PSLV - Palm Valley Capital Fund Q1 2022 Commentary

• The Palm Valley Capital Fund invests in small cap stocks. While our Fund is new, its underlying absolute return-based investment strategy is not. We have practiced the same strategy throughout our careers in investment management.
• It’s been well-documented that investors anchor to peak prices, no matter how extreme.
• While the pullback from November to late January temporarily improved the attractiveness of many small cap securities, the decline did not produce panic or a significant number of undervalued equities.
• Unfortunately for many equity investors, the market’s track record after a series of rate hikes is not bullish.
• The past year was the first time ever that aggregate small cap earnings actually achieved the forward estimates established by analysts one year earlier.

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