Palm Valley Capital Management, an investment management firm, released the “Palm Valley Capital Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, Palm Valley Capital Fund increased 2.43% compared to a 10.13% and 8.48% return for the S&P SmallCap 600 Index and the Morningstar Small Cap Index, respectively. During the quarter the equity positions in the Fund increased by 8.32% slightly below small-cap benchmarks. Cash equivalents comprised 81.5% of the fund’s assets at the period’s end. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Palm Valley Capital Fund highlighted stocks like Resources Connection, Inc. (NASDAQ:RGP), in the third quarter 2024 investor letter. Resources Connection, Inc. (NASDAQ:RGP) offers consulting services to business customers. The one-month return of Resources Connection, Inc. (NASDAQ:RGP) was -12.55%, and its shares lost 40.60% of their value over the last 52 weeks. On October 3, 2024, Resources Connection, Inc. (NASDAQ:RGP) stock closed at $8.36 per share with a market capitalization of $279.826 million.
Palm Valley Capital Fund stated the following regarding Resources Connection, Inc. (NASDAQ:RGP) in its Q3 2024 investor letter:
“The Fund’s top decliners during the third quarter were TrueBlue (ticker: TBI) and Resources Connection, Inc. (NASDAQ:RGP). Our staffing holdings have suffered as the weak demand for temporary labor is spreading to permanent jobs, further eroding investor sentiment on the industry. Strong payroll numbers reported by the government over the past eighteen months were inflated and have been revised lower. We believe a convergence in demand between temporary and permanent jobs is necessary before the staffing industry can begin to heal. Job openings are now below the pre-pandemic trend and are worse in the private sector, since government job openings have outperformed.
Resources Connection operates on the other end of the staffing spectrum from TrueBlue, offering consulting and professional staffing services. Current revenues are the lowest in years, which demonstrates the severity of the industry downturn, since bill rates have grown materially over time. On the last earnings call, RGP’s CEO said once clients see the first interest rate cut, “It’s going to be a firm line in the sand that we’re moving in the right direction.” Our portfolio holdings aren’t immune from the beggar mentality! We expect RGP’s earnings to continue sliding in the near-term, but the company has no debt and a significant amount of cash to sustain it until the recovery. RGP’s dividend yield exceeds 5%.”
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Resources Connection, Inc. (NASDAQ:RGP) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Resources Connection, Inc. (NASDAQ:RGP) at the end of the second quarter which was 17 in the previous quarter. In the first quarter of fiscal year 2025, Resources Connection, Inc.’s (NASDAQ:RGP) revenue was $136.9 million, down 19% from previous year’s quarter. While we acknowledge the potential of Resources Connection, Inc. (NASDAQ:RGP) 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.
Palm Valley Capital Fund established a position in Resources Connection, Inc. (NASDAQ:RGP) during Q2 2024. In addition, please check out our hedge fund investor letters Q3 2024 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.