Schwar Capital Research

An Investor's Odyssey

Schwar Capital Research — Fri, 31 Jul 2026 17:25:47 GMT

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Christopher Nolan has just put Homer’s Odyssey on the big screen, and everyone is suddenly talking about a 3,000-year-old story about a very long journey home.

Which makes this the perfect time to revisit a talk Chuck Akre gave in Omaha in May 2011, at the 8th Annual Value Investor Conference, the day before Berkshire’s annual meeting.

He called it “An Investor’s Odyssey: The Search for Outstanding Investments.”

The title wasn’t an accident.

Akre started in the investment business in 1968 with a degree in English literature and, by his own account, no idea what he was doing.

It took him decades of wrong turns, strange encounters, and hard-won lessons to arrive at the framework that built one of the great long-term track records in American investing.

Odysseus took ten years to get home. Akre took about twenty.

The lessons he brought back are worth your time…

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The Destination: Compounding

Every odyssey needs a destination. Akre is unusually clear about his.

He opens the talk with a question he says he puts to friends: which would you rather have - $750,000 today, or the outcome of a penny doubling every day for 30 days?

Most people say the penny, because they sense a trick. Almost nobody can say what the penny is actually worth: a little over $10.7 million.

That gap - between knowing compounding matters and understanding what it actually does - is, in Akre’s telling, where most investors live.

His firm’s entire stated goal is to compound clients’ capital at an above-average rate while incurring a below-average level of risk. Everything else in the talk hangs off that.

Two things sharpened his thinking early:

In 1972 he read “100 to 1 in the Stock Market” by Thomas Phelps, an analysis of stocks that had turned $1 into $100, and the characteristics they shared.
In 1977 he bought his first Berkshire Hathaway shares, at around $120. By the time of this talk they were a thousand-bagger.

Then he offers the hypothesis that quietly organises his whole approach:

One’s return from an asset will, over time, approximate the ROE, given the absence of any distributions and given a constant valuation.

Common stocks have returned roughly 10% a year across the 20th century.

The real return on the owner’s capital across American business, adjusted for what Akre calls “the accounting garbage”, sits in the low teens. He doesn’t think that’s a coincidence.

Over long periods, your return converges on the economics of the business you own.

So if the market averages 10% because the average business earns low-teens returns on capital, the way to beat it isn’t cleverness with entry and exit points. It’s owning businesses that earn far more than that - and holding on.

Which raises the obvious question: how do you find them?

The Three-Legged Stool

Akre’s answer is a visual construct his firm had used for years: an early 20th-century three-legged milking stool.

Why three legs? Because three legs are sturdier than four, and they sit steady on uneven ground. Each leg is a test, and he has a story about what happens when one of them fails.

Leg one: the business model

What is producing the high returns on capital? A patent, scale, low-cost production, lack of competition? In his office the question was always: “How wide and how long is the runway?”

The point of the leg is that the source of the returns is often not obvious.

Akre gave an intern a box of clippings, and the intern came back excited about Bandag - a Muscatine, Iowa company earning 20% returns on capital in truck-tyre recapping. Every other tyre company earned single digits. So Bandag couldn’t really be in the tyre business, whatever it said on the door.

The real answer turned out to be a network of fiercely loyal independent dealers, cemented by how generously the company had treated them during the 1973-74 oil embargo.

When that loyalty structure lost its underpinnings, Akre sold. Profitable investment, not a great compounder - because the thing causing the good returns didn’t last.

His second example cuts the other way: in the early days, Bill Gates and Paul Allen tried to sell Microsoft to IBM and were turned down.

Akre’s conclusion is that neither party understood what was actually valuable about Microsoft - which went on to become, in his words, the most valuable toll road in modern business history.

If the people running the company can’t always see the source of the strength, an outside investor should expect to work hard for it.

Leg two: the people

Akre borrows a line from his friend Tom Gayner: do the managers have equal parts skill and integrity? And he adds a rule from his own experience:

Once someone puts his hand in your pocket, he will do so again.

The story here is Charlotte Motor Speedway. Akre owned a tiny stake when the controlling shareholder - a man previously barred by the SEC from association with the company - tendered for the minority shares at a price Akre considered far below fair value. He joined the litigation, which eventually settled at several times the going-private price.

He won the case. He never again owned anything that man controlled. When you run a concentrated portfolio, there is simply no room for managers you have real questions about.

Leg three: reinvestment

This is the leg people miss, and Akre calls the reinvestment question “perhaps the single most important issue facing any CEO.”

A high-return business run by honest people still isn’t a compounding machine unless it can redeploy the cash it generates at those same high rates.

His cautionary tale is a company called American List, which sold data on high-school seniors to razor-blade marketers. 50% net margins. A genuinely wonderful business. And no way to reinvest a dollar of it - so the CEO paid everything out as dividends. One wonderful business, two intact legs, and no third leg. It never compounded.

His favourite question for CEOs follows directly: “How do you measure the ways in which you are successful in running a business?”

Very few give the answer he wants - growth in real economic value per share.

The opening pages of the Berkshire annual report showed that number growing about 20% a year for 40 years. That, in his view, is the whole game.

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The Sirens

Homer’s hero had to be tied to the mast to survive the sirens. Akre’s version of the sirens is the temptation to trade a great business because the price has moved.

His confession is one of the most useful passages in the talk:

If I sell a stock at $30 because it’s too rich, and I set in my mind that I’m going to buy it back at $23, inevitably it trades to $23 and an eighth... and I never get back. And the next time I look, instead of being $30, it’s $300.

The really great compounders are, in his words, too hard to find and too hard to replace.

So while valuation discipline matters on the way in - he’s “very stingy” and simply won’t pay too much - the discipline on the way out is mostly to do nothing while the three legs remain intact.

The flip side is what he does when prices collapse.

Akre defines risk as permanent loss of capital, and treats volatility as an opportunity generator.

American Tower is his proof.

His firm had accumulated shares at an average cost of $5; by late 2002 the market, fixated on more than 16 times debt-to-EBITDA and a looming convertible maturity, had taken the stock to 71 cents. Akre flew to Boston, satisfied himself the business model was intact - more towers, more tenants per tower, more rent per tenant, with tower-level margins around 90% - and took a large position at 80 cents.

The business went on to earn roughly 30% returns on invested capital over the 1998-2010 period, and from the October 2002 bottom the shares compounded at about 66% a year. A high-return business bought at a depressed valuation gives you both the business return and the re-rating on top. Akre calls it the Davis double play. The same shares bought in February 1998 compounded at 11%. Same company, same machine - the starting price has everything to do with your compound return.

What This Means for How We Invest

Asked at the end for his biggest mistake, Akre doesn’t name a losing stock. His answer: not buying enough of the ones that were really good.

That answer, and the framework behind it, maps closely onto how we run money at Schwar Capital:

We anchor on the economics, not the story. Over time, returns converge on the underlying return on capital. That’s why ROIC and reinvestment sit at the centre of our checklist, not revenue growth on its own.
We ask all three questions, every time. A moat without honest management, or great management without a reinvestment runway, is two legs of a stool. Our worst candidates historically fail the third leg quietly - good businesses that generate cash they cannot usefully redeploy.
We treat integrity as binary. One hand in the pocket is enough. There is no valuation at which we’ll partner with management we don’t trust, because in a concentrated portfolio there’s nowhere to hide.
We pre-commit to holding. The $30-to-$300 problem is a biology problem as much as an analytical one, and we’ve written before about building processes for the worst version of yourself. Trimming a compounder because it “feels rich” is exactly the siren song Akre spent forty years learning to resist.
We keep capital ready for the American Tower moments. Drawdowns in businesses whose legs are intact are where the double play lives. The analysis is only useful if you can act when the market is offering 80 cents.

