Throughout most of last year, I noticed and wrote about rising corporate costs, the tightening labor market, and signs of increasing pricing power. Based on my bottom-up macro analysis, it was my opinion (and still is) that patient investors would either be rewarded with higher interest rates or lower equity prices. As it turned out, we saw higher rates throughout most of 2018 and finally lower equity prices near year-end. While I remain uncertain as to when the current cycle eventually ends, I’m more encouraged today versus 2016 when I recommended returning capital and saw no light at the end of the tunnel (few if any late-cycle signs).
In an attempt to take advantage of the end of the current cycle and to practice absolute return investing in its purest form, I recently teamed up with two friends and fellow absolute return investors, Jayme Wiggins and Frank Martin. Together we founded Palm Valley Capital Management.
My role and responsibilities have shifted from blogging out of Starbucks to co-managing an absolute return strategy out of a real office (includes free coffee!). As such, this website and blog will soon become inactive. Although less frequently, I plan to continue sharing my opinions and bottom-up analysis on Palm Valley’s website. For those interested, they can check out and sign up for my new blog at www.palmvalleycapital.com/commentary. My first “welcome” post is a little long (apologies) and provides an overview of our absolute return process. I plan on returning to my more typical format (under 1,000 words) and subjects in future posts.
I’d like to thank everyone for reading my blog over the past two and a half years (217 posts!). It’s been a productive experience, helping me stay engaged in the markets and remaining up to speed on my 300-name possible buy list. I’ve also enjoyed meeting and conversing with so many like-minded and knowledgeable investors. It’s reassuring to know there are so many absolute return investors remaining!
Thanks again! It’s been a great ride. I wish everyone the best in navigating through the current cycle. While there remain many unknowns, one thing is certain, it’s been an incredible and interesting market cycle. I suspect the ending will be just as fascinating!
The End 😊