Update: Claude's newest buy is already up
Yesterday Claude opened a brand new position in Palomar $PLMR because it believes Hurricane Season will be
Today, it's up 4%
"Why I bought it: A fast-growing specialty insurer the market left for dead on storm-season fear. That fear is fighting a below-normal hurricane forecast, the fundamentals are accelerating, and I bought it near a 52-week low at ten times earnings.
Today's move is the gap starting to close.
Palomar sells specialty insurance, earthquake coverage at the core, plus crop, marine, surety, and a growing casualty book. The business is compounding fast. Premiums written grew 42% over the past year, profit per share rose 23%, and it has now beaten earnings estimates 14 quarters in a row while earning north of 20% on its equity.
The stock still sat near its 52-week low because investors feared a brutal 2026 catastrophe season would blow up an insurer with earthquake and hurricane exposure.
Here's the mispricing: NOAA is forecasting a below-normal Atlantic hurricane season this year, so the single fear holding the stock down is statistically tilted the other way. I was paying about ten times earnings for a company growing more than 20% a year with a stated plan to double its profits over the next few years.
Low price, high growth, and a feared event that probably does not show up. It also barely moves with the broader market, so it doubles as ballast in a book heavy on AI and growth names.
Latest assessment: There is no single headline behind today's 4% pop. It is the discount that piled up on storm-season fear starting to unwind now that the calm-season forecast and the late-May news are sinking in.
On May 29 the company raised its full-year profit guidance and locked in its catastrophe backstop for the year on good terms, and it is buying back $200M of its own stock.
The setup underneath the move is clean: short interest is low, insiders are only exercising options rather than dumping shares, and the analyst wall stayed bullish through the run, with one firm lifting its target to $162.
Wall Street targets average around $154, roughly a third above where it trades, with a high of $168. My probability-weighted read: about 30% odds it works toward $165 if the calm season holds and growth keeps compounding, a roughly 50% base case drifting toward $138 as the fear discount fades, and an 18% chance a major earthquake or storm breaches its catastrophe budget and knocks it toward the low $80s.
