like Forrester and Gartner. While not expecting AI to impact economy as quickly as Wall Street bulls predict, manager sees specific industry disruption risk. Younger demographics increasingly speculating viewing trading as ticket to comfortable existence. |
AI Chatbots Disruption Research Speculation | |
ValueFund buys stocks that have performed poorly when normalized results support higher value, often with declines accelerating before involvement. Leaves slack in investment process for margin of safety to take advantage of dislocations. Many holdings continue to trade meaningfully below intrinsic value with largest discount in over five years. |
Value Investing Margin of Safety Intrinsic Value Dislocations | |
| 2025 Q3 |
AIManagers question whether AI valuations are justified, noting that while AI may change the world, current leaders like Nvidia face sustainability challenges with 50%+ margins. They argue that even if AI continues and current beneficiaries remain entrenched, valuations already reflect their moats. |
Nvidia Semiconductors Valuations Technology Margins |
Small CapsSmall caps trade near lowest price ratio versus S&P 500 in two decades but aren't cheap by historical standards. Median S&P SmallCap 600 constituent trades at 25x trailing earnings. Fund focuses on neglected periphery rather than core small cap opportunities. |
Russell 2000 Valuations Relative Performance Quality Opportunities | |
GoldGold and silver have extended purchasing power during era of rotating asset bubbles, outpacing housing inflation. Metals prices shot higher in 2025 as part of the 'Return to Easy Money' trade, with fund selling portions to manage weightings. |
Silver Precious Metals Inflation Asset Bubbles Monetary Policy | |
ValuationsCurrent bull market is most enduring ever with top ten mega caps representing 80% of GDP versus 36% in 1999. These companies trade at 35x aggregate earnings with record profit margins, creating a sub-3% earnings yield that feels backward-looking. |
Mega Caps Earnings Yield Profit Margins Bull Market GDP | |
| 2025 Q2 |
Small CapsSmall cap stocks have not advanced in four years yet still aren't cheap, with current median P/E for profitable S&P SmallCap 600 members at 19x. The nonfinancial median P/E for profitable S&P 600 small caps is 22x, and median net margins remain well above historical levels. |
Valuations Russell 2000 Margins Profitability Drawdowns |
Trade PolicyThe Trump administration proposed steep tariffs on major trading partners including Mexico, Canada, and China, but implementation has been inconsistent. The administration has moved from extreme tariff proposals to more moderate approaches as trading partners express good faith in negotiations. |
Tariffs China DOGE Trade Wars Policy | |
OilEnergy prices fell sharply in the quarter, creating opportunities in oil and gas companies. The fund invested in Chord Energy and RPC during the selloff, attracted by strong balance sheets and free cash flow generation in the energy services sector. |
Energy Drilling Production Williston Basin Free Cash Flow | |
InflationThe administration is pressuring the Fed to reduce short-term rates as inflation has receded, though it's unclear whether looser money will trigger economic boom. Federal interest spending reduction through forced lower rates breeds inflation that must be absorbed by the population. |
Fed Interest Rates Monetary Policy Powell Borrowing Costs | |
StaffingThe staffing industry faces headwinds with ManpowerGroup forecasting revenue declines and Kelly Services impacted by DOGE initiatives. Despite challenges, Kelly has outperformed peers with slight organic revenue growth driven by Education services strength. |
ManpowerGroup Kelly Services Employment Labor Market DOGE | |
SilverSilver has lagged gold's strong performance over the past two years, leading to an expansion in the gold-to-silver ratio reaching the second highest level in generations. Silver may have appreciated from investors seeking higher beta fiat substitutes. |
Gold Ratio Precious Metals Fiat Substitutes Safe Haven Beta | |
| 2025 Q1 |
Small CapsSmall cap equity performance has trailed large caps with fewer passive tailwinds and a drag from lower quality businesses. High quality small cap businesses remain fully valued despite the S&P SmallCap 600 being down 17% from its November 2024 record. The median profitable small cap company has an EV/EBIT multiple of 17x with elevated profits and valuations. |
Small Cap Valuations Quality Russell 2000 Profitability |
