Palm Valley Capital Management, an investment management firm, released the “Palm Valley Capital Fund” second quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, Palm Valley Capital Fund appreciated 0.82% compared to a 4.90% gain for the S&P SmallCap 600 and a 7.28% rise in the Morningstar Small Cap Total Return Index. Cash was 76.7% of Fund assets at the start of the quarter and 73.6% at the conclusion. Year-to-date, the fund gained 1.39% compared to a 4.46% decline for the S&P SmallCap 600 and a 0.75% rise for the Morningstar Small Cap Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second quarter 2025 investor letter, Palm Valley Capital Fund highlighted stocks such as Papa John’s International, Inc. (NASDAQ:PZZA). Papa John’s International, Inc. (NASDAQ:PZZA) operates and franchises pizza delivery and carryout restaurants. The one-month return of Papa John’s International, Inc. (NASDAQ:PZZA) was -1.35%, and its shares gained 11.94% of their value over the last 52 weeks. On July 7, 2025, Papa John’s International, Inc. (NASDAQ:PZZA) stock closed at $47.55 per share, with a market capitalization of $1.557 billion.
Palm Valley Capital Fund stated the following regarding Papa John’s International, Inc. (NASDAQ:PZZA) in its second quarter 2025 investor letter:
“The Fund acquired four new names during the second quarter: Healthcare Services Group (ticker: HCSG), Chord Energy (ticker: CHRD), RPC (ticker: RES), and Papa John’s International, Inc. (NASDAQ:PZZA).
Papa John’s International is a leading operator and franchiser of pizza delivery and carryout restaurants. Papa John’s has been on our possible buy list for decades and is a business we know well. In fact, when we owned it previously, we used to make Papa John’s “pizza bets” with one another based on market hijinks before the credit crisis. Once, after six unsuccessful escalations of “double or nothing,” one of us accumulated a 64-pizza deficit! We bought Papa John’s stock during the April 2025 market selloff. Shortly after, the company reported Q1 2025 operating results that exceeded expectations. While the results were only slightly better than anticipated, the stock increased sharply after management indicated same-store sales would improve in the second half of the year. In addition to its earnings report, Papa John’s stock rallied along with the stock market later in the quarter and exceeded our calculated business value sooner than expected. As a result, we bought and sold shares in the same quarter. We exited the position before buyout rumors circulated.”
A family gathering around a delivery pizza box in the comfort of their own home.
Papa John’s International, Inc. (NASDAQ:PZZA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held Papa John’s International, Inc. (NASDAQ:PZZA) at the end of the first quarter, compared to 30 in the previous quarter. In the first quarter of 2025, Papa John’s International, Inc. (NASDAQ:PZZA) reported revenue of $518 million, up 1% from last year. While we acknowledge the potential of Papa John’s International, Inc. (NASDAQ:PZZA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered Papa John’s International, Inc. (NASDAQ:PZZA) and shared the list of stocks Jim Cramer recently shared insights on. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of PZZA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
