Palm Valley Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of 0.79% for the quarter, outperforming its benchmark, the S&P Small Cap 600 Index which returned -32.65% in the same quarter. You should check out Palm Valley Capital’s top 5 stock picks which helped them beat the market by nearly 33 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Palm Valley Capital highlighted a few stocks and A-Mark Precious Metals Inc. (NASDAQ:AMRK) is one of them. A-Mark is a precious metals trading company. Year-to-date, AMRK stock gained 98.2% and on May 19th it had a closing price of $16.06. Here is what Palm Valley Capital said:
“In last quarter’s letter, we wrote: “A-Mark’s trading operations earn higher profits when gold and silver prices are volatile and the spreads on physical metals are large, such as in 2008-2009, 2011, and 2015.” The coronavirus pandemic and resulting plunge in equities has caused a surge in demand for physical gold and silver. The U.S. Mint temporarily sold out of Silver Eagles in March. Major online gold and silver retailers also have limited inventories (see below). The current premium you must pay over spot silver to buy a 1 oz. American Silver Eagle is $8.49 to $11.00 per coin, or 60% to 77% of spot prices, versus ~$2 before the crisis. This is an extremely favorable trading environment for A-Mark.”
In Q3 2019, the number of bullish hedge fund positions on AMRK stock remained unchanged from the previous quarter (see the chart here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.