Palm Valley Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of 0.04% was recorded by the fund for the fourth quarter of 2021, while its benchmarks, the S&P SmallCap 600 Index, by comparison, returned 5.59% and 3.72% return for the Morningstar Small Cap Index over the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Palm Valley Capital Management, in its Q4 2021 investor letter, mentioned Crawford & Company (NYSE: CRD-A/CRD-B) and discussed its stance on the firm. Crawford & Company is an Atlanta, Georgia-based claims management company with a $401.9 million market capitalization. Crawford & Company delivered a 4.67% return since the beginning of the year, while its 12-month returns are down by -0.38%. The stock closed at $7.89 per share on January 10, 2022.
Here is what Palm Valley Capital Management has to say about Crawford & Company in its Q4 2021 investor letter:
“The three positions contributing most negatively to the Fund’s fourth quarter return (includes) Crawford & Co. (tickers: CRD/A, CRD/B). Crawford’s stock is trading for 6x our estimate of normalized operating profit, which is a fraction of the multiple of other profitable small caps. Crawford’s shares have frequently received a controlled company discount, but the current disparity is as wide as ever. During the quarter, an activist shareholder sold his position back to the firm after failing to gain a seat on the board. Crawford was also removed from MSCI US Indexes at the end of November, creating significant price agnostic selling pressure in a stock without fabulous liquidity. There is minimal sell side coverage. The company’s third quarter earnings were less than some expected, partly because other economies have not bounced back as quickly from COVID due to ongoing lockdowns and less stimulus than the U.S. Crawford has meaningful global exposure and had maintained its international cost structure in anticipation of a quicker recovery. Less economic activity means fewer insurance claims and less business for Crawford. Lastly, the company spent over 20% of its market cap on acquisitions from August to October but failed to adequately communicate the high margins of the targets, leading investors to assume management may have overpaid…”
(Click here to see the full text)
Based on our calculations, Crawford & Company (NYSE: CRD-A/CRD-B) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Crawford & Company was in 10 hedge fund portfolios at the end of the third quarter of 2021, compared to 9 funds in the previous quarter. Crawford & Company (NYSE: CRD-A/CRD-B) delivered a -12.50% return in the past 3 months.
In December 2021, we also shared another hedge fund’s views on Crawford & Company in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
