Palm Valley Capital Management, an investment management firm, has issued the second-quarter 2026 investor letter for the “Palm Valley Capital Fund.” A copy of the letter can be downloaded here. In the second quarter, the fund’s investor class gained 1.80%, while the S&P SmallCap 600 rose 19.7% and the Morningstar Small Cap Total Return Index returned 14.0%. The Strategy primarily focused on small-cap categories, allocating 75% to cash equivalents. This led to underperformance relative to benchmarks. The Fund is currently seeking more small-cap opportunities that meet its return criteria and will act swiftly if market conditions improve. The Index benefited from strong contributions from data center construction and biotech sectors, while the energy industry lagged. Additionally, reviewing the fund’s top five holdings can reveal its best investments in 2026.
In its second-quarter 2026 investor letter, Palm Valley Capital Management highlighted The Clorox Company (NYSE:CLX). The Clorox Company (NYSE:CLX) is a global manufacturer of consumer and professional products operating through its Health and Wellness, Household, Lifestyle, and International segments. On July 7, 2026, The Clorox Company (NYSE:CLX) closed at $97.41 per share, reflecting a market capitalization of $11.78 billion. The Clorox Company (NYSE:CLX) posted a one-month return of -1.92%, while its shares lost 22.69% over the past 52 weeks.
Palm Valley Capital Management stated the following regarding The Clorox Company (NYSE:CLX) in its Q2 2026 investor letter:
“The Fund acquired three new positions during the second quarter: The Clorox Company (NYSE:CLX), Molson Coors Beverage Company (ticker: TAP), and Vontier Corp. (ticker: VNT). The Clorox Company manufactures a wide range of household and professional cleaning, disinfecting, lifestyle, and wellness products. Its portfolio includes well known brands such as Clorox bleach and disinfecting wipes, Pine-Sol cleaners, Glad trash bags, Burt’s Bees lip balm, Kingsford charcoal, Fresh Step cat litter, and Hidden Valley salad dressings. The company suffered a major cyberattack in 2023 that disrupted production and distribution, causing it to lose market share in several categories. The recovery has been slower than investors hoped, and Clorox has been working through a large ERP implementation that distorted shipments, reduced volumes, and created inventory disruptions with retailers.
In April, Clorox cut its fiscal 2026 outlook. Consumers have become more price-sensitive, leading some shoppers to trade down to private-label alternatives in categories such as cleaning products and household consumables. We view Clorox as a slow-growth consumer staples company with historically stable cash flows. We acquired a small position near the lows, but the shares have since bounced.”
The Clorox Company (NYSE:CLX) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 44 hedge fund portfolios held The Clorox Company (NYSE:CLX) at the end of the first quarter, compared to 48 in the previous quarter. While we acknowledge the risk and potential of The Clorox Company (NYSE:CLX) 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 The Clorox Company (NYSE:CLX) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered The Clorox Company (NYSE:CLX) and shared the list of top dividend aristocrats. In addition, please check out our hedge fund investor letters Q1 2026 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.