ValueThe fund focuses on identifying businesses experiencing cyclical pressure within specific industries that are trading cheaply compared to their normalized earnings over a full cycle. Many depressed small cap stocks have structural issues making them more challenging investments, requiring careful distinction between cyclical and structural pressure. |
Cyclical Normalized Earnings Structural Cheap Quality | |
GoldPrecious metals gains are being driven by global economic uncertainty, gold accumulation by foreign central banks, and tightness in physical gold supplies. A physical squeeze led to sharply rising borrowing costs for gold during the quarter, leading to a short covering rally. |
Physical Gold Central Banks Uncertainty Supply Rally | |
StaffingTemporary labor's percentage of the total U.S. workforce is near prior recessionary troughs. The fund holds positions in Kelly Services and TrueBlue, with staffing companies facing disproportionate pressure from economic conditions and reduced demand for temporary labor services. |
Temporary Labor Recession Workforce Cyclical Pressure | |
| 2024 Q4 |
CryptoBitcoin rocketed 50% after the election to exceed $100,000, with crypto enthusiasts rejoicing at the pro-crypto stance of the incoming administration. The fund discusses various cryptocurrencies including Dogecoin with a $50 billion market cap and Tronix equal in size to major corporations, questioning the existence and value of hundreds of digital assets. |
Bitcoin Cryptocurrency Dogecoin Tronix Blockchain |
Small CapsSmall cap stocks have struggled with earnings back to pre-COVID levels for Russell 2000 and down 30% from 2022 peak for S&P SmallCap 600. Consumer discretionary businesses face pressure from stimulus comedown and inflation impact. Valuation multiples remain high at 17.5x EV/EBIT for profitable constituents. |
Russell 2000 S&P SmallCap 600 Valuations Consumer Discretionary Earnings | |
StaffingThe staffing industry faces extremely challenging conditions with commercial and light-industrial demand down over 30%. Companies like Kelly Services, ManpowerGroup, and TrueBlue are experiencing business pressure, though some maintain profitability. The fund sees potential opportunities as the industry appears to be emerging from a cyclical trough. |
Temporary Labor Kelly Services ManpowerGroup TrueBlue Cyclical | |
GoldPrecious metals exhibited strong performance during 2024 as central banks restarted monetary easing. The fund believes gold and silver are telegraphing a future where towering deficits are addressed through inflation rather than spending cuts, making them attractive hedges. |
Precious Metals Silver Central Banks Inflation Deficits | |
ValueThe fund focuses on researching out of favor stocks including consumer discretionary and commodity firms. They seek companies with a history of profitability outside cyclical troughs, following valuation discipline by buying when prices fall below fair value estimates and selling when they exceed valuations. |
Out of Favor Valuation Discipline Fair Value Cyclical Profitability | |
| 2024 Q3 |
Commercial Real EstateThe commercial real estate market faces a menacing backdrop with property valuations for office sector down 40% and multifamily suffering. Many lenders reluctant to foreclose hoping for recovery. Small banks may not be properly recognizing expected loan losses on distressed CRE assets despite significantly lower valuations. |
Office Multifamily Valuations Foreclosure Banks |
RatesFederal Reserve cut rates 50 basis points in September despite strong economy and record asset prices. Wall Street and politicians lobbied aggressively for cuts. Rate cuts expected to benefit real estate and banking industries most, though many small cap borrowers may see limited upside given fixed rate debt structures. |
Fed Monetary Policy Easing Lobbying Fixed Rate | |
StaffingStaffing industry suffering as weak demand for temporary labor spreads to permanent jobs. Government payroll numbers were inflated and revised lower. Job openings now below pre-pandemic trend and worse in private sector. Fund's staffing holdings TrueBlue and Resources Connection both declined during quarter. |
Temporary Permanent Job Openings Labor Employment | |
Small CapsSmall caps experienced unprecedented rotation in July with Russell 2000 gaining 12% in five days. Over 40% of nonfinancial Russell 2000 members have net cash, limiting direct impact from rate changes. Relationship between rates and small caps driven as much by risk-on perceptions as operating fundamentals. |