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The Takeaway

Fifteen years on, the talk holds up because almost nothing in it depends on 2011. The three-legged stool - business model, people, reinvestment - is a complete test, and each leg fails in a distinctive way: Bandag’s moat quietly eroded, Charlotte Motor Speedway’s owner put his hand in Akre’s pocket, and American List had nowhere to put the money.

Odysseus’s journey was only worth telling because he knew where home was.

Akre knew too: a small number of businesses that can compound the owner’s capital at high rates for a very long time, bought at sensible prices, and then - the hardest part - left alone.

The search is the odyssey. The compounding is home.

Have a great weekend,

Dom
Schwar Capital

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Disclaimer: The content provided in this newsletter is for informational purposes only and does not constitute financial, investment, or other professional advice. The opinions expressed here are those of the author and do not necessarily reflect the views of Schwar Capital. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. The author may or may not hold positions in the stocks or other financial instruments mentioned. Always do your own research or consult with a qualified financial advisor before making any investment decisions. To read our full disclaimer, click here.

A New Position: Revenue Up 94%, Patented IP, 10x Capacity Locked In

Schwar Capital Research — Mon, 27 Jul 2026 11:42:10 GMT

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Gore-Tex. Dyneema. 3M Scotchgard.

The most valuable companies in industrial materials don’t sell finished products.

They sell ingredients.

They embed their branded, patented material inside somebody else’s premium product, then collect margin every time that product sells.

Today’s company is attempting to become the next of these.

On June 12th, I bought it into the Schwar Capital portfolio at $3.18 CAD - a 2.6% weight. The position is up roughly 13% as of writing.

And on June 24th - twelve days after I bought - the company reported the strongest quarter in its public history.

The updated numbers are worth paying attention to:

Revenue of $3.06M in the most recent quarter, up 94% year-over-year - a record
First-half revenue up 90% to $5.39M
Gross margin of 44% - the sixth consecutive quarter inside the 40-45% target range
Material delivered to 12 new customers in a single quarter
Pack & Bag - the newest vertical - now 19% of quarterly revenue, up from 3% a year ago
Patent protection on the core process running through mid-2037
$13.7M of cash on the balance sheet, against a related-party loan repaid in full
The lease for a new facility just signed, funding a ~10x manufacturing capacity expansion
~34% insider ownership; the former President of the world’s leading competing fiber technology sits on the board

Today’s company is...

A Microcap At Its Earnings Inflection (With Free Defense Optionality)

Schwar Capital Research — Mon, 06 Jul 2026 11:45:20 GMT

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Most hardware microcaps look the same on a screener.

Lumpy quarters. Thin margins. A P&L that never quite compounds.

Every once in a while, one of them has been quietly building a second business behind the first - a recurring revenue line under every unit that ships, growing patiently for years.

Then the recurring line covers the entire cost base. Every next sale drops through at high margin. The whole business is a different animal to what it was two quarters ago.

That is what just happened here.

Last month I initiated a 2.5% position in the Schwar Capital portfolio.

Today’s company is…

My Top 25 Investing Books

Schwar Capital Research — Mon, 22 Jun 2026 12:33:28 GMT

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Every investor has a handful of books that genuinely changed how they see the world.

Not the ones that sit pretty on a shelf to impress visitors.

The dog-eared ones. The ones with margins full of scribbles and pages folded at the corners.

These are mine.

I’ve tried to organise them into categories, though the best books tend to bleed across boundaries.

Some taught me how to value businesses. Others taught me how to think. A few did both.

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The Taleb Trilogy

These three books rewired my brain. If I could only recommend one author to any investor, it would be Nassim Taleb.

Fooled by Randomness - The book that made me realise most of what I thought was skill was probably luck, and most of what looked like luck was probably skill going unrecognised.

The Black Swan - Taught me that the events we dismiss as impossible are often the only ones that truly matter.

Antifragile - The concept that some things gain from disorder changed everything about how I construct portfolios and think about risk.

Value Investing Foundations

The classics exist for a reason. I return to these constantly.

The Intelligent Investor - Graham’s margin of safety concept is the bedrock everything else builds upon. Chapter 8 and Chapter 20 alone are worth the price of admission.

Essays of Warren Buffett - Buffett’s shareholder letters organised by theme. Pure, unfiltered wisdom on capital allocation, management, and business quality.

Poor Charlie’s Almanack - Munger’s mental models framework fundamentally changed how I approach problems. The inversion principle alone is worth hundreds of hours of saved mistakes.

One Up on Wall Street - Peter Lynch made investing feel accessible. His emphasis on understanding what a company actually does before buying remains underrated.

University of Berkshire Hathaway - Decades of annual meeting Q&As distilled into one book. The closest thing to sitting in Omaha without buying the plane ticket.

The Most Important Thing Illuminated - Howard Marks explains why being right isn’t enough; being different and right is what matters.

The Dhandho Investor - Mohnish Pabrai distilled the essence of low-risk, high-reward investing into something anyone can understand. Heads I win, tails I don’t lose much.

The Multi-Bagger Playbook

100 Baggers - Chris Mayer’s masterpiece on what it actually takes to hold a stock long enough to see it multiply 100 times.

100 to 1 in the Stock Market - Thomas Phelps wrote this in 1972 and somehow it’s still the best study of what makes a company compound for decades.

The Outsiders - William Thorndike profiles eight CEOs who massively outperformed by thinking differently about capital allocation. I try and look for these traits in every management team.

Learning from the Masters

No amount of theory replaces studying those who’ve actually done it.

The Snowball - The definitive Buffett biography. Understanding how he evolved as an investor - from cigar butts to quality compounders - is essential.

The Alchemy of Finance - Soros’s reflexivity framework is uncomfortable because it’s probably right. Markets aren’t just discounting machines; they’re participants in the outcomes they’re supposedly predicting.

Investing for Growth - Terry Smith’s approach is deceptively simple: buy good companies, don’t overpay, do nothing. The execution is where most fail.

Decision Making & Mental Models

Investing is applied decision-making under uncertainty. These books made me better at it.

Thinking, Fast and Slow - Kahneman maps the systematic errors wired into human cognition. Once seen, they’re everywhere. Especially in markets.

Thinking in Bets - Annie Duke’s poker-trained framework for making decisions when the information is incomplete and the feedback is noisy.

Seeking Wisdom - The closest thing to a thinking toolkit. I keep it within arm’s reach.

More Than You Know - Michael Mauboussin connects investing to fields most ignore: biology, psychology, complexity science. Always makes me think differently.

Timeless Wisdom

Scale - Geoffrey West reveals the mathematical laws that govern growth, from cities to companies. Changed how I think about sustainable growth rates.

Against the Gods - Peter Bernstein’s history of risk. Understanding where our tools came from makes clear where they might fail.

The Success Equation - Mauboussin again, this time unpacking the skill-luck continuum. Essential for knowing when results are meaningful.

Same as Ever - Morgan Housel’s meditation on what never changes. In a world obsessed with predicting the future, focusing on constants is a genuine edge.

