I went through the 150 smallest companies on the AIM. These are the 10 you should know about.

Stupidly cheap financials, a locksmith rollup, stranded Ukrainian gas fields and a Mexican restaurant chain - microcaps never get old.

A Very Long Introduction (& Why Microcaps)

(Skip a couple sections down if you just want to know about the companies.)

The longer I invest, the more I come to respect the efficiency of the stock market. I think a good chunk of the value investing community is stuck in the past — a past where all an investor needs is the right mindset (buying stocks as if you were buying the whole company; be greedy when others are fearful) and the right approach (good business, good management, reasonable valuation). The past in which Buffett, Lynch and others delivered 25%+ annual returns for decades on end.

I think that time is over, and I doubt it’s coming back. Most market participants were boneheads back then. Market participants today are a hell of a lot smarter, and a lot more of them have more of a long-term, fundamental approach. Perhaps not a majority, but it needn’t be a majority — only enough to push up the price of the really good stuff.

I also don’t subscribe to the view that the rise of passive investing is making the market inefficient — at least on a granular level. Currently, the S&P 500’s float is split roughly 50/50 between active and passive owners. Clearly, there is no good reason that those passive owners, sitting there buying nothing and selling nothing, should make prices inefficient. The other 50% do all the trading between themselves, and thus set the prices.

Okay, but what about passive flows? All these trillions of dollars piling in, driving up prices… surely that’s creating a bubble?

That money/demand is coming from two places:

• It can be moving from active management into passive management, in which case that new passive investor is as much a seller as they are a buyer. Granted, if a higher proportion of the money flowing from active to passive is in certain sectors (likely ones that have performed poorly), those sectors may become further depressed — but money flowing away from poor-performing areas of the market is nothing new, nor a result of passive investing (if anything, the fact this money is now being distributed evenly across the market, rather than flowing directly to an active manager in a well-performing area, should be good for efficiency…).

• It can be coming from altogether new investors who, enticed by (a) the US stock market’s stellar performance over the last 15 years, and (b) the ease of investing, are finally throwing their hat in the ring. But as for (a), once again, the investing public’s interest increasing when the market is doing well is nothing new, and as for (b)… well, I think this probably is true — more people are investing in stocks because it’s easier now, and that’s contributing to higher valuations. But if your argument is that the market is broken because it’s no longer very expensive and a massive pain in the arse for the average Joe to invest, I think you might need to reassess.

The crowd that argue passive breaks the market because it makes buyers price-agnostic must be unaware that the vast majority of active funds are also mandated to be fully or near-fully invested, not to mention that fund managers who do have discretion tend to be more bullish at highs and bearish at lows.

One need only look at the records of well-respected value investors & funds over the past 15 years to see the effect of this more efficient market. I’ve been applying for jobs at many, so I naturally check their track record — and I’ve been consistently disappointed. To point out a few:

• While Buffett’s investments have performed roughly in-line with the market, those of Ted Weschler and Todd Combs — the two people out of many thousands that he decided were best equipped to take on the challenge of beating the market when he’s gone (and both having excellent track records of their own pre-Berkshire) — have drastically underperformed (a year ago, their combined record stood at 7.8% annually versus the S&P’s 12%).

• Ruane Cunniff’s Sequoia Fund, started by the legendary Bill Ruane, has 10-year returns of 7.7%, versus 12.5% for the S&P 500

• Seth Klarman’s Baupost has reportedly returned just 4% a year for the last decade, compared to 20% since inception

• Third Avenue has posted 6.8% over the same period

For sure, there are times when most value investors will naturally underperform, namely aggressive bull markets. But to perform that poorly, not just on a relative basis but also an absolute one, over 10-15 years — either what they hold now must be the most stupidly undervalued things imaginable, or all of them have suddenly forgotten how to invest… or it has just gotten a lot harder.

So, should we all just give up then?

No. It’s my view that there are and will for a long time continue to be two powerful sources of 'alpha' available to investors.

The first is behavioural. While I do believe the higher number of intelligent participants in the market has reduced that granular relative inefficiency, human nature has not changed. The next time shit properly hits the fan (the US debt burden is shaping up to be a strong contender, though the future is always full of surprises), people will panic and markets will plunge to bargain territory. Whether those intelligent participants can hold their steel is irrelevant — their investors can’t.

The second — and the reason for this unreasonably long intro — is the ability to invest in places where those participants can’t, namely illiquid microcaps.

