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Palm Valley Capital Management’s Second Quarter 2019 Commentary

Palm Valley Capital Management is an investment firm based in Jacksonville Beach, Florida. The company is composed of professionals that specialize in small-cap value investments and its processes focus on acquiring well-performing businesses at great prices.

The fund was founded by three managers: Eric Cinnamond, Jayme Wiggins, and Frank Martin. Cinnamond entered the investment field in 1993 after graduating from Stetson University and worked for First Union National Bank. He also worked for Evergreen Funds, Intrepid Capital Management, and River Road Independent Value Fund. He holds an MBA from the University of Florida.

Just like Cinnamond, Wiggins is also an alumnus of Stetson University and previously worked for Intrepid Capital Management. He is an expert when it comes to small-cap equity securities research and valuation. He holds an MBA from Columbia Business School.

Among the three founders, Martin is the most experienced in the investment industry. With over 50 years of investing experience, he worked and partnered with big companies and is on the boards of different charitable organizations. This Northwestern University alumnus founded Martin Capital Management in 1987 and authored two investment books. He holds an MBA from Indiana University at South Bend.

Palm Valley Capital Management released its first investor letter, the Second Quarter 2019 Commentary, wherein Cinnamond and Wiggins informed the investors about the fund’s recent investment performance.

“Dear Friends,

This is the inaugural letter for the Palm Valley Capital Fund (ticker: PVCMX), which launched on April 30, 2019. The Palm Valley Capital Fund (the Fund) invests in small-cap stocks. While our Fund is new, its underlying absolute return-based investment strategy is not. We have practiced the same strategy throughout our careers in investment management.

The foundation of our approach is to only deploy capital when we believe we have found an undervalued security. This can result in the Fund holding a significant percentage of cash during periods of high small cap valuations, like the present. Being “underinvested” in equities can create meaningful differences in investment performance between our Fund and its benchmarks. Furthermore, the types of stocks we own are often considered contrarian and may behave differently than their small cap peers. We emphasize the quality of a company’s balance sheet and free cash flow stream when evaluating securities for the portfolio. Many other investors focus on estimating growth rates and how a firm’s management can maximize near-term earnings per share.”

The firm reported that its Palm Valley Capital Fund, which started on April 30,  returned 0.70% from its inception through June 30, 2019. However, the Morningstar Small Cap Total Return Index and the S&P Small Cap 600 Index declined 1.35% and 1.93%, respectively. You may download the complete report below.

“For the two-month period from April 30, 2019 (inception) through June 30, 2019, the Palm Valley Capital Fund returned 0.70%. In contrast, the S&P Small Cap 600 Index and Morningstar Small Cap Total Return Index declined 1.93% and 1.35%, respectively. While we are pleased to report positive relative returns since the Fund’s inception, we are not overly concerned about how we compare to a benchmark in the short-term.”

You can download a copy of Palm Valley Capital Management’s Second Quarter 2019 Commentary here:

Palm Valley Capital Management’s Second Quarter 2019 Commentary

You can also see the list of our 2019 Q2 investor letters and download them on this page.

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