Financial Intelligence - Shows that accounting is less science than language, and like any language, it can be used to clarify or obscure.

Final Thoughts

Reading these books have shaped how I think about uncertainty, value, and decision-making in ways that compound over time.

The best investment books aren’t really about investing at all.

They’re about understanding the world clearly and acting accordingly. Everything else follows from that.

I’ll keep adding to this list as new books earn their place. In the meantime, if there’s one category to start with, it’s Taleb. Understand randomness and fragility first. Everything else will make more sense after.

Dom
Schwar Capital

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NEW POSITION: A Rare Disease Compounder

Schwar Capital Research — Fri, 19 Jun 2026 11:38:28 GMT

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Every so often a small-cap operator quietly raises their long-term ambition by an order of magnitude.

Most of the time the market dismisses it as bravado. Sometimes, looking at the execution that came before it, the new ambition deserves to be taken seriously.

This one, I think, deserves to be taken seriously.

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A US-listed small-cap with structural moats at the product level. A high-margin model. A management team that under-promises and over-delivers. A string of catalysts already hit and another string still queued.

In the last six months alone:

Their biggest pipeline asset received regulatory approval, with a meaningfully better outcome than the consensus had modelled
Gross margins expanded to 73%
The company turned GAAP profitable for the first time
The product portfolio grew through a disciplined, cash-funded acquisition with no dilution and no debt
Long-term targets were raised twice
Last month, management laid out a 10-year vision that, if even half-delivered, repositions the entire investment case

Last week I initiated a 5% position in the Schwar Capital portfolio.

Today’s company is…

The Pyramid: How I Actually Build a Portfolio

Schwar Capital Research — Mon, 15 Jun 2026 11:15:05 GMT

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There’s a question every concentrated investor eventually gets asked: if you believe in concentration, why do your new positions start so small?

It looks like a contradiction. It isn’t. And resolving it is the single most important idea in how I now build a portfolio:

Concentration is the end state, not the starting position. Size is earned, not assigned.

This post walks through the whole framework - the tiers, how positions move between them, and why that movement is really just “cut your losses, let your winners run” built into the structure instead of left to willpower. Then, for paid subscribers, I’ll show you exactly what my own pyramid looks like right now, name by name, and why I’m running a more concentrated version than the textbook.

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Why structure matters more than stock-picking

Microcap returns don’t arrive evenly.

They follow power laws: over any meaningful period, a small handful of positions drives nearly all of the return, a larger group does roughly nothing, and a few lose money.

The uncomfortable truth is that you can’t reliably know in advance which position belongs to which group.

Research improves your odds - that’s the job - but certainty isn’t on offer at the moment you buy.

So the portfolio has to be built as a discovery machine rather than a set of finished convictions.

Many small bets at the bottom. Capital flowing toward whichever ones prove themselves. Mistakes dying cheaply before they can do real damage.

The structure does as much work as the stock selection.

Here’s the shape I’m aiming for:

The three tiers

Toeholds (2–5% each): Auditions. A new idea enters here no matter how excited I am, because excitement at the point of purchase is the least reliable signal in investing. The position is small enough that a total thesis failure - down 40%, idea dead - costs the portfolio one or two percent. Every toehold gets written promotion criteria on day one: the specific, dated milestones that would justify buying more.
Scaling positions (6–10% each): A toehold gets promoted here when the business - not the share price - confirms the thesis. Contracts land, margins progress, management does what it said. This is where averaging up happens, often at prices above the original entry, which feels wrong and is right. Paying more for a company that has removed uncertainty is a better trade than paying less for one that hasn’t.
Core positions (12–20% each): The earned weights. Nothing arrives here by purchase alone - positions reach the core through years of execution compounded with appreciation. In a healthy book the top three to five names might be 60% of the portfolio, and the honest answer to “isn’t that risky?” is that the market built that concentration by rewarding the positions that deserved it.
Cash (5–10%): Dry powder. Its job is funding promotions and buying drawdowns - the moments when having capital available is worth far more than the drag of holding it.

How positions move - and why the movement is the philosophy

Everyone repeats the old line:

Cut your losses, let your winners run.

Almost nobody builds it into their portfolio’s actual mechanics. The pyramid does, in both directions.

Cutting losses happens at the bottom, where it’s cheap.

Lee Freeman-Shor’s research in The Art of Execution found that the investors who underperform aren’t the ones who pick bad stocks - they’re the ones who freeze when a position drops.

His rule: when you’re down, you either buy more with conviction or you sell. Holding and hoping is the one forbidden move.

The pyramid enforces this, because every position below the core is permanently on trial. At each review, everything gets classified as promote, hold, or prune - and “hold” has to be an active choice with a reason, not a default.

When a toehold fails its audition, the loss is capped at audition size. You take many small risks to discover the few worth taking a big one on.

Letting winners run happens at the top, automatically.

When a scaling position doubles, it promotes itself - no buying required.

And here’s the discipline that matters most: I don’t rebalance it away.

To hold a multibagger you have to actually hold it - through the 50% pullbacks, through the quarters where the price goes nowhere while fundamentals backfill, through every urge to bank the gain.

A core position only gets trimmed for two reasons: the valuation has pulled three or four years of future returns into the present, or it fails the pain test - could I hold through a 40% drawdown in this name without it breaking me or the portfolio? “The percentage looks big” is not on the list.

A large winner is the reward for being right, not a problem to tidy away.

Put the two halves together and you get the deepest property of the structure:

The asymmetry of the portfolio mirrors the asymmetry of the individual bets.

Downside capped small at the bottom; upside uncapped at the top. Each position is chosen for limited downside and uncapped upside - and the pyramid applies that same payoff shape to the whole book.

One more rule that follows from all of it: spend twice as much time on maintenance research - the companies you already own - as on hunting new ideas.

What you don’t own can’t hurt you. The promotion decisions are only as good as your ongoing knowledge of the businesses being judged.

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In the Rest of This Post

Behind the paywall, for paid subscribers:

A chart of my actual portfolio mapped onto the pyramid - every position, every tier
Why I’m running a more concentrated version than the template, and how that happened
The one position carrying a core-sized weight it hasn’t fully earned yet
How a real prune this month proved the structure works as designed
A link through to where you can read about the companies themselves

June Portfolio Update: One Out, Three In

Schwar Capital Research — Fri, 12 Jun 2026 10:31:24 GMT

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It’s been a busy month, and a productive one.

I’ve cleared out a position I no longer wanted to own, followed through on two adds I’d been building toward, and - the part I’m most pleased about - opened three entirely new positions.

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For a while the bottom of this portfolio had gone quiet. No fresh ideas being auditioned, no pipeline of future winners coming through. That’s now fixed, and I’ve rebuilt the lower half of the book with three new names I think have real asymmetry.

Full, dedicated theses on each of them are coming over the next few weeks. But since they’re already in the portfolio, here’s the preview:

Three New Positions

A US specialty pharma rolling up orphan drugs. The first new name buys assets that big pharma can’t be bothered to commercialise properly - therapies for rare diseases with small patient populations - then monetises them through dedicated rare-disease infrastructure. Ten commercial products, already GAAP profitable, and a dense stack of near-term clinical and regulatory catalysts. This is the largest of the three new positions, because it’s the deepest-researched and the highest-conviction.
A patented advanced-materials business running the ingredient-brand playbook. The second runs the same model as Gore-Tex or Dyneema: its material gets built into someone else’s premium product, the end brand does the marketing, and the company collects a margin every single metre. The entire thesis hinges on one milestone landing in the next few months. Explicitly speculative, and sized accordingly.
A profitable, cash-rich communications microcap hiding in plain sight. The third trades like a lumpy hardware business while quietly building a recurring service-revenue tail behind every device it deploys. Consistently profitable, cash-heavy relative to its size, and almost completely off-screen.