Russell 2000 Rotation Net Cash Risk-on Fundamentals | |
| 2024 Q2 |
Small CapsSmall cap valuations have normalized more than large caps since 2021 peaks, with median profitable small cap P/E at 17.5x versus 24x for large caps. The fund sees selective opportunities among struggling smaller companies trading near multi-year lows. Quality small caps have underperformed recently but historically delivered strong returns. |
Valuations Russell 2000 Underperformance Opportunities |
StaffingThe temporary employment industry is contracting with revenues down 15-25% from two years ago. The fund owns three staffing companies believing this is cyclical rather than structural change. Never before has overall employment remained robust while temporary staffing declined significantly. |
Cyclical Labor Market Temporary Employment Recession | |
ValueThe fund focuses on absolute return investing and finding undervalued businesses trading at discounts. They look for exceptions among ravaged companies with solid balance sheets experiencing temporary issues. Current opportunities exist but the overall small cap market is not on sale. |
Undervalued Absolute Return Discounts Balance Sheets | |
Precious MetalsThe fund maintains exposure to physical silver and gold trusts as a hedge against expected return to easy money policies by the Federal Reserve. Silver gained 17% during the quarter while gold increased 4%. Precious metals ownership is viewed as prudent for surviving the current market environment. |
Silver Gold Federal Reserve Easy Money | |
| 2024 Q1 |
Small CapsSmall cap valuations remain elevated despite recent volatility, with median multiples still on the high side of pre-QE3 periods. The manager categorizes the small cap universe into three buckets based on quality and valuation, currently focusing on Bucket #3 cyclical or out-of-favor businesses where compensation exists for risks assumed. |
Valuations Multiples Quality Cyclical Risk |
ValueThe fund maintains a disciplined value approach with higher required returns and normalization of cash flows, avoiding extrapolation of peak results. This creates a higher threshold for deploying capital and explains significant cash exposure late in the business cycle when valuations are full. |
Discipline Required Returns Normalization Threshold Cash | |
AINvidia's dominance in AI chips has driven extraordinary stock performance, but the manager questions sustainability of margins and market share. The AI bubble has lifted companies like Super Micro Computer to extreme valuations despite limited historical profitability and questionable competitive advantages. |
Nvidia Chips Bubble Margins Sustainability | |
Capital MarketsThe financialization of the economy has reached extreme levels, with derivatives driving underlying asset prices and passive strategies accounting for over half of US equity assets. There are now 3x as many mutual funds and ETFs as publicly listed companies, representing a complete reversal from 40 years ago. |
Financialization Derivatives Passive ETFs Reversal | |
CryptoGlobal cryptocurrency market cap has doubled in four months following Bitcoin ETF approvals, with altcoin market cap surging back toward 2021 bubble highs. The manager views this as evidence of speculative fervor returning to markets. |
Bitcoin ETFs Altcoins Bubble Speculation | |
GoldGold prices hit all-time highs in March, driving performance of the Sprott Gold Trust. Investors appear to be responding to prospects of monetary easing including telegraphed rate cuts and an end to Quantitative Tightening. |
All-time High Monetary Easing Rate Cuts Quantitative Tightening | |
| 2023 Q4 |
Small CapsSmall caps experienced significant volatility in 2023, with a 26% surge from October lows driven by Fed pivot expectations. However, 40% of Russell 2000 constituents remain unprofitable, and median net income has stagnated for 25 years. Quality deterioration and speculative business models persist despite recent outperformance. |
Russell 2000 Valuations Profitability Quality |
InflationInflation remains above the Fed's 2% target, with the Fed signaling rate cuts despite persistent price pressures. Higher prices continue to strain middle and lower-income consumers, affecting spending patterns and creating economic inequality. Asset inflation has not cured equity overvaluation as hoped. |
Fed Policy Consumer Strain Asset Prices Inequality | |
