Palm Valley Capital Stays Defensive in Q4 With 76% T-Bills, Exits Forrester and Sells Silver Trust

Overview

• In its Q4 2025 letter, the fund reported a 0.66% gain versus 1.70% for the S&P SmallCap 600 and 3.12% for the Morningstar Small Cap index.
• The allocation to short-term Treasuries rose to 76.3% from 74.1%, while equities advanced 1.12% and precious metals aided results before the fund exited its Sprott Physical Silver Trust holding late in the quarter.
• Top detractors were Kelly Services, Forrester Research, and Flowers Foods, with Forrester sold after the managers said they could no longer value it with confidence.
• The fund increased Heartland Express and Flowers Foods, citing early signs of trucking rate stabilization and an attractive valuation and dividend at Flowers despite ongoing volume pressure from private-label shifts.
• New small positions included Ingredion, which the fund viewed as a proven, less-cyclical ingredients business trading near 10x earnings with a roughly 3% dividend yield and meaningful emerging-market exposure.