The Case for Microcaps

It was in 1999 that Buffett first claimed he could still make 50% a year, if running less than $1 million. Speaking to Bloomberg Businessweek, the usually-modest oracle said…

“Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers … I think I could [still] make you 50% a year on $1 million. No, I know I could. I guarantee that."

He has doubled down on this several times since. At last year’s AGM, someone had the bright idea of asking exactly how he’d go about it. Buffett explained:

“It would be going through the 20,000 pages … I don’t know what the equivalent of Moody’s Manual or anything would be now, but I would try and know everything about everything small, and I would find something.”

The lack of institutional attention is the main reason this segment of the market is so attractive, but not the only one. Many institutional investors of have restrictions (formal or informal) on what they may hold in their funds — most funds will adhere to a minimum market cap restriction, and dividend funds for example must only own dividend-payers. Hence, when a small cap drops below a certain size and/or cuts the dividend, these funds become forced sellers — and with liquidity as low as it is, shares can be driven to inordinately cheap prices.

This is exactly what I believe happened with Watkin Jones (LON: WJG). As the UK housing development fell into a nasty downturn in 2023, their earnings dropped from £30-45m a year to ~0 (adjusted for one-offs). Shares followed, with the market cap plummeting from >£500m for most of 2022 to <£200m by mid-2023. They then cut their dividend, forcing the dividend funds to sell out, which drove the market cap below £100m, a common minimum market cap threshold. By the time those funds had sold out, the market cap had been pushed to just £50m — for a company that had been earning £40m a couple of years prior. It was about then, this January, that I came across the stock, and was so baffled by the valuation that I stayed up all night researching it, buying it at 8am when the market opened, before finally hitting the hay. Unfortunately, with earnings only a week out, and still not entirely convinced I wasn’t missing something, I decided to hold off on writing it up. It’s up 95% since I bought it.

[In the days since I wrote this, it has fallen back ~25%. I have just added it to the VGV Portfolio.]

Pushback

There is one particular pushback I always get when I talk about microcaps.

“If no one’s looking, what makes you think the market is ever gonna realise the value?”

It’s a valid point. The usual response people give is that you have to buy things with a catalyst. No catalyst, and your shares can sit at 5x earnings until kingdom come.

I disagree with this answer. Usually, if there’s a catalyst (or at least one that you can find within a reasonable amount of time), people know about it. In spite of all the inefficiency, it’s most often priced in. That’s my experience.

The answer I would instead give is that you have to pick companies where management is doing the right things with cash (and is incentivised to continue doing so). If you’re buying something fairly high-quality for say, 10x earnings, that probably means reinvesting the cash in the business and compounding value. Shares cannot sit still forever while intrinsic value marches up 20% a year — they will correct upwards sooner or later, even if only to maintain the P/E. If you’re buying something of a more mediocre quality at 5x earnings, management should probably be returning cash via dividends or buybacks (I personally don’t care which, as I buy my shares in a tax-free account). Shares cannot sit still forever if the share count is reducing 20% per year; and I don’t care how long shares sit still if I’m receiving a 20% dividend (though common sense says it won’t be long).

The most common ways managers squander capital are (a) bad acquisitions and (b) expanding the business at unattractive ROIICs. Very simply, avoid managements that have done these things in the past. As for how to ensure they continue to do the right things with cash in the future — you have to pick management that are aligned with shareholders. This cannot be a secondary consideration — due to the lack of eyes on them, poorly-aligned microcap managers are much more of a threat than those in larger companies — and if they wish to, they will find a way to steal shareholders’ money. As Munger said, “show me the incentive and I’ll show you the outcome.”

Generally, good alignment requires they own a reasonably large stake in the company, particularly in relation to their compensation, as well-designed compensation plans are uncommon in microcap-land (and more easily gamed).

Methodology

The AIM (Alternative Investments Market) is generally seen as the London Stock Exchange’s shitty backwater. Full of fraudulent pre-revenue African mining companies and doomed biotech start-ups, it has a horrible reputation and for the most part, it lives up to it.

The AIM all-share is still down 44% from 2021 highs.

I selected it as the hunting ground partly for this reputation, but more so because I’m British — I understand the culture here better than anywhere else, and know more of the companies. And, should anything really take my fancy, I can hop on a train and go knocking on doors (no doubt with the image of a young Buffett meeting Lorimer Davidson running through my head).

