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 Helmerich & Payne Inc. (NYSE:HP) is one of them. Helmerich & Payne is a petroleum contract drilling company. Year-to-date, HP stock lost 58.1% and on May 18th it had a closing price of $19.26. Here is what Palm Valley Capital said:
“Helmerich & Payne (HP) is the number one land drilling company in the United States. Founded in 1920, Helmerich & Payne has a long history of successfully navigating through the frequent booms and busts of the energy industry. As oil and natural gas prices plummeted during the quarter, Helmerich & Payne’s stock fell sharply and traded below our calculated value of its 331 land rigs. Although we expect results to suffer in the near-term, we believe the company’s balance sheet will allow it to survive the current bust in the energy industry. As of December 31, 2019, the company had $412 million in cash and has no debt maturities until 2025.”
In Q4 2019, the number of bullish hedge fund positions on HP stock increased by about 14% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with HP’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.