LiquidityThe Fed's monetary policy interventions since 2008 have created artificial liquidity conditions, with aggressive QE and ZIRP policies lasting seven years. The 2020 money printing encore further distorted markets, and expectations of renewed easing in 2024 continue to drive asset prices despite economic fundamentals. |
QE ZIRP Fed Balance Sheet Monetary Policy | |
| 2023 Q3 |
RatesHigher interest rates are like water that freezes in an overleveraged economy and splits it apart. The 10-year Treasury yield has risen to 4.6% from below 2.0% in 2019, yet equity valuations remain elevated with the S&P 500 trading at 21x P/E. The fund sees rates as a major structural headwind that will eventually force valuation adjustments. |
Interest Rates Treasury Yields Fed Policy Monetary Policy ZIRP |
Commercial Real EstateCommercial real estate is experiencing significant distress with office values down 31% from peak and apartments down 22%. Small cap banks are particularly vulnerable as CRE backs 44% of their loans, equaling 289% of their aggregate equity. The fund views this as a major systemic risk for regional banking. |
CRE Office Property Values Banking Risk Real Estate | |
Small CapsSmall caps appear cheap relative to large caps but context is required. The typical small cap trades at 4% free cash flow yield and 20x EV/EBIT. While small caps have underperformed since 2018, the fund believes many apparent bargains still have meaningful downside potential due to cyclical earnings and elevated valuations. |
Valuation Russell 2000 SmallCap 600 Relative Performance FCF Yield | |
Credit StressCredit conditions are deteriorating with Fitch projecting high yield default rates of 4.5-5% by end 2023, up from 1.3% last year. Credit card delinquency rates have reached post-crisis levels, and retail companies are experiencing significant pressure from depleted pandemic savings and higher borrowing costs. |
Default Rates Credit Cards High Yield Delinquencies Consumer Credit | |
MortgageThe housing market is experiencing unprecedented stasis with activity at multidecade lows while prices remain at highs. Housing affordability is at its lowest since the 1980s, with only 16% of California residents able to afford a median-priced home. The fund questions sustainability of current housing dynamics. |
Housing Affordability Mortgage Rates Home Prices Housing Market Real Estate | |
| 2023 Q2 |
AIManager views AI as potentially transformative but warns against investing in the current hype cycle. Compares AI boom to past bubbles like Cisco during the internet explosion, noting that revolutionary technology doesn't guarantee profitable investments. Believes progress will come in small steps rather than giant leaps. |
Artificial Intelligence Technology Bubble Valuation Innovation |
Credit StressManager highlights significant tightening in lending standards with nearly half of banks restricting business loans. Notes rising charge-offs at credit card issuers and deteriorating conditions among younger consumers. Compares current lending environment to previous recession periods. |
Banking Credit Lending Recession Financial | |
Small CapsManager notes that small cap earnings are declining with lower average earnings despite revenue boosts from inflation. Highlights that many small caps have market caps lower than their five-year cumulative free cash flow, creating potential value opportunities despite fundamental headwinds. |
Small Cap Valuation Earnings Value | |
BuybacksManager criticizes excessive share repurchase programs, noting that last year saw the highest percentage of small firms spending more than 100% of free cash flow on buybacks in twenty years. Views this as financially irresponsible behavior encouraged by low interest rate environment. |
Share Repurchases Capital Allocation Financial Management |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 1, 2026 | Fund Letters | Palm Valley Capital Management | DOX | Amdocs Ltd | Software - Infrastructure | IT Services | Bull | NASDAQ | AI Resilience, Billing Systems, high switching costs, infrastructure, Managed services, Software, telecommunications, Value | Login |
| Apr 1, 2026 | Fund Letters | Palm Valley Capital Management | RYN | Rayonier Inc | REIT - Specialty | Specialized REITs | Bull | New York Stock Exchange | Asset Discount, carbon capture, inflation hedge, Real assets, REIT, Share Buybacks, timberland, Value | Login |
