We Want To Be In Before the Bean Counters
End of the month review
This is an overdue time for an explanation of what the Microcap Opportunity portfolio is all about and how it may be of use to you. Our portfolio disregards the typical considerations in portfolio composition. We are not concerned with minimizing risk or diversifying our portfolio. We fill our portfolio with microcap stocks that have the potential to deliver hockey-stick returns and more. How you choose to use our portfolio decisions is up to you and your qualified advisers. This is a tracking exercise for us and a tool to generate ideas for your due diligence.
Our investment ideas are derived from different themes. Our favorite theme is a company that is presenting a solution with a large TAM and no direct competition. This is an area where it is essential to determine if a compelling story has actual potential market penetration. Most startups fail. The majority of investors wait for financial evidence of early success before taking a position. We strive to get in early. These opportunities are rare. We are excited about NeurAxis (NRXS) having everything in place to capture a massive market opportunity.
A developing industry might attract our attention. We were among the first to identify drones and invested in Unusual Machines (UMAC) and Red Cat (RCAT). We took profits when we saw that these stocks were becoming meme favorites. It appears to be a good time to revisit this theme. We are taking a fresh look at drone stocks and may add one to our portfolio shortly.
We seek investment opportunities where the investment community is currently underserved. Canadians generally only invest in Canadian stocks, and in the microcap arena, they like to invest in profitable Canadian microcaps that the institutional community has not discovered. It is not easy to find stocks that fit this niche. Aurora Spine (ASAPF) (ASG.V) is so very close to establishing profitability. The stock also fits in as a hot industry play. Minimally invasive spine implants are a fast-growing, barely penetrated arena. Aurora Spine may not become the market leader, but we appreciate that management has established a path to profitability and not burned shareholder value by pursuing growth at all costs.
It is incredible how you can achieve double-digit returns for multiple years by identifying an undervalued opportunity. So, value is also of interest in building our portfolio. We are invested in Ascent Industries (ACNT), where a skilled management team is focusing on maximizing the company’s operations, resulting in a stock trading at a cheap valuation and discount to its peer group.
There are also niche plays where the opportunity isn’t ample enough for the larger companies, but is a massive opportunity for a microcap. NTG Clarity (NYWKF) (NCI.V) is leading the digital transformation in Saudi Arabia. The company has created a moat by providing Arab-speaking IT professionals to an Arab country that is heavily investing in upgrading its non-oil and gas infrastructure to promote economic growth.
We will stick with a stock as long as management steers the company on the stated course and our investment thesis remains intact. Kraken Robotics (KRKNF) (PNG.V) has grown itself out of the microcap realm, with a market cap now exceeding $300 million. We like to hold on to our successes and let them run their course.
This is the last Sunday of the month. Time to review our portfolio.
Ascent Industries (ACNT)
Initiated 4/20/25 @ $12.70
Current price $12.60
Our investment theme centers on the new management team's transition of the company to focus on higher-margin specialty chemicals and the divestiture of its tubular operations. The May 12 Q1 report illustrated management's progress in orchestrating a turnaround. The reported loss was $0.10 per share, compared to a $0.41 per share loss for the prior year, along with a significant improvement in gross margin. The company has completed its transition to a fully specialty chemical company. The sale of the American Stainless Tubing asset was completed today for $16 million in cash, resulting in a profitable business with a robust balance sheet currently priced by the market at a multiple below 1X sales. Ascent is also a play on the tariff climate, as almost all sourcing and manufacturing is completed in the U.S.
The chart is visually appealing with a clear upward trend. Technically, this is an excellent time to add shares or start a position. The price is sitting at the support of the 50-day moving average, with the MACD and RSI signaling a potential bottom of the price channel.
Aurora Spine - ASG.V ASAPF
Initiated 8/28/2024 @ $0.28 C
Current Price $0.32 C
Aurora Spine specializes in minimally invasive spine devices. Its sales are almost 100% organic, and its products are FDA-cleared. As the minimally invasive spine surgery industry is still in its early stages, there is considerable market share to be gained.
Over the past few months, the company has strengthened its in-house sales force to drive revenue growth and enhance profitability, while continuing to introduce new products, providing surgeons with a more comprehensive one-stop shopping experience. The company will commence soft commercial sales of its recently FDA-cleared Aero facet device. Notably, the device was cleared for use from the cervical to the lumbar region, allowing Aurora to introduce the implant for the entire spine. No other company has gained such clearance from the FDA. Aurora plans to begin with a lumber implant and work up the spine, introducing additional implants.
Aurora will introduce its DEXA-L device in the next few months. The DEXA-L device is expected to gain popularity among the medical community, as it has a significantly higher insurance reimbursement rate.
