Palm Valley Capital recently released its Q4 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 5.78% for the quarter, underperforming its benchmark, the S&P Small Cap 600 Index which returned 31.27% in the same quarter. You should check out Palm Valley Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, Palm Valley Capital highlighted a few stocks and Collectors Universe Inc (NASDAQ:CLCT) is one of them. Collectors Universe Inc (NASDAQ:CLCT) provides third-party authentication and grading services to collectors, retail buyers and sellers of collectibles. In the last three months, Collectors Universe Inc (NASDAQ:CLCT) stock gained 26.1% and on January 13th it had a closing price of $76.40. Here is what Palm Valley Capital said:
“Collectors Universe (ticker: CLCT) is the world’s largest provider of authentication and grading services to dealers and collectors of coins, trading cards, and autographed memorabilia. We looked at the stock closely during the late 2018 swoon. Collectors has produced good cash flow, but the shares were languishing due to a loss of business from China. We valued it at $15 per share (roughly 15x normalized free cash flow), which was around where it was trading at the time.
The lockdowns led to a spike in interest for rare coins, trading cards, and autographed items. During the quarter ending September 30, 2020, Collectors reported 65% year-over-year growth in earnings. On November 30th, the company announced it was being acquired by a well-known card collector and Steven Cohen’s family office for $75 per share ($680 million), or 52x trailing earnings. Clearly, the buyers are assuming the sharp increase in demand for grading trading cards and authenticating autographs is permanent. And everyone buying travel stocks now is assuming people will leave their homes (and new hobbies). Will they both be right?”
In November 2020, we published an article revealing that Alta Fox Capital is bullish on Collectors Universe Inc (NASDAQ:CLCT) stock. The investment firm believes that CLCT’s leadership team can capitalize on the significant changes in the collectibles marketplace to drive value for shareholders.
In Q2 2020, the number of bullish hedge fund positions on Collectors Universe Inc (NASDAQ:CLCT) stock increased by about 38% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in ANET’s growth potential. Our calculations showed that Collectors Universe Inc (NASDAQ:CLCT) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.