Three names, three different risk profiles, all sized as toeholds - small starting positions that have to earn their way up.

More on exactly what that means in my companion piece on portfolio construction, out next Monday.

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In the Rest of This Post

Behind the paywall, for paid subscribers:

The position I closed this month, at a loss - and the simple test that made it an easy decision
The two positions I added to, where they now sit, and the bar I set for averaging down
Exactly where all three new names sit in the portfolio, with weights
The full portfolio table, every position and every weight
What each position has to do from here to keep its place - including one core holding now on probation
How I’m thinking about the shape of the book going into a busier month

CeoTronics Update: Three Records, One Caveat

Schwar Capital Research — Mon, 08 Jun 2026 15:08:59 GMT

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CeoTronics makes communication systems for environments where comms failure costs lives: military, police, firefighting, aviation, hazardous industry.

Roughly 94% of components are built in-house in Germany, which protects IP, secures the supply chain for defence procurement, and locks in switching costs once systems are embedded in a force’s helmets and radios.

The thesis in one line: this has quietly shifted from a lumpy, cyclical hardware maker into a largely contracted business with multi-year framework deals, right as Europe enters a decade-long rearmament cycle. The recurring base sits just above two thirds of revenue, the order book is at record highs, and the market still prices it like an old-school defence contractor.

On June 1, the company released preliminary figures for fiscal year 2025/2026 (ended May 31, 2026).

The rest of this update is for paid subscribers. Below, I break down the three records, the flat revenue caveat that needs context, the margin question I want answered, and what it all means for the thesis.

The Case for Simplicity: What Taleb and Mandelbrot Taught Me About Surviving Markets

Schwar Capital Research — Fri, 05 Jun 2026 15:01:07 GMT

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Here’s a statistic that should trouble every investor: Long-Term Capital Management employed 16 PhDs, two Nobel laureates, and some of the most sophisticated quantitative models ever built. They blew up in 1998.

Meanwhile, Warren Buffett - who famously uses a calculator and reads annual reports - has compounded at roughly 20% annually for six decades.

The difference? Simplicity.

I’ve spent considerable time studying the works of Nassim Nicholas Taleb and Benoit Mandelbrot. Their insights have fundamentally shaped how I think about portfolio construction, risk management, and the very nature of markets themselves. In my view, their combined wisdom points toward one uncomfortable truth: complexity in investing is usually just hidden fragility.

This post distils what I believe are the most important principles from their work - and how I apply them at Schwar Capital.

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The Problem with Complexity

Most investors believe sophistication equals edge. More data. More models. More variables.

In my experience, the opposite is true.

Mandelbrot demonstrated something profound in his study of cotton prices, stock markets, and turbulent flows: markets are wild.

They don’t follow the neat bell curves that finance textbooks assume. Extreme moves - the kind that wipe out portfolios overnight - occur far more frequently than Gaussian models predict.

The 1987 crash. The 2008 financial crisis. March 2020.

These weren’t once-in-a-millennium events.

They were features, not bugs.

Complexity hides exposure to these fat tails. Think derivatives on derivatives. Think correlation assumptions that work beautifully until they don’t. Think models that optimise for a world that exists only in spreadsheets.

Simplicity, by contrast, keeps tail risk visible and tractable.

I can understand a concentrated portfolio of businesses I know well. I cannot understand a web of synthetic instruments whose interdependencies require a PhD to map.

Five Principles of Simplicity

Drawing from both Taleb and Mandelbrot, I’ve distilled what I believe are the core principles that should guide any investor serious about long-term survival.

1. Simplicity Protects Against the Unknown

Taleb’s central insight is this: the world is dominated by rare, unpredictable events - Black Swans.

The 2008 crisis wasn’t predicted by the models that said it couldn’t happen. COVID-19 wasn’t in anyone’s DCF.

Simple systems break less often because there are fewer moving parts to fail. A portfolio with five deeply-researched positions, clear theses, and no leverage has far fewer failure modes than a portfolio with fifty positions, various hedges, and borrowed money.

I don’t try to predict Black Swans. I try to ensure they won’t destroy me.

2. Simple Heuristics Beat Fragile Optimisation

Both thinkers reject over-fitted models. Taleb argues that optimisation leads to fragility - when conditions change even slightly, optimised systems shatter. Mandelbrot showed that markets are simply too wild for precise calculation.

3. Simplicity Preserves Optionality

Optionality is the ability to benefit from volatility rather than be destroyed by it. It’s having the capacity to act when others can’t.

Taleb’s insight here is elegant: simple structures - a cash buffer plus a few asymmetric bets - maximise upside without committing to predictive complexity. Complexity usually locks capital in. It creates obligations, covenants, margin requirements.

When markets crashed in March 2020, investors with simple, unleveraged portfolios and cash reserves could buy world-class businesses at decade-low prices. Those with complex, levered structures were forced sellers.

Simplicity is dry powder waiting for opportunity.

4. Via Negativa: Improvement by Removal

Taleb calls this the Via Negativa - the negative way. True simplicity isn’t naive minimalism. It’s the rigorous removal of everything that doesn’t meaningfully change outcomes.

In practice, this means asking different questions. Not “what should I add to my portfolio?” but “what should I remove?” Not “what new indicator should I track?” but “what noise am I mistaking for signal?”

Most investment research is addition - more data, more metrics, more complexity. The better approach is subtraction. Strip away everything until only what matters remains.

In my own process, I’ve found that a simple checklist - management ownership, return on capital, competitive moat, valuation - outperforms any elaborate scoring system.

5. Accept Markets as They Are, Not as Models Wish

Mandelbrot spent decades showing that markets follow fractal patterns - rough, irregular, and unbounded by our statistical assumptions. Volatility clusters. Returns have fat tails. Dependence structures shift.

The comforting Gaussian bell curve is a lie. It allows precise calculations but describes a market that doesn’t exist.

Simplicity means using models that reflect reality - wild randomness - rather than comforting illusions. It means acknowledging that precise predictions are impossible and positioning accordingly.

What This Means for Investment Philosophy

These principles translate into specific beliefs about how to construct and manage a portfolio.

Focus on Robustness, Not Prediction

Markets are fundamentally unpredictable. Taleb puts it bluntly: “Invest in preparedness, not forecasts.”

I don’t try to predict earnings beats, macro shifts, or market timing. I try to own businesses that will be worth more in five years under most reasonable scenarios. The focus is survival first, returns second.

Prediction is optional. Survival is not.

Respect the Power of Extremes

Mandelbrot’s fractal markets reveal an uncomfortable truth: large moves dominate long-term returns. A handful of days - often the worst and the best - determine decades of performance.

Portfolio survival therefore equals the ability to withstand, or benefit from, these extremes. This is why leverage is so dangerous: it turns survivable drawdowns into terminal ones.

In a world of fat tails, the few events that matter decide everything.

Barbell Thinking Beats Average Thinking

The barbell strategy is simplicity at its finest: most capital in extremely safe assets, a small portion in high-upside convex opportunities, and nothing in the middle.