We have watched this company transform from a third-party reseller to a developer of potentially game-changing products, as described by the company management. The company offers interesting products, competes in a large, nascent industry, and has strengthened its sales team. That is the fundamental story that supports our investment interest.
The chart effectively captures the performance of the underlying fundamentals. Management has guided to profitability this year. The stock was building momentum after achieving profitability in the fourth quarter of 2024. The Q1 report came in with a negative bottom line, and the stock sold off. Investors are willing to support the stock if profitability becomes consistent.
Cardiol Therapeutics - CRDL
Initiated 8/21/2024 @ $1.90
Current price $1.41
Cardiol Therapeutics is a clinical-stage life sciences company focused on anti-inflammatory therapies for heart disease. The company's lead drug, CardiolRx™ for treating Pericarditis and Myocarditis, is a THC-free (<10 ppm) pharmaceutically produced ultra-pure, high-concentration cannabidiol oral formulation manufactured under Good Manufacturing Practices.
The stock price has declined since June as investors were confused by mid-stage data released for treating pericarditis. News releases cited the results as mixed. The data was instrumental in continuing the clinical trial with the most effective dosage and eliminating dosages with weaker outcomes.
The company is currently enrolling patients in a MAVEriC Phase III trial. Results from the trial are expected in mid-2026, and if cleared by the FDA, commercial rollout is anticipated to commence late in 2026 or early 2027.
Top-line data from the myocarditis FDA Phase II ARCHER trial for CardiolRx is expected this quarter. The company has exclusive rights to its pipeline drugs and is likely negotiating with large pharmaceutical companies for commercial partnerships. This is another potential catalyst for share price appreciation.
The stock price has rebounded and is now facing resistance at the 200-day moving average while receiving support from the 50-day moving average. We will soon see the convergence of the two major moving averages. This is known as a triangle pattern. You can visualize the triangle by drawing a line from the high price to the current price and another line from the bottom price to the current price. A major breakout or breakdown in stock price typically follows a triangle pattern.
Coya Therapeutics COYA
Initiated October 10/10/2024 @ $7.06
Current price $5.85
Coya is a clinical-stage company developing treatments for neurodegenerative diseases, including Amyotrophic Lateral Sclerosis ("ALS"), Alzheimer's disease ("AD"), Parkinson's disease ("PD"), and Frontotemporal Dementia ("FD"). Neurodegenerative diseases destroy brain cells, and the process is irreversible. Currently, available treatments slow the disease's progression, but there is no FDA-approved cure for neurodegenerative diseases. Coya is targeting filling that void.
Coya has partnered with Dr. Reddy Labs to develop and commercialize COYA 302 for ALS, a deal that could be worth up to $700 million if all goals are met. Coya 302 combines Coya 301 and a drug from Dr. Reddy's. The company will receive $8.2 million from Dr. Reddy upon initiating the Phase 2 ALS study, which is expected this quarter. Also expected this year is a partnership for the development and commercialization of Coya 303, a combination of Coya 301 and GLP-1, for the treatment of ALS.
Other potential catalysts for share price appreciation in 2025 include the following:
Q1 2025: Additional data from the Alzheimer's clinical trial.
Q2 2025: Topline results from the FTD study.
Q2 2025: Submission of additional nonclinical data to support the start of the COYA-302 Phase 2 trial in patients with ALS
Upon IND acceptance and first patient dosing of COYA-302 in ALS, the company is eligible to receive milestone payments of $8.4 million from its strategic partner, Dr. Reddy’s Laboratories (DRL)
Q2 2025: Publication of COYA-303 combination mechanistic data
Q2 2025: Publication of data documenting the role of inflammation in Parkinson’s Disease
Q2 2025: ALS Biomarker data. Publication of longitudinal data on Neurofilament Light Chain and oxidative stress markers in patients with ALS
2H 2025: Additional single-cell proteomics data from the completed investigator-initiated, 21-week, double-blind, placebo-controlled, exploratory Phase 2 study of low-dose interleukin-2 (LD IL-2) in patients with Alzheimer’s disease (AD)
2H 2025: Filing of IND for the COYA-302 Phase 2 trial in patients with FTD*
(*Clinical trial initiated upon FDA IND approval)
The technical picture isn’t providing much information over the last six months. There are numerous potential catalysts for price appreciation. I do not understand why this stock is not receiving more enthusiastic attention.
Delcath Systems DCTH
Initiated on 1/8/2025 @ $11.85
Current price $13.57
Delcath is a hybrid medical device company that treats primary and metastatic liver cancer. It is very common for primary cancer from other body organs to metastasize in the liver, as the liver filters out harmful substances from the blood.
