Palm Valley Capital Management, an investment management firm, released its fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, Palm Valley Capital Fund returned 3.86% compared to a 9.19% rise for the S&P SmallCap 600 Index and an 8.05% return for the Morningstar Small Cap Index. A large cash position led the fund to underperform its benchmark index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
In its Q3 2022 investor letter, Palm Valley Capital Management mentioned Oil-Dri Corporation of America (NYSE:ODC) and explained its insights for the company. Founded in 1941, Oil-Dri Corporation of America (NYSE:ODC) is a Chicago, Illinois-based specialty sorbent products manufacturer and supplier with a $253.0 million market capitalization. Oil-Dri Corporation of America (NYSE:ODC) delivered a 5.46% return since the beginning of the year, while its 12-month returns are up by 3.66%. The stock closed at $35.37 per share on January 20, 2023.
Here is what Palm Valley Capital Management has to say about Oil-Dri Corporation of America (NYSE:ODC) in its Q3 2022 investor letter:
“One theme for the Fund during 2022 was our investment in companies exhibiting margins that are below normal levels, generally because of inflationary factors. We believe this contrasts with the overall market’s above-average profitability. Fund holdings that fit this bill include Oil-Dri Corporation of America (NYSE:ODC). In the first three cases, we believe the catalysts for improved profitability are the price increases the companies are currently pushing through to customers. Oil Dri’s product pricing was up roughly 20% from the prior year. For certain businesses, the lag between cost inflation and price realization presented investment opportunities in 2022, in our judgment. We did not purchase any new holdings during the fourth quarter. We also meaningfully reduced our weightings in Oil-Dri as their stock prices approached fair value. Oil Dri may be closer to the finish line in raising prices than some of the Fund’s other positions that were acquired under a similar thesis.”
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Our calculations show that Oil-Dri Corporation of America (NYSE:ODC) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Oil-Dri Corporation of America (NYSE:ODC) was in 3 hedge fund portfolios at the end of the second quarter of 2022, compared to 5 funds in the previous quarter. Oil-Dri Corporation of America (NYSE:ODC) delivered a 27.28% return in the past 3 months.
In January 2023, we also shared another hedge fund’s views on Oil-Dri Corporation of America (NYSE:ODC) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q4 2022 page.
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Disclosure: None. This article is originally published at Insider Monkey.
