Palm Harbour Capital Q1 2025 Investor Letter

2025-04-24 08:10:00 ET

Summary

• During the first quarter, the fund gained 2.63% gross of fees.
• We do not have a stated benchmark in our Key Investor Information Document and therefore cannot comment on relative performance. We leave it up to you to decide.
• Whilst we view our 10% annualized return as a solid performance, we are still working on achieving our stated goal of a mid-teen return.

Dear fellow investors,

During the first quarter, the fund gained 2.63% gross of fees ¹ (31/3/2025). We do not have a stated benchmark in our Key Investor Information Document (KIID) and therefore cannot comment on relative performance. We leave it up to you to decide. We note the above number appears slightly lower than European and significantly higher than global benchmarks, driven by US underperformance. Our last reported NAV at quarter-end was 17.85 (27/03/2025), +5.56% from the closest reported NAV at the fourth quarter end of 16.91 (27/12/2024). This brings our one-year NAV return to +13.5% (31/03/2024 to 27/03/2025). Inception to quarter end NAV return was 78.5% or 10.2% compounded annual return. We are extremely optimistic about our portfolio’s prospects and believe we will reach our compound return aspiration over time. Our fund’s composition is unlike any index, and we are unlikely to perform in a similar manner.

Shortly after the end of the first quarter, our fund celebrated our sixth anniversary. Whilst we view our 10% annualized return as a solid performance, we are still working on achieving our stated goal of a mid-teen return. We launched our fund after a major rally in small-caps, then went through COVID, inflation, European war, and now potentially the worst global trade war in a century. We are continuously learning and refining our processes and believe that we will meet our ambition in the mid-term. We believe that by investing in smaller, off the beaten track, competitively advantaged, highly cash-generative, lowly valued companies whilst avoiding speculative and overpriced market darlings, we have exposed our investors to much less risk than investors who mindlessly follow indices or chase fades....

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