The middle ground - the “moderate risk” investments - often provides the worst of both worlds. Not safe enough to protect, not explosive enough to transform.

Separate safety from speculation. Don’t blend them into mediocrity.

Prefer Businesses with Convexity

Convexity means limited downside with large potential upside. It’s the mathematical essence of asymmetric investing.

Simple filters for convexity (recurring revenue, network effects, no terminal fragility, strong balance sheets) beat complex models every time. A business with 90% recurring revenue and zero debt has structural convexity. A business with cyclical revenue and heavy leverage has structural concavity.

This is why at Schwar Capital I obsess over business model quality before ever looking at valuation.

How I Apply This at Schwar Capital

These aren’t abstract principles. They inform every aspect of how I manage the portfolio.

Concentrated positions: I hold few positions that I understand deeply, rather than many positions I barely know. Complexity through diversification is still complexity.
Clear theses: Every investment must have a thesis that can be stated in two sentences. If it requires a spreadsheet to explain, it’s probably too complex.
No leverage: The portfolio is never leveraged. Full stop.
Cash buffer: I maintain optionality through liquidity, ready to act when markets offer asymmetric opportunities.
Asymmetric focus: Every position targets at least 3:1 upside versus downside. This is convexity in practice.
Minimal trading: Fewer decisions means fewer errors. Activity is not progress.

Conclusion

The irony of markets is this: the more certain someone sounds, the more likely they’re wrong. The most sophisticated models often hide the most fragility. The cleverest strategies often precede the most spectacular blowups.

Taleb and Mandelbrot both point toward the same conclusion.

Simplicity isn’t a lack of sophistication - it’s an edge against uncertainty. Fragile portfolios are built by addition; robust ones are built by subtraction. Complexity hides risk; simplicity exposes it.

In a world where extreme events drive long-term returns, where markets are wilder than any model assumes, and where prediction is largely theatre, simplicity isn’t just preferable.

It’s necessary.

Dom
Schwar Capital Research

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A Speculative Bet I'm Seriously Considering

Schwar Capital Research — Mon, 01 Jun 2026 14:00:20 GMT

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Every once in a while you come across a company where the screen and the human read the same filing and come away with two completely different pictures.

A screen looks at it and sees a small profitable Canadian microcap with a going-concern footnote and a thin cash balance.

Skip.

A human, looking at what is actually being built, sees the early stages of something else entirely:

A capital-allocation vehicle.
Run by an operator with a documented 200-bagger to his name.
Sitting on top of a recurring, cash-generative core business that funds its own working capital.
Acquiring small profitable operators at a pace that has now produced two outright control deals inside six months, plus a quietly-growing book of convertible-debt positions in other operators on the side.

If he keeps doing this for the next seven to ten years, the market should eventually stop valuing this as its boring core business and starts valuing it as a holding company.

That is the entire setup.

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This is a speculative idea. It is small, illiquid, carries a going-concern footnote, and the entire thesis depends on one person continuing to allocate capital well.

None of that disqualifies it. It does mean it sits in the speculative bucket - high asymmetry, real risk of permanent capital loss, sized accordingly.

It is also a name I am seriously considering adding to the portfolio.

You don’t want to miss this one. Let’s dig in…

Spectra Systems: First Follow-On Sensor Order Lands

Schwar Capital Research — Thu, 28 May 2026 14:03:27 GMT

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Quick update on Spectra Systems ($SPSY.L).

On 22 May, the company announced an additional sensor order beyond the original $39.6M contract from June 2024. The new order is worth $1.3M, with deliveries scheduled between 2026 and Q2 2027.

More importantly, management flagged that another order from a separate affiliated organization is expected later this year, along with an additional service contract.

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In the March update, I laid out that the bull case rested on the $42M of potential follow-on sensor systems beginning to convert, plus the maintenance annuity continuing to compound.

This announcement is the first concrete proof point that the follow-on pipeline is real and active.

The headline dollar figure is small. The signal is not in my opinion.

Three things matter here:

The customer is coming back. The original deployment is not yet complete, and the customer is already extending the technology to affiliated organisations. That is exactly the dynamic the central-bank-infrastructure thesis depends on - once the sensors are embedded, the system expands rather than gets re-tendered.
More is explicitly guided. Management has now put on the record that a second affiliated-organisation order is expected this year, plus another service contract. The maintenance annuity through 2030 keeps growing.
It directly offsets the 2026 sensor build roll-off. Every incremental order softens the optical step-down from $42.7M in Authentication revenue and lifts the floor on what 2026 actually looks like.

Watching for the next order and the service contract to land in H2.

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Thanks for reading,

Dom
Schwar Capital

TruFin Sells Playstack: The Catalyst Fired, and Why I'm Selling (TRU.L)

Schwar Capital Research — Mon, 25 May 2026 11:39:06 GMT

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TruFin announced on Thursday morning that it has conditionally agreed to sell its 84.5% interest in Playstack to VantageCo Limited (a wholly owned subsidiary of Integrated Media Company, IMC) for an enterprise value of £125 million on a debt-free, cash-free basis.

I’ve been writing for the better part of a year that “the endgame” (a Playstack sale, a take-private, or a re-rating) was the obvious direction of travel.

But the reason I owned TruFin has now happened, and what’s left isn’t my kind of bet.

Let me walk through why the tape is flat, why the price is fair-not-thrilling, what the proceeds actually translate to per share, and why my move here is to take the gain.

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The Five Taleb Lessons That Shape Schwar Capital

Schwar Capital Research — Mon, 18 May 2026 12:39:19 GMT

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If I had to throw out every investing book on my shelf and keep the work of one author, it would be Nassim Nicholas Taleb.

Not because he gives stock tips - he doesn’t. Not because he predicts markets - he refuses to. But because he answers a question almost no one else in finance even asks:

How do you survive a world you cannot predict?

Over the years I’ve come back to his ideas more than any others. They’ve shaped how I size positions, how I think about leverage, how I read research, and - perhaps most importantly - whose advice I take seriously.

This post is a distillation. The five Taleb lessons that, more than any others, sit underneath how I run Schwar Capital.

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1. Antifragility

The opposite of fragile is not robust. It is antifragile.

This is Taleb’s most original idea, and the one most of the industry has failed to absorb. Robust things merely survive stress. Antifragile things actually gain from it.

Your muscles get stronger from strain. Your immune system gets better from exposure. Ideas get sharper under attack. None of these things are simply surviving disorder - they are improving because of it.

Markets are full of fragility dressed up as sophistication. Leverage. Tightly coupled portfolios. Hedging strategies that work until correlations break. Optimised allocations that depend on the next five years looking like the last five. All of them quietly fall apart in the conditions where it matters most to hold together.

The right question is not “will this survive a crisis?” The right question is “will this benefit from one?”

In practice, antifragility means owning things that gain from volatility rather than just endure it. A cash buffer becomes more valuable when markets crash, not less. A concentrated portfolio of high-quality businesses bought at fair prices benefits from sell-offs, because they let you add to them. A simple structure with low costs and no leverage compounds quietly while complex ones spend every crisis defending themselves.

Fragile portfolios fear volatility. Robust portfolios tolerate it. Antifragile portfolios feed on it.

The goal at Schwar Capital is the third.

2. The Barbell Strategy

Most people try to find the “sensible middle.” Taleb argues that middle is where the fragile live - and die.

