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 Skechers USA Inc (NYSE:SKX) is one of them. Skechers is a lifestyle and performance footwear company. Year-to-date, SKX stock lost 37.3% and on May 18th it had a closing price of $27.32. Here is what Palm Valley Capital said:
“Skechers (SKX) is a leading global footwear brand with sales evenly balanced across domestic wholesale, retail, and international channels. The firm earns approximately 20% of revenue from China, so Skechers’ results will show an early impact from the coronavirus. Nevertheless, the company has over $900 million of cash and investments with limited debt. We believe Skechers will be wellpositioned to exit the crisis and regain its momentum.”
In Q4 2019, the number of bullish hedge fund positions on SKX stock increased by about 7% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with SKX’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 are checking out investment opportunities like this one. 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.