Palm Valley Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 0.89% for the quarter, underperforming its benchmark, the S&P Small Cap 600 Index which returned 3.17% in the same quarter. You should check out Palm Valley Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the said letter, Palm Valley Capital highlighted a few stocks and Crawford & Co (NYSE:CRD) is one of them. Crawford & Co (NYSE:CRD) is the world’s largest independent claims management company. Year-to-date, Crawford & Co (NYSE:CRD) stock lost about 36% and on October 7th it had a closing price of $6.50. Here is what Palm Valley Capital said:
“Of the Fund’s top 10 positions, only one has more debt than cash: Crawford & Co (CRD/A, CRD/B), which has approximately 1.5x net leverage on depressed numbers. Crawford is a top provider of claims management services to insurance companies and self-insured entities. Demand is tied to industrywide claims volumes, which are impacted by weather events, economic activity, and workplace injuries. A cursory examination of the company’s long-term operating performance suggests stagnation. However, a few years ago, Crawford sold its class action administration business (“Garden City”). Following the 2010 BP oil spill, this segment enjoyed several years of abnormally strong, but dwindling, profits. This masked underlying improvement in the core claims and third-party administration businesses. Crawford’s results are positively impacted by extreme weather activity, which hurt them in 2019, but we believe the shares are inexpensive based on normalized profitability. The stock is trading for 6-7x normalized operating profit and a double-digit free cash flow yield.”
In Q1 2020, the number of bullish hedge fund positions on Crawford & Co (NYSE:CRD) stock remained unchanged from the previous quarter (see the chart here). Our calculations showed that Crawford & Co (NYSE:CRD) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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