The barbell is one of the most counter-intuitive ideas in modern finance, and one of the most powerful. Instead of taking moderate risk across a portfolio, you split it into two extremes:

The vast majority - cash, short-duration treasuries, the safest assets you can find.
A small minority - highly asymmetric bets where the upside is uncapped and the downside is capped at what you put in.

You hold nothing in the middle.

The mathematics are quietly devastating. A portfolio of “moderate risk” investments looks reasonable on a spreadsheet but tends to lose a great deal in a crisis and gain modestly the rest of the time. A barbell loses almost nothing on the safe side, and the speculative side - precisely because each position is small - cannot ruin you, but any one of them can transform you.

This is why I obsess over downside before upside. The safe side of the barbell is what allows the asymmetric side to exist. Without preservation, there is no aggression - only ruin.

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3. Via Negativa

Most investing improvement comes from removal, not addition.

Taleb borrows the term Via Negativa from theology, but its application in markets is almost embarrassingly direct: you don’t get rich by chasing returns; you get rich by avoiding ruin.

What separates good investors from great ones is almost never something they did. It’s something they refused to do.

They refused to use leverage. They refused to buy the obvious bubble. They refused to invest in things they didn’t understand. They refused to add a position because they were bored. They refused to act on a forecast they had no business making.

This is harder than it sounds. Every part of the industry is pointed in the opposite direction. More ideas. More data. More trades. More indicators. Activity is mistaken for skill; complexity is mistaken for sophistication.

My own checklist is shorter every year, not longer. Quality of business, ownership, balance sheet, valuation, fragility. If a thesis cannot survive contact with five questions, no twentieth question is going to save it.

The hardest word to say in markets is no. It is also the most profitable.

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4. The Lindy Effect

For things that don’t age - ideas, books, technologies, businesses - the best predictor of how long something will last is how long it has already lasted.

A book that has been read for two thousand years will probably be read for another two thousand. A book published last Tuesday probably will not. A business model that has survived multiple recessions, technology shifts, and regulatory regimes is telling you something a five-year-old startup simply cannot.

Time is the only honest critic, and it cannot be faked.

This shapes how I evaluate businesses. I have a strong bias toward what has already worked - durable demand, repeat purchase, products that customers have been buying for decades without thinking. The boring industries that have outlasted every wave of disruption are usually boring for the same reason they’re durable: they meet a need that was real fifty years ago and will be real fifty years from now.

It also shapes how I read. I would rather re-read Graham, Buffett’s letters, Marks, Taleb, and Munger than chase the latest book of the month. The signal density is higher. The ideas have already been tested by something more rigorous than any peer review: time.

If an idea has not been around long enough to fail, it has not been around long enough to be trusted.

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5. The Turkey Problem

The greatest risks are never in the data. They are in the assumption that the data is all there is.

Taleb tells a parable. Every day for a thousand days, a turkey is fed by the farmer. With each passing day the turkey’s confidence in the farmer’s benevolence grows. The data is unambiguous. The trend is up and to the right. The model fits beautifully.

On day 1,001 - the day before Thanksgiving - the turkey’s confidence in his model is at its highest, and his model has never been more wrong.

Every financial crisis I have studied has a turkey in it. Housing prices have never fallen nationally. Volatility is structurally lower now. This bank is too big to fail. Rates can’t go higher than 1%. The longer something has been true, the more confident the consensus, the more dangerous the eventual reversal.

The defence is not to predict the day of reckoning. No one can. The defence is to never let your portfolio be a turkey - to never construct a strategy that requires the past pattern to keep holding in order to survive.

This is why I refuse leverage, why I keep a cash buffer, why I prefer businesses that have already survived a downturn, and why I distrust any model whose track record is short and whose conditions have been benign.

Survival first. Returns second. Always.

Conclusion

If you read Taleb long enough, a single theme emerges underneath all of his work. It is not that markets are dangerous - though they are. It is not that experts are often wrong - though they are. It is something deeper:

The world is fundamentally more uncertain than the people running it want you to believe.

Most of finance is a sophisticated machine for ignoring this fact. Models, forecasts, ratings, projections - all designed to give the appearance of control over something that has none.

The five lessons above are, in different ways, the same lesson:

Stop trying to predict the world. Start trying to survive it. The compounding will take care of itself.

That belief sits underneath every position in the Schwar Capital portfolio, every research note I write, and every investment decision I make.

Dom Schwar Capital

Dom
Schwar Capital

KFS Q1 2026: The J-Curve Has Turned.

Schwar Capital Research — Fri, 15 May 2026 12:51:36 GMT

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Kingsway just reported Q1 2026 earnings. The headline numbers:

Consolidated revenue of $39.0 million, up 37.4% year-on-year
KSX revenue of $21.1 million, up 80.7%
Extended Warranty revenue of $17.9 million, up 7.2%; Extended Warranty cash sales up 11.8%
Consolidated adjusted EBITDA of $2.4 million, up from $1.4 million
KSX adjusted EBITDA of $3.5 million, up 82% - a record quarter for the segment
Extended Warranty adjusted EBITDA of $0.4 million, down from $0.9 million
Consolidated net loss of $2.2 million, narrowed from a $3.1 million loss
Portfolio LTM EBITDA of $22.0 to $23.0 million
Total net debt of $63.9 million, up from $62.4 million at year-end

When I wrote the Q4 update in March, the title was “The J-Curve Is Turning.”

The argument was that the margin compression which ran through 2025 was a predictable feature of the acquisition model, not a structural problem, and that there was now real, granular evidence the recovery had begun.

This quarter confirms it.

The company still printed a GAAP net loss. Net debt ticked up rather than down. Extended Warranty adjusted EBITDA was lower year-on-year. None of those are nothing. But every one of them is explainable, and the underlying trajectory across the portfolio is no longer ambiguous.

The following is my personal take and what I am doing with my position.

ACFN Q1 2026: A Lackluster Quarter, A More Interesting AIO

Schwar Capital Research — Mon, 11 May 2026 15:04:32 GMT

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Acorn Energy just reported Q1 2026 earnings. The headline numbers:

Total revenue of $2.23 million, down 28.1% year-on-year
Monitoring revenue of $1.42 million, up 11.7%
Hardware revenue of $810,000, down 55.7%
Gross margin of 80.2%, up from 75.1% in Q1 2025
OmniMetrix segment operating income of $395,000
Consolidated net loss of $77,000, or $(0.03) per share
Cash of $4.26 million, zero debt

Let’s be straight about this: Q1 was a lackluster quarter.

However, the reasons are explainable.

The material cellphone provider contributed $876,000 of hardware revenue in Q1 2025 and just $93,000 in Q1 2026 as initial shipments wound down. Q1 is seasonally Acorn’s lowest-revenue quarter to begin with. And the consolidated net loss is largely a function of $197,000 of non-cash stock-based compensation. Strip those out and the underlying operating business - OmniMetrix - generated $395,000 of segment operating income, even after carrying $50,000 of pre-revenue Infrastructure Solutions cost.

But explainable is not the same as good. Q2 2026 hardware comparisons will look bad for the same mechanical reason Q1 did. Management was upfront about that on the call. The shape of 2026 is back-end weighted, and there is no way to dress up the fact that the front half of the year will not be exciting on the printed numbers.

That is the near-term picture. The longer-term picture is where this gets more interesting.

The following is my personal take and what I am doing with my position…

April Portfolio Update

Schwar Capital Research — Tue, 05 May 2026 11:50:50 GMT

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The SCR portfolio is up 12.5% year-to-date.

