Palm Valley Capital Fund Sold its Stake in Kelly Services (KELYA) in Q2

Palm Valley Capital Management, an investment management firm, released the “Palm Valley Capital Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, Palm Valley Capital Fund increased 0.79% compared to a 3.11% and 3.64% decline for the S&P SmallCap 600 Index and the Morningstar Small Cap Index, respectively. In Q2, small caps continued their trend of underperforming big caps. The fund’s equity securities saw a slight increase of +0.24% in Q2 before operational expenses (fees).  On the other hand, interest received on Treasury bills boosted quarterly profit. At the end of the period, cash equivalents made up 81.4% of the firm’s assets. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Palm Valley Capital Management highlighted stocks like Kelly Services, Inc. (NASDAQ:KELYA) in the second quarter 2024 investor letter. Kelly Services, Inc. (NASDAQ:KELYA) provides workforce solutions to various industries. The one-month return of Kelly Services, Inc. (NASDAQ:KELYA) was -4.86%, and its shares gained 17.02% of their value over the last 52 weeks. On July 9, 2024, Kelly Services, Inc. (NASDAQ:KELYA) stock closed at $20.35 per share with a market capitalization of $724.029 million.

Palm Valley Capital Management stated the following regarding Kelly Services, Inc. (NASDAQ:KELYA) in its Q2 2024 investor letter:

“During the quarter, we sold Kelly Services, Inc. (NASDAQ:KELYA). Kelly is a staffing company that has been bucking industry trends recently, with margins expanding to record highs. This is due to internal efforts to raise profitability as well as the company’s leading position in educational staffing, including substitute teachers. Although Kelly has long maintained an excellent balance sheet, in early May the company announced a major acquisition and did not, at the time, share details about the profitability of the target. As a result, we were unable to determine how the deal would affect our valuation, but we believed it could have a material adverse impact and would increase the firm’s financial risk. Since Kelly was trading near our valuation, we sold on the news. This was our second time owning Kelly since the Fund’s launch.”

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Kelly Services, Inc. (NASDAQ:KELYA) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held Kelly Services, Inc. (NASDAQ:KELYA) at the end of the first quarter which was 14 in the previous quarter. In the first quarter, Kelly Services, Inc. (NASDAQ:KELYA) generated $1.05 billion in total revenues down from $1.27 billion in 2023. While we acknowledge the potential of Kelly Services, Inc. (NASDAQ:KELYA) 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 cheapest AI stock.

Palm Valley Capital Management highlighted in its Q1 2024 investor letter that despite a challenging staffing climate Kelly Services, Inc. (NASDAQ:KELYA) reported earnings growth in the quarter. In addition, please check out our hedge fund investor letters Q2 2024 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.