Palm Valley Capital Management, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of 1.94% was recorded by the fund for the first quarter of 2022, while its benchmarks, the S&P SmallCap 600 Index, by comparison, returned -5.64% and -6.18% return for the Morningstar Small Cap Index over the same period. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Palm Valley Capital Management mentioned Preformed Line Products Company (NASDAQ:PLPC) and explained its insights for the company. Founded in 1947, Preformed Line Products Company (NASDAQ:PLPC) is a Cleveland, Ohio-based fiber optic cable manufacturing company with a $297.3 million market capitalization. Preformed Line Products Company (NASDAQ:PLPC) delivered a -6.96% return since the beginning of the year, while its 12-month returns are down by -10.85%. The stock closed at $60.20 per share on April 12, 2022.
Here is what Palm Valley Capital Management has to say about Preformed Line Products Company (NASDAQ:PLPC) in its Q1 2022 investor letter:
“We acquired three new stocks over the first quarter: (which includes) Preformed Line Products (ticker: PLPC). While many of the companies on our buy list fell in Q1, they were generally declining from lofty levels. The prices did not reach a level where we believed we could meet our required return threshold. Additionally, stocks partially rebounded in the last two weeks of March.
Preformed Line Products (PLP) makes products that protect, connect, terminate, and secure cables and wires for energy, communications, and cable networks. The products are often used to revitalize aging infrastructure to reduce lost revenue from events like malfunctioning power lines or fiber optic cables. Approximately 70% of U.S. transmission lines are over 25 years old, and many are well past their original life expectancy. Repair work occurs after emergencies or natural disasters such as hurricanes, tornadoes, and floods. The 75-year-old company has established a strong competitive position by investing in technology and manufacturing its own products. PLP’s performance trends with the capital spending of utilities (~twothirds of revenue) and communication service providers (~one-third of revenue) around the world. International sales account for half of revenue. While operating results are cyclical, free cash flow is consistently positive. Insiders hold a third of the shares. The company owns most of its real estate.
PLP’s stock price had fallen with the broader market and over concerns about the impact of raw materials cost inflation. We acquired shares near 6x trailing operating profit and very close to tangible book value. Shortly after we began establishing our position, the company disclosed strong fourth quarter results, including a more than doubling of its backlog from the prior year.”
Photo by Mika Baumeister on Unsplash
Our calculations show that Preformed Line Products Company (NASDAQ:PLPC) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Preformed Line Products Company (NASDAQ:PLPC) was in 5 hedge fund portfolios at the end of the first quarter of 2022, compared to 4 funds in the previous quarter. Preformed Line Products Company (NASDAQ:PLPC) delivered a -2.59% return in the past 3 months. You can find more investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
