SCHEDULE: Palm Global, Horowitz Boost Kingsway Financial Stake

Palm Global Small Cap Master Fund LP and Joshua S. Horowitz have increased their beneficial ownership in Kingsway Financial Services Inc. through the early exercise of options.

Summary

• Palm Global Small Cap Master Fund LP and Joshua S. Horowitz, along with other reporting persons, have increased their beneficial ownership in Kingsway Financial Services Inc.
• On December 17, 2025, they amended existing option agreements to allow for early exercise.
• Palm Global exercised options to purchase 252,500 shares of Common Stock for $2,083,125.
• Joshua S. Horowitz exercised options to purchase 22,500 shares of Common Stock for $185,625.
• The aggregate beneficial ownership of the reporting persons is 436,842.4 shares, representing approximately 1.5% of the company's outstanding Common Stock.
• This includes 36,842.4 shares of Common Stock convertible from Class D Preferred Stock held by Palm Global, at an initial conversion price of $9.50 per share.

Sentiment

Score: 7

Explanation: The increased stake by an activist investor group, including a director, suggests a strong belief in the company's potential. While activist involvement can sometimes be disruptive, it often aims to unlock shareholder value. The early exercise of options indicates conviction. The potential for future proposals regarding governance and operations could be seen positively by some investors seeking change, but also introduces uncertainty.

Positives

• Increased investment by Palm Global and Joshua S. Horowitz signals confidence in Kingsway Financial Services Inc.
• Early exercise of options suggests a proactive approach by the investors.
• The acquisition of additional shares at an exercise price of $8.25 per share, potentially below current market value, could indicate a favorable entry point for the investors.

Risks

• Reporting Persons may acquire additional shares or dispose of some or all of their holdings, potentially impacting stock price volatility.
• They may engage in short selling, hedging, or similar transactions, which could introduce market uncertainty.
• The Reporting Persons may propose changes to the company's capitalization, ownership structure, board composition, senior management, or operations, which could lead to strategic shifts or potential conflicts.

Future Outlook

The Reporting Persons acquired the Common Stock for investment purposes and intend to review their investment on a continuing basis. They may acquire additional shares, dispose of current holdings, or engage in hedging transactions. They also reserve the right to communicate with management and the board, and propose changes to the company's capitalization, ownership structure, board composition, senior management, or operations.

Management Comments

• The Reporting Persons acquired the Common Stock reported in this Statement for investment purposes.
• The Reporting Persons and their affiliates may in the future acquire additional shares of Common Stock or dispose of some or all of the shares of Common Stock held by the Reporting Persons in open-market transactions or privately negotiated transactions.
• The Reporting Persons may engage in short selling or hedging or similar transactions with respect to the Common Stock.
• The Reporting Persons do not have any present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a) (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein, or as may be proposed by Mr. Horowitz in his capacity as a director of the Company or by the Company's board of directors with his participation.
• Depending on various factors... the Reporting Persons may in the future take such actions with respect to their investment in the Company as they deem appropriate and to the extent permitted by law, including... engaging in communications with management and/or the board of directors... making proposals to the Company concerning changes to the capitalization, the ownership structure, the structure, composition and skill sets of the board of directors and senior management or the operations of the Company.

Industry Context

This filing reflects an activist investor's increased stake in Kingsway Financial Services Inc., a common occurrence in the financial services sector where investors seek to influence corporate strategy and governance to unlock shareholder value.

Related Party Transactions

• Palm Global Small Cap Master Fund LP and Joshua S. Horowitz (Reporting Persons) entered into an amendment to an option agreement with Stilwell Value LLC, Stilwell Activist Fund, L.P., and Stilwell Activist Investments, L.P. (Sellers), an affiliate of Mr. Stilwell, for the early exercise of options to acquire Common Stock.
• Palm Global Small Cap Master Fund LP entered into a subscription agreement with Kingsway Financial Services Inc. for the purchase of Class D Preferred Stock. This is considered a related party transaction due to Joshua S. Horowitz's position as a director of Kingsway Financial Services Inc. and his affiliation with Palm Global.

Stakeholder Impact

• Shareholders: Potential for increased shareholder value if activist strategies are successful, but also potential for volatility or strategic shifts due to activist involvement.
• Management/Board: Increased scrutiny and potential for proposals regarding strategic direction, governance, and operational changes from the activist investor group.

Next Steps

• Reporting Persons may acquire additional shares of Common Stock or dispose of current holdings.
• They may engage in short selling, hedging, or similar transactions.
• They intend to review their investment in the Company on a continuing basis.
• They may engage in communications with management and/or the board of directors.
• They may make proposals to the Company concerning changes to capitalization, ownership structure, board composition, senior management, or operations.

Key Dates

Recommendation

This Schedule 13D amendment indicates an increased conviction from a significant investor group, including a director, through the early exercise of options. While this signals potential for value creation and active engagement, the filing itself does not provide new financial performance data or a clear strategic direction from the company. The stated intent of the activist group to potentially propose changes to capitalization, governance, or operations introduces both opportunity and uncertainty. Therefore, a 'hold' recommendation is appropriate, awaiting further clarity on the company's response or the activist's specific proposals.

Keywords

Kingsway Financial Services, KFS, Schedule 13D, Beneficial Ownership, Option Exercise, Palm Global, Joshua Horowitz, Activist Investor, Preferred Stock, SEC Filing