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 Sp Plus Corp (NASDAQ:SP) is one of them. SP+ facilitates the movement of vehicles, people, and personal belongings. Year-to-date, SP stock lost 55.5% and on May 19th it had a closing price of $18.63. Here is what Palm Valley Capital said:
“SP Plus (SP) provides professional parking management, ground transportation, remote baggage check-in and handling, and other solutions. Aviation comprises half of the business. However, over 80% of the company’s gross profit is earned from management contracts where SP Plus receives a fee regardless of the financial performance of its client. We were willing to accept moderate financial risk in buying SP, which has debt, given the steep drop in its share price.”
In Q3 2019, the number of bullish hedge fund positions on SP stock decreased by about 15% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with SP’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 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.