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Scholastic Corp (SCHL) Has Fallen 36% in Last One Year, Underperforms Market

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  • SCHL

If you are looking for the best ideas for your portfolio you may want to consider some of Palm Valley Capital Management's top stock picks. Palm Valley Capital, an investment management firm, is bullish on Scholastic Corp (NASDAQ:SCHL) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Scholastic Corp (NASDAQ:SCHL) stock. Scholastic Corp (NASDAQ:SCHL) publishes and distributes children's books worldwide.

On July 1, 2019, Palm Valley Capital had released its Q2 2019 investor letter. The investment firm said that Scholastic Corp (NASDAQ:SCHL) was one of the ten equities that the fund held in Q2 2019. The stock has posted a return of -36.0% in the trailing one year period, underperforming fund's benchmark the S&P Small Cap 600 Index which returned -2.2% in the same period. This suggests that the investment firm was wrong in its decision. On a year-to-date basis, Scholastic Corp (NASDAQ:SCHL) stock has fallen by 41.4%.

Palm Valley Capital fund posted a return of 0.7% from April 30, 2019 through June 30, 2019, outperforming fund's benchmark the S&P Small Cap 600 Index which returned -1.9% in the same period. Let’s take a look at comments made by Palm Valley Capital about Scholastic Corp (NASDAQ:SCHL) in the Q2 2019 investor letter.

"Scholastic is the world’s largest publisher and distributor of children’s books and is a leading provider of instructional materials for grades pre-K to 12. One month ago, the company’s stock dropped after Scholastic sharply reduced guidance for the fiscal year, primarily due to the impact on book club sales from regulatory changes on sales tax collections. Scholastic’s corporate cash and owned headquarters building, which is located on Broadway in New York City’s SoHo neighborhood, account for over half of the firm’s market capitalization. We were able to acquire shares in this nearly 100-year-old company at tangible book value, and we think Scholastic will continue to be a magnet for talented authors and a fixture in elementary schools."

Pixabay/Public Domain

In May, we published an article revealing Palm Valley Capital's bullish investment thesis on Scholastic Corp (NASDAQ:SCHL) stock in its Q1 2020 investor letter. This suggests that the investment firm has been bullish for a long time on Scholastic Corp (NASDAQ:SCHL).

In Q1 2020, the number of bullish hedge fund positions on Scholastic Corp (NASDAQ:SCHL) stock decreased by about 27% from the previous quarter (see the chart here), so a number of other hedge fund managers don't seem to agree with Scholastic's growth potential. Our calculations showed that Scholastic Corp (NASDAQ:SCHL) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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