Palm Valley Capital Management, an investment management firm, has released the “Palm Valley Capital Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, Palm Valley Capital Fund appreciated 0.66% compared to a 1.70% gain for the S&P SmallCap 600 and a 3.12% rise in the Morningstar Small Cap Total Return Index. At the beginning of the quarter, the Fund allocated 74.1% to Treasury bills and increased to 76.3% by the end of the quarter. The equity holdings of the Fund rose by 1.12% over the past three months (excluding the effects of fund operating expenses). The performance of equities was positively influenced by the investments in precious metals, particularly as silver has been the Fund’s largest allocation for the past few years. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Palm Valley Capital Fund highlighted stocks such as Flowers Foods, Inc. (NYSE:FLO). Flowers Foods, Inc. (NYSE:FLO) is a U.S.-based packaged bakery food products company. The one-month return of Flowers Foods, Inc. (NYSE:FLO) was -4.53%, and its shares lost 48.24% of their value over the last 52 weeks. On January 5, 2026, Flowers Foods, Inc. (NYSE:FLO) stock closed at $10.32 per share, with a market capitalization of $2.179 billion.
Palm Valley Capital Fund stated the following regarding Flowers Foods, Inc. (NYSE:FLO) in its fourth quarter 2025 investor letter:
“In the fourth quarter, the Fund’s top three detractors from performance were Kelly Services (ticker: KELYA), Forrester Research (ticker: FORR), and Flowers Foods, Inc. (NYSE:FLO). While Flowers Foods met earnings guidance and reaffirmed its outlook for the year, the operating environment remains challenging. Volume trends have improved but are still negative as consumers continue to trade down to private-label and shift away from traditional loaf bread. Flowers is responding by emphasizing growth in its better-for-you offerings, including Dave’s Killer Bread and Simple Mills snacks. While year-over-year comparisons should become easier in 2026, the company plans to step up innovation and new product launches. These initiatives should support sales growth but will likely pressure margins due to higher operating expenses. As Flowers transitions its business to meet changing consumer tastes, we expect it will continue to generate strong free cash flow. Most of the company’s free cash flow has been used to fund a very generous dividend, currently yielding 9%. While we would support a dividend cut and a greater emphasis on debt reduction, we appreciate the board’s commitment to returning capital to shareholders. Trading at 10x earnings, we continue to view Flowers Foods as attractively valued and increased our position during the quarter.”
