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 Cass Information Systems Inc (NASDAQ:CASS) is one of them. Cass Information Systems provides freight and utility invoice payment services. Year-to-date, CASS stock lost 35.5% and on May 18th it had a closing price of $37.75. Here is what Palm Valley Capital said:
“Cass Information Systems (CASS) provides payment and information processing services to large manufacturing, distribution, and retail businesses across the U.S. and is more popularly known for its Cass Freight Index. The firm also provides commercial banking services with a primary focus on faith based ministries. We believe the larger transaction processing segment is a high-quality operation with significant recurring revenue. The banking segment has historically experienced limited chargeoffs, even during recessions.”
In Q3 2019, the number of bullish hedge fund positions on CASS stock decreased by about 18% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with CASS’s growth potential.
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 are checking out investment opportunities like this one. 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.