My Top 8 Highest Conviction Micro Cap Ideas
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That means you get full access to every one of these ideas in detail, ongoing coverage of all the companies below, plus every new idea we publish going forward.
Since launching Schwar Capital, we’ve covered companies across the UK, US, Canada, Sweden, Germany, and Australia.
Some of these have already started delivering. Others are early in their story, still proving out the thesis.
That’s the nature of this approach - patient capital, applied to asymmetric situations, held with conviction.
Below is a short thesis summary for every high-conviction micro cap position in the portfolio. Each one links to the full deep dive or most recent earnings summary for those who want the complete picture.
I hope you enjoy today’s post.
Ashtead Technology Holdings (LSE: AT)
A subsea equipment rental business operating since 1985 with zero loss-making years in four decades. Ashtead rents 30,000+ pieces of mission-critical equipment to the world’s largest offshore contractors - gear that costs a fraction of total project spend but can shut down a vessel operation costing hundreds of thousands per day if it fails. The company has completed 9 acquisitions, all subject to 20% IRR hurdles, in a deeply fragmented market with plenty of targets remaining. FY2025 revenue came in at £203 million, up 21% year-over-year, with margins at the top end of guidance. The business delivers roughly 25% returns on invested capital. I also believe there’s optionality the market isn’t pricing in.
Acorn Energy (OTC: ACFN)
Through its 99%-owned subsidiary OmniMetrix, Acorn monitors critical backup power infrastructure for hospitals, cell towers, and gas utilities - over 23,000 connected devices watching over billions of dollars of equipment. The business runs a razor-and-blade model with recurring monitoring subscriptions at 95% gross margins. CEO Jan Loeb owns 17% of the company. Monitoring revenue grew 22% year-over-year while overall margins hit a record 77% and cash from operations more than doubled. Zero debt. Management guiding for 20%+ annual revenue growth over the next 3-5 years. A recent exclusive partnership dramatically expands the addressable market into several new verticals - with average deal sizes 5-6x larger than the existing business. In my opinion, the most recent earnings report was better than the headline suggests.
Spectra Systems (LSE: SPSY)
A UK-listed, US-headquartered company that embeds covert authentication materials into banknotes and manufactures the sensor systems that detect them. Once a central bank integrates these materials into a currency design, they’re locked in for the entire note series - typically 10-15 years. The business has undergone a fundamental transformation from lumpy project revenue to contracted recurring income, with a signed maintenance agreement running through 2030 now on the books. H1 2025 revenue grew 54%, adjusted EBITDA more than doubled, and the board expects record earnings for the full year. Multiple layers of optionality sit on top of the base case - none of which are required for the thesis to work. I believe the base case alone supports significant upside from here.
Perma-Pipe International Holdings (NASDAQ: PPIH)
A 32-year-old manufacturer of pre-insulated piping and leak detection systems operating 14 facilities across 6 countries. I originally added this as a Middle East infrastructure play after the company secured a key approval that opened access to a massive new market. Contracts started flowing immediately. Then a second growth vector emerged that I didn’t expect to materialise this quickly - one tied to a secular theme that has nothing to do with oil. Two catalysts are now firing simultaneously. The contracted backlog is substantial relative to the company’s size, against a fortress balance sheet. Management has publicly stated the stock “does not reflect the true value of the company.”
TruFin (LSE: TRU)
A UK-listed holding company with three distinct assets that, individually, would likely command higher multiples than the market gives the group today. Adjusted PBT surged 720% year-over-year. One division is quietly compounding with 100% client retention and deep switching costs. Another is shifting from hit-driven to recurring revenue, with back-catalogue expected to account for roughly 50% of 2026 revenues. Management has been aggressively returning capital to shareholders through buybacks. A recently established incentive plan ties key management compensation to a specific exit valuation, signalling that value crystallisation is actively being contemplated. The sum-of-the-parts tells an interesting story.
Kingsway Financial Services (NYSE: KFS)
The only publicly traded company in the United States operating the search fund model at scale - an asset class that has delivered approximately 32% IRRs over four decades according to Stanford data. Kingsway backs entrepreneurial CEOs to acquire and grow recurring-revenue service businesses. Management owns 27% and has invested $11 million of personal capital. The growth engine delivered revenue up 59% year-over-year in 2025, with Q4 accelerating further. Quarterly EBITDA improved sequentially every single quarter throughout the year. Six acquisitions closed in 2025, with 3-5 targeted for 2026. A $330 million net operating loss portfolio means most earnings pass through tax-free for years. There is a significant gap between reported GAAP earnings and underlying economic earning power - a gap I expect to narrow meaningfully as recently acquired businesses exit their investment phases.
CeoTronics (FSE: CEK)
A 40-year-old German manufacturer of professional communication systems for military, police, fire, and aviation - environments where communication failure can cost lives. The company designs and manufactures roughly 94% of components in-house in Germany. Over two-thirds of revenue now comes from recurring service relationships. Recent results were exceptional: record revenue, EBIT nearly quadrupled, and the largest single order in company history - pushing the order backlog to a level that covers a significant portion of the entire market cap. The balance sheet is a fortress with zero meaningful debt. Europe’s defence modernisation cycle provides a structural tailwind spanning 10-15 years, and the company’s proprietary platform enables interoperability across mixed communication networks - exactly what NATO forces need as they modernise.
Rumbu Holdings (TSXV: RMB)
A Canadian micro-cap building a funeral home platform through disciplined acquisitions across Western Canada. The industry has zero cyclicality - demand is entirely non-discretionary, driven by an aging population with annual deaths projected to rise for the next two decades. Gross margins run 70-75%. The company has grown revenue 7x in two years, acquiring family-owned funeral homes from aging operators with no succession plan at attractive multiples. Insiders own approximately 62%, and the founders have over 35 years of combined experience in the industry. Management has identified a deep pipeline of additional targets and plans to accelerate the acquisition pace. Almost nobody is watching this. It is an early-stage show-me story with a clear path to scale in one of the most fragmented and stable industries in existence.
Thanks for reading and have a great rest of your day,
Dom
Schwar Capital
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Great summary
I follow your articles and I share your philosophy. I have come across a company that I believe reflects your principles. It is Water Intelligence plc (LSE: WATR) as a long-term investment opportunity over a 10 year horizon. The company operates primarily through its subsidiary American Leak Detection, combining a franchising model with the progressive acquisition of franchisees to capture higher margins. Its core business focuses on non-invasive water leak detection and repair for residential, commercial, and municipal clients, complemented by proprietary smart monitoring technologies such as StreamLabs.
Water Intelligence benefits from strong and predictable demand, driven by the non-discretionary nature of water damage repair and long-term contracts with major insurance companies. The company has demonstrated consistent revenue growth (around 7–11% annually), increasing operating leverage, expanding margins, and robust free cash flow generation, which is reinvested mainly into franchise acquisitions and technology development.
The market in which the company operates is highly fragmented, allowing Water Intelligence to act as a consolidator with significant competitive advantages, including nationwide coverage, network effects, intellectual property, brand strength, and high switching costs for B2B clients. Management is highly aligned with shareholders, supported by strong governance and a conservative balance sheet.
Despite solid fundamentals and favorable long-term market trends, the company’s shares seem materially undervalued respect to its intrinsic value.
I'd like to know your view.