Palomar Holdings (PLMR) Rose on Strong Quarterly Results

Riverwater Partners, an investment management company, released its “Small Cap Strategy” Q1 2025 investor letter. A copy of the letter can be downloaded here. The Small Cap Core Strategy outperformed the Russell 2000 in Q1 2025, driven by strong stock selection and sector allocation. Within this strategy, the firm focuses on bottom-up fundamental research rather than making top-down macroeconomic bets. While much of the market discourse today is centered on tariffs and U.S. fiscal policy, the firm’s focus remains on identifying high-quality companies. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first-quarter 2025 investor letter, Riverwater Partners Small Cap Strategy highlighted stocks such as Palomar Holdings, Inc. (NASDAQ:PLMR). Palomar Holdings, Inc. (NASDAQ:PLMR), with a market capitalization of $4.102 billion, is a specialty insurance company. The one-month return of Palomar Holdings, Inc. (NASDAQ:PLMR) was -12.69%, and its shares gained 84.35% of their value over the last 52 weeks. On June 27, 2025, Palomar Holdings, Inc. (NASDAQ:PLMR) stock closed at $153.38 per share.

Riverwater Partners Small Cap Strategy stated the following regarding Palomar Holdings, Inc. (NASDAQ:PLMR) in its Q1 2025 investor letter:

"Palomar Holdings, Inc. (NASDAQ:PLMR) was our top performer in the first quarter. PLMR is a specialty insurance company focused on underserved property catastrophe insurance markets in the United States, with a particular emphasis on earthquake coverage. Palomar's business strategy involves underwriting and analytical expertise, allowing them to concentrate on markets with limited competition. Their key product categories include earthquake, inland marine & other property, casualty, fronting, and crop.

In February, Palomar reported strong fourth-quarter 2024 results that beat expectations, with significant growth in gross written premiums. The company also issued robust full-year 2025 guidance for adjusted net income, indicating continued positive momentum. Additionally, Palomar successfully closed its acquisition of First Indemnity of America (FIA) in early 2025, expanding into the surety market, which was seen as a positive development for diversification and growth. The anticipation of strong growth in key areas like earthquake and crop insurance for 2025 likely contributed to a favorable stock performance in the first quarter of 2025."

Palomar Holdings, Inc. (NASDAQ:PLMR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Palomar Holdings, Inc. (NASDAQ:PLMR) at the end of the first quarter, which was 20 in the previous quarter. While we acknowledge the potential of Palomar Holdings, Inc. (NASDAQ:PLMR) 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 undervalued AI stock set for massive gains.

In another article, we covered Palomar Holdings, Inc. (NASDAQ:PLMR) and shared Alger Weatherbie Specialized Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of 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.

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Disclosure: None. This article is originally published at Insider Monkey.