My Top 3 Asymmetric Stock Ideas
Companies with Risk/Reward Profiles That Stand Out to Me
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The market's current setup has created some extraordinary asymmetries.
While everyone's chasing the obvious trades, I've been building positions in three situations where I believe there is an attractive balance of risk and reward.
Companies trading below their sum-of-parts value.
Management teams buying aggressively with their own money.
Potential catalysts that could help narrow valuation gaps sooner rather than later.
Combined, these make up nearly 50% of my portfolio.
My full portfolio breakdown and complete holdings list are at the end of this post.
But first, let me show you why these three opportunities currently stand out the most to me...
Stock 1
A picks-and-shovels play for the entire offshore energy industry that's been quietly compounding wealth for 40 years.
Never had a loss-making year. Not once. 25% returns on invested capital. 50% market share in their core segment.
The CEO owns meaningful skin in the game.
They're systematically rolling up a fragmented market of 200+ identified targets. Each acquisition hitting 20%+ IRR hurdles, bought at 5x EBITDA, dropping to 4x after synergies.
Mission-critical equipment rentals where failure costs customers hundreds of thousands per day. The kind of business where reliability matters infinitely more than price.
Beautiful unit economics - equipment pays back in 1-2 years but lasts 10-15. Inelastic demand from customers with record order books up 10-30% across the board.
From £8 million EBITDA in 2017 to £78 million today. Not through speculation, but methodical execution of a proven playbook.
The market's pricing this at 8x earnings like a dying cyclical. Technical selling and temporary headwinds have created the disconnect.
Sometimes the best opportunities come when proven compounders get temporarily mispriced. When management owns stock, customers are thriving, and the business model is bulletproof.
The fundamentals do the real work.
Stock 2
Three completely unrelated businesses accidentally bundled into one listed company. The market can't figure out what box to put it in, so it's putting it in the trash.
A GovTech monopoly processing £28.7 billion annually with 62 councils locked in at near-100% retention. Zero credit risk. Government-backed cashflows.
A games publisher with a 90% success rate and 300% average returns. No massive development budgets. Just surgical precision in finding diamonds before anyone else realizes they're valuable.
A technology platform that could be worth millions to the right buyer - or nothing at all.
Combined market cap: £115 million. Net cash alone: £15 million. Plus £71 million of accumulated tax losses.
The CEO needs the stock to hit £1.76 for his options to fully vest. Current price: £1.10. Management's buying back shares aggressively while the market sleeps.
Classic sum-of-the-parts mispricing. The kind that happens when quality assets get hidden inside confusing structures.
Main market listing coming in 2025. Division sales possible. Management incentivized to crystallize value.
Have a read:
Stock 3
A small homebuilder that shouldn't be public anymore. And finally admits it.
1,200 homes annually in a world where scale starts at 3,000. Management knows they're stranded. The "For Sale" sign went up in May.
But here's what matters: 7,500 lots in prime growth corridors. In today's world of land scarcity and permitting nightmares, that's strategic gold.
The CEO, an ex-investment banker, hired specialized M&A advisors. Management owns 76% of the stock. In December, insiders bought another $7 million worth at $5.00. Current price: $4.00.
Recent comparable transactions value lots at $90,000 each. Apply that math here and the stock's worth $5.50-7.00. That's 40-75% upside from today.
The operational turnaround hitting right as they shop the company. Gross margins jumping 400-500 basis points. $4 million in annual cost savings dropping straight to the bottom line.
Big builders need lots. Japanese firms have cheap capital. Private equity discovered homebuilding's cash generation. Multiple buyer types circling.
Zero analyst coverage. Recent forced selling from index deletion. The kind of forgotten corner where opportunity lives.
What Paid Subscribers Get
Subscribers get complete access to my full portfolio holdings, all personal investment theses, the active watchlist, and (coming soon) the risk/reward matrix that drives my position sizing.
Annual plans are also 34% cheaper for those who appreciate good value.
If that sounds like something you're interested in, you can view everything with this link or at the end of the post:
No worries if not.
Thanks for reading,
Dom
Dom
Schwar Capital