There are 1205 companies listed on the AIM. Of these, 438 are in the AIM All-Share index, the qualification requirements of which are so lax that I doubt anything outside it is worth looking at. 438 seemed like a few too many companies to go through all at once so, following the logic that more illiquid means more inefficient, I selected only those which had traded <£150,000 worth in the last month, leaving 150. From these I eliminated anything pre-revenue, which brought it down to a final count of ~120.

For each company, I have tried to understand their business model, their financial history, any recent major events, and write at least a couple of sentences about them. In the end, it took about 2 weeks, doing ~5 hours a day on average, and I’ve written ~17,000 words.

At some point in the next few weeks, I hope to cover the next ~150, which cover the range of £150k-£1m in 1-month trading volume. However, this will be my first paid post. If you want to se

The Results

I found 10 companies that genuinely interested me. They range from 'solid company - worth keeping an eye on in case it drops another 20%' to 'why the fuck is this trading this cheap??' to 'I have no idea how to evaluate this but it’s an interesting situation'.

For each, I have written a basic description of the company, its financials, its management, and why it interests me. These are intended as jumping-off points for your own research — I have not yet studied them anywhere near deeply enough to make a buy decision (though for a couple of the more interesting ones, I expect to publish a more complete write-up in the coming months).

By the way, a number of these can’t be bought on Interactive Brokers, because they trade on the ASX1 segment. If you want to buy them, Interactive Investors may be your best bet.

Okay, let’s get started.

1. B90 Holdings (B90): £7.7m

B90 run affiliate-based gambling sites like oddsen.nu . These provide gamblers with betting site recommendations, odds comparisons, exclusive promotion offers (e.g. bet £50 and get a £100 bet free), and betting tips. In return, they receive a share of the winnings from whatever site they refer people to.

This company screens horribly. Revenue was £14m in 2017; last year it was £3.5m, with an operating loss of £1.7m. That tells a very misleading story, though — the company is undergoing a rapid turnaround under the hood. Hear me out.

The current executive chairman, Ronny Breivik, entered the role in late 2022. Revenues that year were £2.1m, and the loss was £4.2m. Last year’s results start looking slightly better compared to that shitshow. But we need to get deeper into the numbers.

See, they used to also run their own gambling sites, but in 2024 they outsourced these to a third-party white-labeller — essentially converting to a franchise model (they now collect ~£300k/yr completely free for these). This move cut their operating costs 54% YoY. Granted, it did also wipe away 30% of their revenues — but commissions from the affiliate business grew so fast – 74% YoY – that they managed to produce a 16% increase in total revenue.

That £1.7m loss for 2024 also contains an impairment of £1.4m related to this change. Excluding that, the loss for 2024 is only £0.3m.

We’re not done yet. Amortisation of acquired intangibles was £760k. This is a meaningless expense. Add it back and we’re up to a £450k profit (they have no interest-bearing liabilities and no taxes, due to an Isle of Man incorporation).

Already, that’s not sounding too bad, but it gets better. Interim results show H1 2024 accounted for only £1.4m of FY24’s revenue and £50k of its adjusted profit — meaning H2 saw £2.14m of revenue and £400k of profit. £800k of run-rate profit (this business is not seasonal). That implies a P/E of only 9.6, and both the top and bottom lines are rapidly growing.

Based on the strength of the turnaround, management seems capable, but what about alignment? Ronny Breivik, the executive chairman, holds 31m shares (7% of the company) worth £550k, versus total comp of £285k in 2024. This is right on the bottom end of what I would consider acceptable alignment — if ownership is too small in relation to compensation, it often fattens the manager’s wallet more to expand the company by M&A (“justifying” a higher salary) than to maximise per-share value. I would want to speak with Ronny before making any decisions.

2. Croma Security Solutions (CSSG): £11.6m

Croma has two divisions. The less interesting one is Fire & Security, which consists of two teams of specialist, one based in Manchester and the other Southampton, which design and install and maintain electronic security systems and fire alarm systems. They serve both commercial and individual customers, with an emphasis on entertainment and healthcare. This division delivered roughly 42% of revenue and profit in FY24, with EBIT up 23% YoY.

The more interesting business is their Locksmiths division. That’s because they’re attempting a rollup strategy in the locksmith industry, similar to Constellation with vertical market software or Danaher with industrials (though on a much smaller scale). The industry is incredibly fragmented, with over 6500 independent locksmiths in the UK. CSSG currently run 17 locations, and are aiming to make 3-5 acquisitions per year, taking the acquirees up from low-single digit EBITDA margins to their own ~12% by broadening the product range, eliminating cost duplication and consolidating purchasing. They are targeting a minimum IRR of 15% with these acquisitions, and say they have identified a sizeable pipeline of suitable candidates.

