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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Palm Harbour Capital returned 4.66% in Q2 2026 despite June underperformance from Asian holdings caught in leverage-driven market distortions. The manager expresses deep concern about extreme leverage and passive flows creating systemic risks while maintaining strong conviction in fundamentally-driven value investing."
Palm Harbour Capital returned 4.66% in Q2 2026, bringing one-year returns to 10.6% and inception-to-date annualized returns to 10.4%. The fund underperformed in June due to Asian exposure, where capital gravitated to narrow technology names while attractively valued businesses experienced weaker performance despite unchanged fundamentals. Korea's introduction of leveraged single-stock ETFs caused extreme volatility and investor losses exceeding 40%, exemplifying the manager's deep concerns about extreme leverage levels and passive flows distorting markets. Top contributors included Watches of Switzerland (+59.2%), which rebounded strongly on resilient Rolex demand and easing tariff concerns, and Esprinet (+44.1%), benefiting from market share gains and IT spending recovery. Norma continued returning €260 million to shareholders through buybacks at premiums to market. The manager maintains conviction in patient, fundamentally-driven value investing, with the portfolio offering 106% upside at 6.6x P/E and 17% FCF yield. The fund added a Mexican cement company and two Asian names while exiting BW Energy and M Dias Branco. Management remains extremely optimistic about medium-term prospects for smaller, out-of-favor companies.
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