| Apr 1, 2026 | Fund Letters | Palm Valley Capital Management | CHRD | Chord Energy Corporation | Oil & Gas E&P | Oil, Gas & Consumable Fuels | Bull | NASDAQ | conservative balance sheet, dividend, Free Cash Flow, Oil & Gas, operational efficiency, Share Buybacks, Williston Basin | Login |
| Jan 6, 2026 | Fund Letters | Jayme Wiggins | FLO | Flowers Foods, Inc. | Consumer Staples | Packaged Foods & Meats | Bull | New York Stock Exchange | cashflow, deleveraging, dividends, innovation, Margins, Staples | Login |
| Jan 6, 2026 | Fund Letters | Jayme Wiggins | HTLD | Heartland Express, Inc. | Industrials | Trucking | Bull | NASDAQ | Capacity, CapEx, deleveraging, Freight, Rates, Regulations, Trucking | Login |
| Jan 6, 2026 | Fund Letters | Jayme Wiggins | DOM LN | Domino’s Pizza Group plc | Consumer Discretionary | Restaurants | Bull | New York Stock Exchange | dividends, Franchising, marketshare, Restaurants, valuation | Login |
| Jan 6, 2026 | Fund Letters | Jayme Wiggins | UTZ | Utz Brands, Inc. | Consumer Staples | Packaged Foods | Bull | New York Stock Exchange | brands, Consumerstaples, deleveraging, Freecashflow, Snacks | Login |
| Jan 6, 2026 | Fund Letters | Jayme Wiggins | INGR | Ingredion Incorporated | Consumer Staples | Food Ingredients | Bull | New York Stock Exchange | cashflow, dividends, Ingredients, Specialtyproducts, valuation | Login |
| Jul 8, 2025 | Fund Letters | Jayme Wiggins | CHRD | Chord Energy Corporation | Energy | Oil & Gas Exploration & Production | Bull | NASDAQ | buybacks, cashflow, dividends, energy, Shale | Login |
| Jul 8, 2025 | Fund Letters | Jayme Wiggins | RES | RPC, Inc. | Energy | Oil & Gas Equipment & Services | Bull | New York Stock Exchange | balance sheet, Cyclicals, energy, Oilfieldservices, Smallcap | Login |
| Jul 8, 2025 | Fund Letters | Jayme Wiggins | PZZA | Papa John's International, Inc. | Consumer Discretionary | Restaurants | Bull | NASDAQ | Consumers, Franchising, growth, Restaurants, turnaround | Login |
| Jul 8, 2025 | Fund Letters | Jayme Wiggins | PSLV | Sprott Physical Silver Trust | Materials | Precious Metals & Minerals | Bull | New York Stock Exchange | Commodities, Hedging, inflation, Preciousmetals, Silver | Login |
| Jul 8, 2025 | Fund Letters | Jayme Wiggins | HCSG | Healthcare Services Group, Inc. | Health Care | Health Care Services | Bull | NASDAQ | cashflow, healthcare, Outsourcing, services, Smallcap | Login |
| Jul 1, 2025 | Fund Letters | Palm Valley Capital Management | RES | RPC | Energy | Energy Equipment & Services | Bull | NYSE | cash-rich, contrarian, Cyclical, debt-free, Energy Services, market share, oilfield services, Pressure Pumping | Login |
| Jul 1, 2025 | Fund Letters | Palm Valley Capital Management | HCSG | Healthcare Services Group | Health Care | Health Care Services | Bull | NASDAQ | COVID Recovery, debt-free, Free Cash Flow, Healthcare services, market leader, Nursing Homes, Outsourcing, turnaround | Login |
| Jul 1, 2025 | Fund Letters | Palm Valley Capital Management | CHRD | Chord Energy | Energy | Oil, Gas & Consumable Fuels | Bull | NASDAQ | dividends, E&P, energy, Free Cash Flow, Oil & Gas, Proven Reserves, Share Buybacks, Value, Williston Basin | Login |
| Jul 1, 2025 | Fund Letters | Palm Valley Capital Management | PZZA | Papa John's International | Consumer Discretionary | Hotels, Restaurants & Leisure | Neutral | NASDAQ | Consumer Discretionary, Franchising, Opportunistic, Pizza, Quick Service, Restaurants, same-store sales, Trading | Login |
| Apr 1, 2025 | Fund Letters | Palm Valley Capital Management | FLO | Flowers Foods | Consumer Staples | Packaged Foods & Meats | Bull | NYSE | Bread Producer, consumer staples, dividend yield, Free Cash Flow, market leader, Packaged Foods, Value | Login |
| Apr 1, 2025 | Fund Letters | Palm Valley Capital Management | REYN | Reynolds Consumer Products | Consumer Staples | Household Products | Bull | NASDAQ | consumer staples, defensive, household products, leverage, market leader, Quality, Stable Cash Flow | Login |
| Apr 1, 2025 | Fund Letters | Palm Valley Capital Management | MNRO | Monro | Consumer Discretionary | Specialty Retail | Bull | NASDAQ | Automotive Aftermarket, Cyclical Recovery, dividend yield, essential services, Free Cash Flow, Tire Services, Value | Login |
| Apr 1, 2025 | Fund Letters | Palm Valley Capital Management | FORR | Forrester Research | Communication Services | Research & Consulting Services | Bull | NASDAQ | Consulting, net cash, SaaS, subscription model, Technology Research, turnaround, Value | Login |