The FDA cleared the company's Hepzato Kit in August 2023 for treating metastatic ocular melanoma ("mOM"), an eye cancer that spreads to the liver. This is the first FDA-approved device for treating the entire liver. Delcath intends to develop Hepzato into a platform for treating all types of liver cancer and currently has two Phase II clinical trials in progress.
Delcath reported positive free cash flow for Q1 and a strong balance sheet with $59 million in cash and no debt. The company is on target to have 30 active medical centers by the end of the year. The average treatment rate per center is two per month, which is expected to increase as each center maximizes its potential. Management guided revenue growth for 2025 of over 150% over the prior year, reaching at least $94 million.
The stock was added to the Russell 2000. This will result in the purchase of approximately 4 million DCTH shares for the index tomorrow. That is heavy buying considering that only about 33 million shares are outstanding, and only half of the outstanding shares are available for public trading. Funds were active on Friday in advance of the Russell buying on Monday. The volume was heavy, but the stock price retreated. That is a head-scratcher for me. Monday should be another high-volume day for the stock, giving it the momentum to rise above the 50-day MA and resume its uptrend.
Frequency Electronics - FEIM
Initiated on 8/14/2025 @ $12.15
Current price $23.28
Frequency Electronics designs, develops, and manufactures precision time and frequency generation technology for satellites and secure terrestrial communication, command, and control. The majority of revenue is derived from U.S. government contracts.
The company is the world leader in precision time and frequency generation technology. The satellite industry is undergoing a paradigm shift, and Frequency is successfully leveraging its technological superiority while adapting to this changing industry. The secret sauce for the company's success has been continued strong sales from established products, combined with the addition of new products.
The company reported 2025 Q3 results during March. The reported revenue of $ 49.8 M for the nine months, compared to $39.7 M in the prior year, is the highest in ten years. The backlog remained high at $73 M, slightly lower than the $78 M for the previous fiscal year. Following the earnings report, Frequency announced a $12 million contract to deliver synchronization products over the next three years. The balance sheet is solid, with $27 M in working capital and no debt.
President Trump's Golden Dome plan could be a vast potential tailwind for Frequency Electronics. That may be the reason for the latest gap-up in stock price. The chart shows how the previous gaps have filled. I will look to add shares to my account when this gap is filled.
Kneat - KSIOF KSI.V
Initiated on 8/14/2024 at $4.64 C
Current price $4.53
Kneat is a first mover in digitalizing validation and quality management compliance. The company continues to add new customers and is pushing toward profitability. Contracts start small and grow into values exceeding $1 million annually within two years. Since contracts with smaller companies won't significantly impact overall earnings for two years, these deals are typically announced on social media platforms, such as X. Contracts with larger companies are disclosed through press releases. Kneat is signing major deals almost monthly. In June, a new global technology customer was announced.
Q1 was another record revenue quarter as the company continues to scale. The stock trades at expensive multiples relative to its peer group, but these multiples do not account for the land-and-expand nature of Kneat's business model. The stock is becoming more attractive as profitability is now within reach. The stock price recently hit a new high, but if the company establishes profitability as expected, we should see an accelerated price appreciation rate.
We are just letting this stock run.
2.92Kraken Robotics - KRKNF PING.V
Initiated 8/11/24 @ $1.27 C
Current price $2.92
Kraken Robotics is an underwater technology company that provides imaging sensors, batteries, and subsea robots primarily for the defense and offshore energy industries. Kraken is a first mover in unmanned underwater vehicles ("UUVs") equipped with synthetic aperture sonar ("SAS")and is the only pure-play related to UUVs that I could find.
The stock trades at rich multiples but is widely considered a likely acquisition. Kraken was the top performer on the TSX Venture exchange for 2024, the fourth time the stock has been included in the annual TSX Venture Top 50 list.
Kraken recently announced its most significant battery order and opened a new production facility in Nova Scotia. Besides the monetary size of the order, the company has developed a new LG battery cell pouch that is smaller and can fit into vehicles that its legacy batteries can not. These new batteries are cheaper and more powerful. The company recently announced the acquisition of 3D At Depth, allowing it to expand its product offerings and establish a U.S.-based footprint.
Q1 was a weak quarter as expected, but the future remains bright. Management is guiding a 40% growth rate for 2025, unchanged from prior guidance. The company just announced a $100 million cap raise. We will see what is in the works while we let this stock run.
NTG Clarity (NYWKF) (NCI.V)
Initiated on 4/6/2025 @ $1.55 C
Current price $1.67 C
NTG was founded in 1992 by Egyptian-born Canadian electronics engineer Ashraf Zaghloul. The company has led the way in providing digital transformation services in the Middle East. It is leveraging its long history of conducting business in the region to gain market share in the trillions of dollars earmarked by the Saudi Arabian government for its Vision 2030 program. The Saudis are transitioning from an economic dependence on oil to developing infrastructure, expanding banking, technology, and manufacturing activities.