The S&P 500? 5.3%.

That’s roughly a 7% spread since the start of the year.

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Discipline Through the Round Trip

Last month I wrote about the importance of not freezing in a sell-off. About leaning on Lee Freeman-Shor’s framework from The Art of Execution - that when you have conviction in a business and the price drops, you have to be willing to act.

I followed through this month.

The position I’d flagged last month for an add got the add. The price had moved against me, the thesis hadn’t, and there was no fundamental reason behind the drawdown to justify standing still.

So I sized up.

A New Research Portal for Paid Subscribers

The bigger announcement this month: I’m launching a new research portal for all paid subscribers later this month.

Everything in one place - every write-up, every watchlist, the full portfolio, and a clearer way to follow each thesis as it develops.

No more digging back through the archive to find the original write-up on a position.

It will all be there, organised, searchable, and updated alongside each new post.

This has been on my list for a while.

Building this out properly takes the research from “a series of posts” into something closer to a research platform - one place to track the entire process, end-to-end.

If you’ve been thinking about upgrading, this is the moment.

Pricing will increase later this year, so existing subscribers and anyone who upgrades before launch will lock in the current rate.

Upgrade Today!

In the Rest of This Post

A position I closed this month, and why I no longer like the setup
The details on this month’s add, and where the position now sits
The earnings calendar for the next two weeks
The new ideas I’m tracking - including one I’ve recently published research on
How I’m thinking about portfolio construction from here

The Biology of Bad Decisions

Schwar Capital Research — Fri, 01 May 2026 15:16:53 GMT

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There’s a French expression for twilight: l’heure entre chien et loup.

The hour between dog and wolf.

It describes the moment at dusk when the light fails and you can no longer tell if the shape moving toward you is a familiar dog or a dangerous wolf.

Friend or threat. Safe or fatal.

Former Wall Street trader turned Cambridge neuroscientist John Coates borrowed the phrase as the title of one of the most interesting books I’ve ever read on investing.

And here’s why it matters: most investors think their biggest enemy is the market. It isn’t.

It’s their own biology…

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The Body Trades Before the Mind

Coates spent years measuring the hormones of traders on a London trading floor. Cortisol in the morning. Testosterone before lunch. Cortisol again after the close.

What he discovered should change how every investor thinks about risk:

Decisions we believe are rational and considered are, in fact, downstream of physiological states we never even notice.

By the time the conscious mind weighs an investment, the body has already reacted. Heart rate has shifted. Hormones have surged. Risk appetite has been set.

Coates puts it bluntly:

“Risk is not just an idea. It is a bodily sensation.”

Investing, in other words, is not purely an intellectual exercise. It’s a physiological one.

And the markets pay people who don’t realise this.

The Winner Effect: Why Bull Markets Make Us Stupid

Coates’ most provocative finding involves a phenomenon he calls the winner effect.

When a trader wins, testosterone rises. With elevated testosterone comes greater confidence, greater appetite for risk, and a willingness to take on larger positions.

Win again, and testosterone climbs higher. Risk appetite expands further.

It is, on paper, a useful adaptation - confidence backed by results. But in markets, this feedback loop becomes a trap.

The trader who has been right ten times in a row is not ten times smarter than the trader who has been right five times.

They are, however, biochemically primed to take on dramatically more risk.

This is how bull markets end. Not with a sudden change of mind, but with a gradual chemical drift toward overconfidence among the people moving capital.

As Howard Marks has noted:

“The greatest risk doesn’t come from low quality or high volatility. It comes from paying prices that are too high.”

And we pay prices that are too high precisely when we feel most certain. Which is precisely when our biology is least trustworthy.

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The Cortisol Crash: Why Drawdowns Cripple Judgment

If testosterone is the hormone of bull markets, cortisol is the hormone of bear markets.

Cortisol is released in response to stress and uncertainty. In small doses, it sharpens us. In large or sustained doses, it does something far worse:

It rewires the brain to avoid risk at almost any cost.

Coates documented that cortisol levels in traders rose by over 68% during periods of market volatility.

Sustained at those levels, cortisol impairs memory, narrows attention, and triggers a learned helplessness that turns thoughtful investors into panicked sellers.

This is why drawdowns feel different when you’re in them.

The same investor who confidently bought a business at 50 pounds cannot bring themselves to buy more at 30 pounds - not because the thesis has changed, but because their body has changed.

The opportunity is right there. The biology is in the way.

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Why Markets Bubble and Crash

Put these two hormones together and you have an explanation for market cycles that no behavioural finance textbook can match.

Bull markets are not just stories about earnings or innovation.

They are also, at the level of the people involved, stories about collectively rising testosterone - confidence breeding confidence, risk appetite breeding more risk appetite, until the people deploying capital are biochemically incapable of restraint.

Crashes are not just stories about debt or fraud.

They are stories about collectively rising cortisol - fear breeding fear, paralysis breeding paralysis, until the people who should be buying are biochemically incapable of acting.

This is why the same patterns repeat in every cycle, with different protagonists and different technologies. The hormones don’t change. The humans don’t change.

Charlie Munger captured the essence of it:

“The world is full of foolish gamblers, and they will not do as well as the patient investor.”

The patient investor wins because they have done the harder work - they have learned to act despite their biology, not because of it.

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What This Means for How We Invest

Coates’ work is not academic curiosity. It has direct, practical implications for how serious investors should structure their process.

Five lessons stand out:

Treat winning streaks as warning signs, not vindication. The longer you’ve been right, the more your biology is working against you. Recheck your assumptions hardest when you feel most certain.
Build your process for the worst version of yourself. Write your investment theses down when you are calm. Make your buying decisions in advance of drawdowns, not during them. The you that is stressed cannot be trusted to do the work of the you that is rested.
Respect physical state. Sleep, exercise, and time away from screens are not luxuries. They are inputs to your decision quality. A tired investor is a different investor.
Use checklists. Checklists impose process when biology wants to improvise. Every great investor I’ve studied - from Buffett to Klarman to Marks - relies on some form of pre-commitment to overrule in-the-moment instinct.
Lengthen your time horizon. The longer you hold, the less the daily hormonal weather matters. Compounding rewards those who can wait. Biology punishes those who can’t.

The Takeaway

If you remember one thing from this post, make it this:

Your biggest enemy as an investor isn’t the market. It’s the body that’s reading the market. Every bull market top and every panic bottom is, at the level of the people involved, a hormonal event before it is a financial one.

That’s the central lesson of The Hour Between Dog and Wolf. And it connects directly to how we invest at Schwar Capital.

We treat winning streaks as warning signs, not vindication. We write our theses down when we are calm, so the stressed version of us has something to follow. We use checklists to overrule instinct. We size and pace our positions for a long horizon, so the daily hormonal weather doesn’t run our portfolio.

The market doesn’t reward the people with the highest IQ. It rewards the people who can keep behaving rationally when their biology is begging them not to - and who have built a process that holds when their willpower won’t.

That’s how the edge survives. And over time, the edge compounds.

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Thanks for reading,

Dom
Schwar Capital

10 Stocks I'm Looking at Right Now

Schwar Capital Research — Wed, 29 Apr 2026 12:57:15 GMT

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I like keeping my watchlist concise.

Only the names I’m really interested in following.

These are the names I’ll do write-ups on in the coming months. Obviously, some may drop off and some may become part of the portfolio. But here’s a look at the 10 items currently on it.