| Jan 1, 2025 | Fund Letters | Palm Valley Capital Management | KELYA | Kelly Services | Industrials | Human Resource & Employment Services | Bull | NASDAQ | Education, Equity, Human Resources, Staffing, technology, Temporary Labor, turnaround, Value | Login |
| Jan 1, 2025 | Fund Letters | Palm Valley Capital Management | SEB | Seaboard Corporation | Consumer Staples | Packaged Foods & Meats | Bull | NYSE | agriculture, Commodities, Cyclical, Equity, Pork Processing, Renewable diesel, Shipping, Turkey, Value | Login |
| Jan 1, 2025 | Fund Letters | Palm Valley Capital Management | HTLD | Heartland Express | Industrials | Trucking | Bull | NASDAQ | Cyclical, deleveraging, Equity, recovery, Transportation, Trucking, Value | Login |
| Oct 1, 2024 | Fund Letters | Palm Valley Capital Management | TBI | TrueBlue | Industrials | Human Resource & Employment Services | Bear | NYSE | Blue-collar, Cost Reduction, Industrial, operating losses, Staffing, Temporary Labor, Value trap | Login |
| Oct 1, 2024 | Fund Letters | Palm Valley Capital Management | RGP | Resources Connection | Industrials | Human Resource & Employment Services | Bull | NASDAQ | cash position, Consulting, Cyclical Recovery, dividend yield, Professional Staffing, rate sensitivity, Zero Debt | Login |
| Oct 1, 2024 | Fund Letters | Palm Valley Capital Management | LAS.TO | Lassonde Industries | Consumer Staples | Soft Drinks | Bull | TSX | Beverage Manufacturing, Canadian, margin expansion, operating leverage, premium brands, Specialty-Foods, turnaround | Login |
| Oct 1, 2024 | Fund Letters | Palm Valley Capital Management | DOX | Amdocs | Information Technology | IT Consulting & Other Services | Bull | NASDAQ | AI integration, cash generation, cloud migration, Digital transformation, Managed services, recurring revenue, Telecommunications Services | Login |
| Oct 1, 2024 | Fund Letters | Palm Valley Capital Management | WHGLY | WH Group | Consumer Staples | Packaged Foods & Meats | Bull | OTC | Feed Costs, geopolitical risk, Operational Turnaround, Packaged meats, Pork Producer, Smithfield IPO, value unlock | Login |
| Oct 1, 2024 | Fund Letters | Palm Valley Capital Management | HELE | Helen of Troy | Consumer Discretionary | Household Products | Bull | NASDAQ | asset-light, Consumer products, contrarian, discretionary spending, free cash flow yield, Leading Brands, Roll-up | Login |
| Jul 1, 2024 | Fund Letters | Palm Valley Capital Management | DOX | Amdocs | Software & Services | IT Services | Bull | NASDAQ | Billing Systems, Blue Chip Clients, defensive, EPS growth, market overreaction, Mission-Critical, Network Optimization, Quality Business, Software Services, telecommunications | Login |
| Jul 1, 2024 | Fund Letters | Palm Valley Capital Management | TBI | TrueBlue | Commercial & Professional Services | Human Resource & Employment Services | Bull | NYSE | blue-collar staffing, contrarian, cost structure, Cycle Low, Cyclical, debt-free, Liquidity, operating leverage, tangible book value, Value | Login |
| Jul 1, 2024 | Fund Letters | Palm Valley Capital Management | CRI | Carter's | Consumer Discretionary | Apparel, Accessories & Luxury Goods | Bull | NYSE | brand strength, Children's Apparel, Consumer Discretionary, consumer pressure, Defensive Market Position, Distribution Channels, e-commerce, Historical Longevity, market leader, retail | Login |
| Jul 1, 2024 | Fund Letters | Palm Valley Capital Management | RGP | Resources Connection | Commercial & Professional Services | Human Resource & Employment Services | Bull | NASDAQ | business transformation, clean balance sheet, Consulting, Cyclical, Fortune 100, Free Cash Flow, professional services, regulatory compliance, Staffing, Value | Login |
| Apr 1, 2024 | Fund Letters | Palm Valley Capital Management | NWN | Northwest Natural Holding Company | Utilities | Gas Utilities | Bull | NYSE | defensive, Dividend Growth, infrastructure investment, natural gas, Oregon, Rate Increase, regulated utility, utilities, Washington | Login |
| Jan 1, 2024 | Fund Letters | Palm Valley Capital Management | LAS/A CN|MLR|MNRO|NGS|WHGLY|WLY | John Wiley & Sons | Communication Services | Publishing | Bull | NYSE | Academic Publishing, barriers to entry, dividend yield, Free Cash Flow, Journals, Textbooks, turnaround, Value | Login |
