Palm Valley Capital Management, an investment management firm, has released the “Palm Valley Capital Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, Palm Valley Capital Fund appreciated 0.66% compared to a 1.70% gain for the S&P SmallCap 600 and a 3.12% rise in the Morningstar Small Cap Total Return Index. At the beginning of the quarter, the Fund allocated 74.1% to Treasury bills and increased to 76.3% by the end of the quarter. The equity holdings of the Fund rose by 1.12% over the past three months (excluding the effects of fund operating expenses). The performance of equities was positively influenced by the investments in precious metals, particularly as silver has been the Fund’s largest allocation for the past few years. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Palm Valley Capital Fund highlighted stocks such as Forrester Research, Inc. (NASDAQ:FORR). Forrester Research, Inc. (NASDAQ:FORR) is an independent research and advisory company. The one-month return of Forrester Research, Inc. (NASDAQ:FORR) was 14.47%, and its shares lost 44.86% of their value over the last 52 weeks. On January 5, 2026, Forrester Research, Inc. (NASDAQ:FORR) stock closed at $8.15 per share, with a market capitalization of $155.526 million.
Palm Valley Capital Fund stated the following regarding Forrester Research, Inc. (NASDAQ:FORR) in its fourth quarter 2025 investor letter:
“We sold Forrester Research, Inc. (NASDAQ:FORR) in Q4. Typically, our sales occur when share prices reach our valuations. Occasionally, we will sell stocks at a loss when we can no longer value them with a high degree of confidence. When we purchased Forrester Research in early 2025, we saw it as a distant number two in providing advice to business leaders about how technology impacts their companies. Forrester achieved peak earnings during the pandemic as firms transitioned to work from home environments, leaning heavily on Forrester to help guide their digital shifts. We concluded that the company’s revenue challenges in the last couple of years were mostly self inflicted, since larger peer Gartner continued to grow at impressive rates. Two things changed.
First, Gartner’s growth trajectory showed cracks during the summer, which was partly blamed on DOGE cutbacks. If Garner sneezes, Forrester is likely to catch pneumonia. Second, and more critically, AI chatbots have improved significantly in 2025, from our perspective. While it is true that LLMs cannot access the walled gardens of proprietary data collected by Gartner and Forrester, we suspect an increasing number of paying subscribers will be satisfied with the improving responses available from popular chatbots. While we’re not expecting AI to impact the economy as quickly and significantly as most Wall Street bulls, this is an industry where it seems like the risk is legitimate. We grew concerned Forrester would have a tough time emerging from its sales slump. For a business with a significant amount of deferred revenue like Forrester, shrinking causes cash outflows. Therefore, we felt the pile of cash on the balance sheet today was less reliable for the purpose of valuation.”
Forrester Research, Inc. (NASDAQ:FORR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 17 hedge fund portfolios held Forrester Research, Inc. (NASDAQ:FORR) at the end of the third quarter, the same as in the previous quarter. In Q3 2025, Forrester Research, Inc. (NASDAQ:FORR) generated $94.3 million in revenue compared to $102.5 million in the prior year period. While we acknowledge the risk and potential of Forrester Research, Inc. (NASDAQ:FORR) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Forrester Research, Inc. (NASDAQ:FORR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Palm Valley Capital Fund opened a position in Forrester Research, Inc. (NASDAQ:FORR) in Q1 2025. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