The company enjoys a competitive advantage over larger competitors in the Middle East by offering Arabic language IT professionals. NTG offers educational programs in Saudi Arabia and Egypt to train individuals for IT careers, ensuring the company has qualified staffing to meet demand.
NTG is profitable, sells at a modest valuation, and is experiencing explosive growth. Revenues and gross profits for fiscal 2024 were over 100% higher than the previous year. The company is benefiting from an expansion of services utilized by its customers. Q1 2025 revenue rose 68%. Management guidance of $78 million for this fiscal year results in a 45% increase over the prior year, but also indicates that the three remaining quarters will be flat in comparison to Q1.
The company has embarked on a hiring spree, which suggests that it is preparing for new contracts, likely to push revenue growth higher this year. We don't believe that the company will undertake a capital raise; however, its cash position is insufficient to fund operations for the year without an improvement in accounts receivable.
The stock is an excellent play on avoiding tariff-related pressure.
Beautiful chart with the stock price hovering closely above rising moving averages.
NeurAxis - NRXS
Initiated on 8/18/2024 @ $3.18
Current price $2.48
The company continues to expand its insurance coverage for the FDA-cleared IB-Stim treatment for irritable bowel syndrome. The IB-Stim received FDA clearance on May 20th for expanded pediatric nausea treatment, doubling the device's total addressable market (TAM). Day traders promoted the news, and the stock price surged over 200%.
Management seized the opportunity to raise $5 million, and another $1 million was added to the company's cash position from the exercise of warrants. There are 9.5 million shares outstanding. Fully diluted, adding in warrants, options, and preferred shares, there are 17.3 million shares. The company is well-funded as it prepares for increased demand for the IB-Stim in January when the Category 1 reimbursement code takes effect.
The company continues to add insurance carriers for IB-Stim coverage and expects to double the number of lives covered by the end of this year. At the same time, it has begun a soft commercial rollout for its second FDA-cleared medical device.
The chart exhibits a triangle pattern that can be visualized by drawing a line from the price high, ignoring the spike in price, and then drawing another line from the bottom price to the current price. A breakout follows a triangle pattern. We view adding coverage from major insurance carriers as a significant expected development. Check out our recent article.
TAT Technologies TATT
Initiated on 1/8/25 @ $25.31
Current price $30.19
TAT provides thermal, auxiliary power units (APUs), and landing gear solutions to the original equipment manufacturers (OEMs) of commercial and military aviation, as well as to the maintenance, repair, and overhaul (MRO) industries. The company is based in Israel, but most of its work is performed in the United States.
Our investment thesis is that TAT benefits from the strong demand for its products, which is driven by supply chain disruptions. Aviation supply chain issues have led to shortages of airplanes. As the fulfillment of new airplane orders takes at least six years, it will take years for supply to catch up with demand. The lack of new airplanes to meet demand results in the extended service of existing aircraft and increased demand for airplane components, such as those manufactured by TAT, for at least the next five years.
2025 Q1 revenues of $42 million were a 24% improvement over the prior year, while EPS of $0.34 exceeded expectations by $0.04. The company reported a strong and growing backlog of $439 million as well as expansion of its Auxiliary Power Unit to serve additional Boeing and Airbus models. The share price declined following the announcement of a capital raise through the issuance of shares at $26 to fund the expansion. The stock price is back on track, resuming the uptrend.
WidePoint - WYY
Initiated on 11/15/2024 @ $3.75
Current price $3.44
Wide Point offers SaaS services, including identity, mobility, and access management. Its revenue is 80% derived from the U.S. government and 20% from commercial, state, and local customers. Almost all of its revenue is predictable and recurring.
The stock trades at a steep discount to its peer group due to lower margins, as a significant portion of its revenue is pass-through with zero margins. This masks double-digit revenue growth, positive adjusted EBITDA over the last seven years, and four consecutive quarters of free cash flow.
Expanding government contracts, introducing a new certification, launching a new product, and a new strategic partnership are potential catalysts for the stock to re-rate.
Investors feared that the uncertainties surrounding U.S. government agencies would hurt WYY. The company benefits from aligning with DOGE's objective, as we discussed in a recent article. The stock price doubled after the article, but investor fear returned when the company reported a minor adjustment to align the time frame for previously reported numbers on its 2025 Q1 report. Missing the top and bottom numbers also refueled the Doge impact fear.
Long sideways movements are followed by a significant price change. The longer the sideways action, the larger the price fluctuation. The company's largest customer is the Department of Homeland Security, with a contract renewal due in November. The new DHS contract is expected to be much larger in value and term than the present contract. It is doubtful that WYY will not win this renewal.
June Additions and Sales
There were no new positions in June, while three positions were closed.