Here's What Pressured Palomar Holdings (PLMR) in Q3

Conestoga Capital Advisors, an asset management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their momentum that began in early April, reaching new all-time highs in the third quarter. The Conestoga Micro-Cap Composite returned 11.7% net-of-fees in the third quarter, compared to the Russell Microcap Growth Index’s return of 19.9%. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its third-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Palomar Holdings, Inc. (NASDAQ:PLMR). Palomar Holdings, Inc. (NASDAQ:PLMR), with a market capitalization of $3.089 billion, is a specialty insurance company. The one-month return of Palomar Holdings, Inc. (NASDAQ:PLMR) was -0.70%, and its shares gained 20.98% of their value over the last 52 weeks. On October 21, 2025, Palomar Holdings, Inc. (NASDAQ:PLMR) stock closed at $115.34 per share.

Conestoga Capital Advisors stated the following regarding Palomar Holdings, Inc. (NASDAQ:PLMR) in its third quarter 2025 investor letter:

"Palomar Holdings, Inc. (NASDAQ:PLMR) writes specialty P&C (notably earthquake and fronting). The stock underperformed as investors de-risked ahead of June-1 reinsurance renewals and Atlantic hurricane season, with attention on attritional loss trends and potential cat exposure. Although later disclosures highlighted solid underwriting and completed reinsurance programs, Q2 sentiment remained cautious, keeping a lid on the shares."

Palomar Holdings, Inc. (NASDAQ:PLMR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 28 hedge fund portfolios held Palomar Holdings, Inc. (NASDAQ:PLMR) at the end of the second quarter, up from 25 in the previous quarter. While we acknowledge the potential of Palomar Holdings, Inc. (NASDAQ:PLMR) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Palomar Holdings, Inc. (NASDAQ:PLMR) and shared Riverwater Partners Small Cap Strategy's views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.