| Jan 1, 2024 | Fund Letters | Palm Valley Capital Management | LAS/A CN|MLR|MNRO|NGS|WHGLY|WLY | Monro, Inc. | Consumer Discretionary | Automotive Retail | Bull | NASDAQ | Automotive Services, Consumer Discretionary, Free Cash Flow, Normalized Earnings, small-cap, Tire Retail, Value | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | FPI | Farmland Partners | Real Estate | Specialized REITs | Bull | NYSE | agricultural land, asset value, Farmland, Interest Rate Sensitive, Real assets, Real Estate, REIT, Share Buybacks | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | CRD.A | Crawford & Company | Financials | Insurance Brokers | Bull | NYSE | Catastrophe Activity, claims management, Cyclical, financials, Insurance Services, operating leverage, Value | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | EQC | Equity Commonwealth | Real Estate | Office REITs | Bull | NYSE | asset sales, cash position, commercial real estate, Opportunistic, Patient Capital, Real Estate, REIT, Value | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | AAP | Advance Auto Parts | Consumer Discretionary | Automotive Retail | Bull | NYSE | Automotive Aftermarket, comparable sales, Consumer Discretionary, Operational Improvement, Real Estate Assets, turnaround, Value | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | SSRM | SSR Mining | Materials | Gold | Bull | NASDAQ | asset value, dividend, Free Cash Flow, Geographic Diversification, gold mining, materials, net cash, Precious Metals | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | BHARATBIJ.NS | TrueBlue | Industrials | Human Resource & Employment Services | Bull | NYSE | Cyclical, debt-free, Industrials, Recession-Resilient, Staffing Services, Temporary Employment, Value | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | ARGX BB|DAVA|DDOG|GLOB|ILMN|LOAR|MELI|NET|NU|NVDA|TSM | Avista Corporation | Utilities | Electric Utilities | Bull | NYSE | defensive, Electric Utility, Hydroelectric, Rate Case, Regulated, utilities, Value, Wildfire Risk | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | LAS.TO | Lassonde Industries | Consumer Staples | Soft Drinks | Bull | Toronto Stock Exchange | Beverages, Canada, consumer staples, Fruit Juice, market share, Pricing power, restructuring, Value | Login |
| Oct 1, 2023 | Fund Letters | Palm Valley Capital Management | LAS/A CN|MLR|MNRO|NGS|WHGLY|WLY | Miller Industries | Industrials | Commercial Vehicles & Trucks | Neutral | NASDAQ | commercial vehicles, Cyclical, debt reduction, Industrials, Record Revenue, Towing Equipment, working capital | Login |
| Jul 1, 2023 | Fund Letters | Palm Valley Capital Management | AAP | Advance Auto Parts | Consumer Discretionary | Automotive Retail | Bull | NYSE | Aftermarket Parts, Automotive Retail, DIY, inventory normalization, Professional Channel, Recession-resistant, turnaround, Value | Login |
| Jul 1, 2023 | Fund Letters | Palm Valley Capital Management | BHARATBIJ.NS | TrueBlue | Industrials | Human Resource & Employment Services | Bull | NYSE | Blue-collar, Cyclical, debt-free, Free Cash Flow, manufacturing, Staffing, Transportation, Value, Warehouse | Login |
| Jul 1, 2023 | Fund Letters | Palm Valley Capital Management | LAS.TO | Lassonde Industries | Consumer Staples | Soft Drinks | Bull | TSX | Beverages, Canada, Cost Inflation, Fruit Juices, inventory normalization, Pricing power, turnaround, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| DOX | We believe Amdocs is far less exposed to AI-driven disruption than many SaaS companies because it is deeply embedded in systems of record and mission-critical infrastructure for its tier-1 telecommunications customers. The company operates billing engines, subscriber databases, network provisioning, and revenue recognition systems that are tightly integrated into carrier operations and carry high switching costs, which helps explain Amdocs' extremely strong customer retention. Replacing this infrastructure layer would require significant operational disruption, limiting the near-term risk from AI. Unlike seat-based SaaS models, Amdocs generates revenue through long-term managed services contracts involving substantial customization and integration, often embedded within carrier IT environments for decades. While AI may compress portions of services revenue by reducing manual coding and testing, Amdocs has been proactive in incorporating automation and AI into its offerings. More broadly, while AI threatens software that automates knowledge workers, Amdocs is focused on automating infrastructure complexity within highly regulated telecom ecosystems. The valuation, at approximately 10x free cash flow, hasn't been this cheap in years. |
