Palm Valley Capital Management has released its third-quarter 2026 investor letter for the Palm Valley Capital Fund. The fund gained 1.61% during the quarter, outperforming the S&P SmallCap 600 Index, which declined 7.93%, and the Morningstar Small Cap Total Return Index, which fell 5.60%. Treasury bills accounted for 75.5% of the fund’s assets at quarter-end, while its equity holdings returned 4.8%.
The letter examines a market in which small-cap stocks lagged their larger peers even as the S&P 500 approached its highs. The managers draw parallels between sharp stock-price swings in a rising market and conditions during the technology bubble. They also question whether policies aimed at preserving today’s wealth come at the expense of future prosperity, arguing that rising asset prices deepen economic disparities while shifting financial burdens to future generations. Citing federal debt exceeding $40 trillion, the managers frame the debate around how wealth and obligations are distributed across generations, alongside the familiar divide between rich and poor.
Gentex Corporation (NASDAQ: GNTX) is a technology manufacturer best known for its automotive automatic-dimming rearview mirrors, digital vision systems, and connected-car technologies. It also develops dimmable glass, fire protection products, audio equipment, and other electronics. On October 29, 2026, its shares closed at $20.26, an increase of 0.95% from the previous session, giving the company a market capitalization of approximately $4.27 billion.
Here’s what Palm Valley Capital Management has to say about Gentex Corporation (NASDAQ:GNTX):
“We purchased Gentex Corp. (ticker: GNTX) in the third quarter. Gentex is the undisputed leading global automotive supplier of automatic-dimming rearview mirrors that reduce glare from trailing headlights. The company also sells Full Display Mirrors (FDM) that can switch between a conventional reflecting rearview mirror and a digital display showing a rear-facing camera feed. Additionally, Gentex incorporates its HomeLink universal garage door controls into its mirror assemblies.
The stock has faced a long-term overhang from investor fears that automakers would eliminate mirrors in favor of cameras. This risk has not materialized due to legislative and economic reasons. Gentex has worked to adapt its business to technological change by integrating advanced features into its mirrors and pursuing adjacent markets.
Nevertheless, Gentex has experienced compression of its industry-leading margins because of increasing investments in R&D and overhead to fund the development and
launch of new products, such as dimmable visors, sunroofs, and driver monitoring systems.The company maintains an extremely clean balance sheet with significant cash and zero debt. Although recent results have been negatively impacted by a loss of mirror business in China due to tariffs, the company’s mix is improving from the sale of more advanced products. Shares are trading for approximately 10.0x normalized unleveraged free cash flow.”
Gentex Corporation (NASDAQ: GNTX) reported its third-quarter results on October 23, 2026, posting revenue of $647.7 million, net income of $90.6 million, and adjusted diluted earnings of $0.47 per share. The company repurchased $132.6 million of shares during the quarter. However, it lowered its 2026 revenue outlook to approximately $2.65 billion and reduced its gross-margin forecast, citing additional costs expected in the fourth quarter.
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Disclosure: No material interests to disclose. This article was originally published on Global Market Bulletin.
