Overview
- In its Q2 investor letter the Palm Valley Capital Fund reported a 1.80% gain and said roughly 75% of the portfolio sat in cash while the S&P SmallCap 600 rose about 19.7% and the Morningstar small‑cap index gained about 14.0%.
- The firm named Kelly Services, TrueBlue and Heartland Express as its top contributors for the quarter and said it sold Heartland after the stock reached the fund’s valuation.
- Palm Valley said Kelly’s management reaffirmed expectations for sequential improvement and that Hunt Companies filed an amended 13D on May 19 requesting a special committee, which the fund views as a possible signal of a takeover offer.
- The letter described TrueBlue’s stock rally as tied to a rebound in industrial staffing and growth in energy projects for data centers, but noted the company has not yet translated that work into positive earnings and that a proxy fight ended in April.
- Palm Valley highlighted that LKQ’s sale process for its Specialty division weakened because tighter credit cut the pool of buyers, and the fund said it added Clorox, Molson Coors and Vontier while keeping a large cash cushion to wait for clearer, high‑conviction small‑cap opportunities.