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The 10 Stocks

A 30-year-old subsea offshore specialist quietly growing 40% in a contracting industry - new CEO has flipped losses into profits without needing oil to cooperate.
A boring cash-generating piece of internet plumbing being deliberately rebuilt as an acquisition vehicle by a Canadian capital allocator with a documented 200-bagger to his name.
A two-sided network business where every unit sold becomes a permanent royalty annuity. Royalties up 31%, EBITDA up 112%, fresh 10% buyback, and insiders accumulating in the open market.
A vertically integrated avionics turnaround whose systems sit inside aircraft cockpits for 20–30 years. Q1 was a monster, the stock has already run, and now I’m waiting for the entry.
An orphan-drug roll-up that buys rights nobody else will commercialise. The biggest binary catalyst just resolved in shareholders’ favour - with a label far better than I’d modelled.
A capital-light operator riding a structural healthcare workforce shortage of ~1.9M jobs a year. Fourteen straight quarters of double-digit revenue growth and basically no analyst coverage.
An aspiring ingredient brand trying to become the next Gore-Tex. Patented material already embedded in Arc’teryx, North Face, and Black Diamond - and the capacity is about to expand 10x.
A famous compounder cut down 36% on AI fears that probably don’t apply to its actual customer base. Operating income +29%, free cash flow +153%, and the playbook is one of the most respected in capital allocation.
The European cousin of #8 - same playbook, same sell-off, same misunderstanding. Plus a lumpy non-cash accounting charge that scared investors out of a perfectly healthy operating business.
A best-in-class insurance broker compounder hit by a P&C pricing cycle. Stock down ~45%, organic growth flat, but eight acquisitions in Q1 and a $1.15B buyback authorisation say management thinks the cycle is the whole problem.

Revenue Up 33%, EPS Up 87%, and the Data Center Pivot Is Now Real (NASDAQ: PPIH)

Schwar Capital Research — Fri, 24 Apr 2026 11:48:51 GMT

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Perma-Pipe International Holdings published its audited fourth quarter and full-year fiscal 2025 results last Thursday.

The headline: record everything.

Revenue grew 33.1% to $210.9 million.
Net income attributable to common stock grew 88.9% to $17.0 million.
GAAP diluted EPS grew 87% to $2.09 from $1.12.
Income before income taxes grew 49% to $27.5 million, or $29.6 million on an adjusted basis.
Operating income grew 45% to $29.4 million.
Gross profit grew 30.6% to $69.5 million at a 33% margin.

Four days later, on Monday, the company disclosed approximately $54 million in new Q1 2026 project awards - including named AI-enabled data center contracts, the National Research Laboratories project, the Marathon project, and major District Heating & Cooling awards in the United Arab Emirates and Saudi Arabia.

PPIH now has roughly $175 million of visible, awarded work on the books - and that is with three quarters of fiscal 2026 still open to new orders.

The business reports a strengthened working capital position, a modernised global capital structure through a new J.P. Morgan credit facility, and a dedicated new US manufacturing facility in Ohio positioned specifically for AI data centers and the Northeast corridor district heating and cooling market.

The stock is trading around $30, implying a market cap of approximately $245 million.

On trailing numbers, that gives you an EV/EBITDA of approximately 7x.

A trailing P/E of around 14x.

For a business growing revenue at 33%, operating profit at 45%, with contracted backlog visibility, named end-market exposure to the AI infrastructure build-out, and two distinct growth vectors firing simultaneously.

In the rest of this post, I cover:

The audited fiscal 2025 numbers and how the operating leverage shows up
Regional performance across MENA and North America
The Ohio facility and what it means for data center exposure
The J.P. Morgan credit facility and capital structure transformation
The backlog and what fiscal 2026 actually looks like
Bear, base, and bull case valuations
Key developments since December and what I am watching from here

Why 30% of Our Portfolio Sits in One Stock...

Schwar Capital Research — Mon, 20 Apr 2026 11:41:08 GMT

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Ted Williams had a theory. Don’t swing at every pitch.

Divide the strike zone into 77 squares, each the size of a baseball. Wait for the pitch in your sweet spot.

Then crush it.

That’s how he hit .406.

Investing works the same way.

The market throws pitches at us every single day. Most of them are garbage. A few are decent. And once in a while - maybe once or twice a year if you’re paying attention - a fat pitch floats right down the middle.

The problem? Most investors swing at everything.

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The Fat Pitch Rule

Here’s what I believe, and it runs through every position in Schwar Capital:

You don’t get rich by being right about a lot of things. You get rich by being right about a few things - and betting big when you are.

Buffett has said this a hundred different ways.

Munger put it more bluntly:

“The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple.”

That’s the game.

So when I find a business I deeply understand, with a runway I can see, a management team I trust, and a price that doesn’t require heroic assumptions - I don’t buy 2%.

I back the truck up.

Enter Ashtead Technology

Ashtead Technology is now 30% of our portfolio.

And it’s up ~65% year-to-date.

People ask me constantly: “Aren’t you going to trim? Lock in some gains? Rebalance?”

No.

Here’s why:

The thesis hasn’t broken. It’s strengthening. Offshore rental day rates are still climbing. The acquisitions (Seatronics, ACE Winches, Hiretech) are integrating better than I modelled. The subsea rental market is structurally short on kit, and Ashtead owns the fleet. They’ve built something that is very hard to replicate - and the market, in my view, still isn’t pricing it as the cash-compounding machine it is.

When a winner is winning, the worst thing you can do is interrupt the compounding.

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Why Trimming Winners Is a Trap

This is the part most investors get backwards.

We’re told to “rebalance.” To “take profits.” To “never let one position get too big.” That advice is perfect - if your goal is to match the index.

If your goal is to beat it, you have to do the opposite.

The whole point of concentration investing is that your best ideas become more of your portfolio over time. That’s the mechanism. That’s the math. If I’d trimmed every position in Schwar Capital back to 5% every time it ran, I’d have a much smoother equity curve - and a much smaller one.

Winners win. Let them.

The risk isn’t that a great business gets too big in your book. The risk is that you find a great business, size it too small, and then sell it too early.

How I Play It

Look - this is what I do. It’s not for everyone, and it’s definitely not advice.

Running 30% in a single name will make plenty of people lose sleep.

Fair enough. Concentration cuts both ways, and if the thesis breaks on a position this size, it hurts.

I know that. I accept it. That’s the trade I’ve chosen to make.

But the framework, for me, is simple:

Wait for the fat pitch.
When it comes, swing hard.
When you’re right, don’t flinch.

That’s how I invest.

Find businesses I understand well enough to size up. Size them up when the price is right. Then hold on - through the noise, the volatility, and the well-meaning advice from people who think a 30% position is reckless.

For me, a 30% position in a business I’ve studied for years isn’t reckless. A 2% position in a business I barely know is.

But that’s me. Your portfolio is yours. Your risk tolerance is yours. Your circle of competence is yours.

Do the work, find your fat pitches, and size them in a way you can live with - in good years and bad.

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Ashtead is one pitch. It’s the biggest one in the book right now, but it’s not the only one. The rest of the portfolio is built on the same principle - a handful of businesses I know cold, sized with conviction, held for the long arc.

If you want to see the full lineup - what’s in there, at what weight, and why - the entire portfolio is laid out here:

Same philosophy. Different pitches.

Thanks for reading,

Dom
Schwar Capital