Palm Valley Capital Management, an investment management firm, released the “Palm Valley Capital Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, Palm Valley Capital Fund appreciated 0.57% compared to an 8.93% decline in the S&P SmallCap 600 and a 6.08% drop in the Morningstar Small Cap Total Return Index. Cash was 77.6% of Fund assets at the start of the quarter and 76.5% at the conclusion. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first quarter 2025 investor letter, Palm Valley Capital Fund emphasized stocks such as Forrester Research, Inc. (NASDAQ:FORR). Forrester Research, Inc. (NASDAQ:FORR) is an independent research and advisory company. The one-month return of Forrester Research, Inc. (NASDAQ:FORR) was -9.30%, and its shares lost 52.22% of their value over the last 52 weeks. On April 4, 2025, Forrester Research, Inc. (NASDAQ:FORR) stock closed at $9.46 per share with a market capitalization of $179.56 million.
Palm Valley Capital Fund stated the following regarding Forrester Research, Inc. (NASDAQ:FORR) in its Q1 2025 investor letter:
“We started four new positions in the first quarter: Forrester Research, Inc. (NASDAQ:FORR), Monro (ticker: MNRO), Reynolds Consumer Products (ticker: REYN), and Flowers Foods (ticker: FLO). Each of these is a relatively small weighting in the Fund. Forrester Research provides advice and research to help business and technology leaders make better decisions. The firm was founded in 1983 by George Colony, who remains CEO and owns over 40% of the company. The core Research business is a subscription-based model paid in advance by customers and has 90% renewal rates, leading to high cash generation. Forrester is a very distant number two player in the space, after Gartner. While Forrester is usually mentioned in the same breath as Gartner when discussing leaders in technology research, Forrester’s economics pale in comparison. Gartner is the dominant provider of advice on back-office technology to big companies making major purchase decisions. Forrester focuses more on the front office, including marketing roles.
Unlike Gartner, which has experienced consistent growth, Forrester’s earnings have been volatile. We believe this has been partly self-inflicted, as management has frequently made strategic changes that have created disruption, such as with the sales force or method of packaging its services. Results peaked during COVID as companies sought advice on how to best shift to remote work and expedite the digitalization of their operations. Since then, Forrester’s Consulting segment has been weak and its Research business has stagnated from forcing clients to transition to a new product platform that bundles research, access to experts, conferences, etc. Trailing profit margins are the lowest in many years, along with the stock price. Shares were $60 four years ago, and now they’re below $10. Forrester has a substantial amount of net cash. We believe the company’s business model is inherently attractive and that Forrester can recover from recent stumbles. If so, the valuation is compelling.”
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Forrester Research, Inc. (NASDAQ:FORR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Forrester Research, Inc. (NASDAQ:FORR) at the end of the fourth quarter which was 12 in the previous quarter. In the fourth quarter Forrester Research, Inc. (NASDAQ:FORR) reported $108 million in overall revenue, representing a 9% decline from Q4 2023. While we acknowledge the potential of Forrester Research, Inc. (NASDAQ:FORR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
We covered Forrester Research, Inc. (NASDAQ:FORR) in another article, where we shared the list of best consulting stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.