| LKQ | LKQ Corp., a leading global distributor of recycled and remanufactured vehicle parts, saw its stock fall on the day it announced a strategic review that could include selling the whole company. |
| TFX | The shares of Teleflex, which derives most of its revenue from consumable medical devices, are near multi-year lows. Yet the firm has two major dispositions lined up that will help it deleverage, repurchase shares at a low valuation, and emerge a higher growth business. |
| KELYA | Staffer Kelly Services has a new, motivated controlling shareholder who in January 2026 paid over 4x the current price of the nonvoting stock for its stake. |
| RGP | RGP has been unable to stem revenue declines, which the firm has mitigated through aggressive cost reductions. The result has been meager, but positive, earnings. During its January earnings report, the company officially acknowledged AI pressure for the first time, citing reduced demand in traditional finance roles as clients increasingly adopt artificial intelligence and automation. While it's possible RGP is AI washing its underperformance, the market has rendered a harsh judgment, with shares trading for 1.5x cash and less than RGP's average annual operating profit for most years prior to 2025. |
| FLO | Flowers Foods is a leading producer of bread and bakery products. While the company's most recent quarterly earnings met expectations, its 2026 guidance indicates continued weakness across the broader bread category. Over the past two years, both Flowers and the wider bakery industry have experienced volume declines, driven in part by the growing adoption of GLP-1 weight-loss treatments and softer consumer sentiment. Although we expect industry volumes to remain under pressure in the near term, the company should continue to generate strong free cash flow. |
| CHRD | Chord Energy is an exploration and production company focused on the Williston Basin. Like many in the industry, its shares moved higher in March alongside rising oil prices. Operationally, the company continues to perform well, with production and cash flow exceeding expectations for most of 2025. Chord has also improved its cost structure by extending drilling laterals, which has lowered its oil break-even price and improved its competitiveness relative to other basins. With a conservative balance sheet and another year of solid free cash flow expected, we believe Chord is well positioned to continue returning capital to shareholders through above-average dividends and ongoing share repurchases. |
| HTLD | Although the freight recession continues to pressure earnings, Heartland Express's operating results are beginning to stabilize, with management noting initial signs of recovery in both shipment volumes and rates. Further improvements are expected in 2026 as the industry works through excess capacity, driven by fleet reductions and tighter regulatory enforcement that is reducing the supply of qualified drivers. |
| FPI | Farmland Partners is a real estate investment trust that owns and leases farmland across the U.S. During the quarter, the REIT reported better-than-expected operating results. Farmland also increased its dividend by 50%. In addition, it continues to sell farms and use the proceeds to reduce debt, buy back stock, and pay special dividends. Over the past year, Farmland sold 60 properties across the Corn Belt, Delta and South, High Plains, and West Coast regions, realizing an overall gain of 38%. |
| RYN | Founded in 1926, Rayonier is the second largest publicly traded timberland real estate investment trust in the United States. Following its January 2026 merger with PotlatchDeltic, the company owns approximately 4.1 million acres of timberland and six sawmills. Rayonier's value is backed by its diversified timberland portfolio, which generates cash flow through timber harvesting, land sales, and alternative uses such as carbon capture and solar leases. We believe Rayonier's shares trade at an attractive discount to the market value of its timberland assets. Management is working to close this gap by gradually selling land for higher and better use at prices well above traditional timberland valuations and is using the proceeds to buy back stock. |
| PHYS | We sold our remaining position in the Sprott Physical Gold Trust toward the beginning of the quarter, marking our portfolio exit from precious metals. Gold and silver prices subsequently deflated from their early Q1 hysteria, although they remain significantly higher year-over-year. |
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