Palm Valley Capital Management, an investment management firm, released the “Palm Valley Capital Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, Palm Valley Capital Fund appreciated 0.57% compared to an 8.93% decline in the S&P SmallCap 600 and a 6.08% drop in the Morningstar Small Cap Total Return Index. Cash was 77.6% of Fund assets at the start of the quarter and 76.5% at the conclusion. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first quarter 2025 investor letter, Palm Valley Capital Fund emphasized stocks such as Monro, Inc. (NASDAQ:MNRO). Headquartered in Rochester, New York, Monro, Inc. (NASDAQ:MNRO) offers automotive undercar repair, and tire sales and services. The one-month return of Monro, Inc. (NASDAQ:MNRO) was -10.88%, and its shares lost 50.78% of their value over the last 52 weeks. On April 4, 2025, Monro, Inc. (NASDAQ:MNRO) stock closed at $15.27 per share with a market capitalization of $447.744 million.
Palm Valley Capital Fund stated the following regarding Monro, Inc. (NASDAQ:MNRO) in its Q1 2025 investor letter:
“We started four new positions in the first quarter: Forrester Research (ticker: FORR), Monro, Inc. (NASDAQ:MNRO), Reynolds Consumer Products (ticker: REYN), and Flowers Foods (ticker: FLO). Each of these is a relatively small weighting in the Fund. During the quarter we repurchased Monro, a leading operator of retail tire and automotive repair stores in the United States. In fiscal year 2024, Monro operated 1,288 stores in 32 states and serviced 4.7 million vehicles. Monro’s automotive repair business has benefited from the rising average age of vehicles and the record number of vehicles on the road. However, even with these tailwinds, revenue and earnings have recently been under pressure. Many of Monro’s customers have been suffering from the rising cost of living, and as a result, have been delaying automotive repairs and trading down to lower-priced tires. These trends contributed to Monro posting low to mid-single digit same-store sales declines over the past year, sending shares to multiyear lows.