The two businesses together delivered TTM EBIT, excluding amortisation of acquired intangibles, of ~£730k. The business holds cash of £4.6m, and will receive another £2.1m over the next year due to a 2023 sale of a business which is paying out over time. They have virtually no debt. Hence, the effective EV/EBIT is only about 7.

Alignment is excellent, with CEO Roberto Fiorentino owning 28% of the business (a stake worth £3.2m, versus compensation of £250k — good numbers). He’s also made smart decisions in the past, such as disposing of their personal security / bodyguarding business, which did a good 80% of their revenue at the time but very little profit.

However, the multiple isn’t that cheap, and I’d probably want to see them prove they can buy 3-5 locksmiths a year at a 15% IRR before buying in.

3. Dewhurst Group (DWHT/DWHA): £53m

Dewhurst has a dual-share structure. More on this later.

Dewhurst are a family-owned (~50% of shares) business which makes keypads and displays for lifts/elevators, public transport, ATMs etc. Almost unfathomably boring, I know — but despite the name, this is probably one of De best businesses on this list (I am so sorry).

Their revenue is impressively diversified — with 36% coming from UK & Europe, 40% from APAC, and 24% from Americas. And all their parts are manufactured here in the UK, which is always nice to see.

Financial Overview

• Revenue is stable and trending gradually upwards over the long run (2024: £64m, versus £46m in 2015)

• Operating profit is a similar story (£8.5m, vs £6.1m in 2015). That’s a 13% margin, which is pretty solid.

• Excluding cash and goodwill, they make a healthy after-tax ROIIC of 17%.

• The balance sheet is rock solid. It holds £21.6m of cash and zero debt. I’d caution against using EV multiples here, though — the majority of that cash is likely to remain on the balance sheet (like many family-owned companies, they are very conservatively managed).

• Tangible book value is £52m.

In the last two years they have paid a tax rate of ~37%. This will probably fall to 30-35% in the coming years (higher than the national rate due to overseas earnings, among other things).

The Share Structure

What really makes Dewhurst interesting is the share structure. They have two classes with identical economic rights:

• DWHT, the normal voting share (3.31 million outstanding)

• DWHA, the Class A non-voting shares (4.33 million outstanding)

The £53m market cap was based on a weighted average of the two classes — but as you can see from the chart at the top, the two trade at very different prices. While the voting shares most recently traded at 905p (implying an effective market cap of £69m), the non-voting shares are currently only 542p (effective market cap £41m). What’s more, the illiquidity means prices are very volatile — just a couple weeks ago, a few hundred DWHA shares traded hands as low as 450p (£34m).

It’s normal for non-voting shares to trade at a discount, but not one of that magnitude (there was even one point in 2021 where DWHT traded for 3.9x DWHA).

At a £44m valuation, you’re paying 5.2x EBIT, and getting £21.6m of balance sheet cash for free. Not a bad deal at all. If that’s still too steep for you, you could consider putting in an order at say, 460p — there’s a good chance it will fill at some point as the price bounces around, at only a £35m valuation.

What are management doing with the cash though?

One method of analysis which I find very useful - and which I never see anyone do - is a study of the aggregate flow of cash over an extended period.

• In the last 10 years, Dewhurst has earned £52.4m

• Over the same period, capex and capitalised development has exceeded D&A by roughly £0.5m, implying owner earnings of ~£52m

• £6.2m of this has been invested in working capital to support the growth of the business

• £16.5m has been invested in their defined benefit pension scheme, which in 2024 finally reached a position of surplus

• This has left ~£30m of free cash flow

• £12.2m of this has been paid out as dividends

• £4.1m has been used to repurchase shares (of particular note, the company bought back 3.8% of total shares in 2024, buying only A shares)

• £13.4m was spent on acquisitions — however £7.5m was received from a disposal, so only £5.9m net on M&A

• £8.6m of cash accumulated on the balance sheet

This is a very solid record, as one would expect given it’s a family-run business. In particular, I like that the pension contributions stopping is gonna free up an extra ~£1.6m/yr versus the last 10, most likely to be used for dividends and (when shares are cheap) repurchases.

The only potential source of concern is that 45% of FCF was spent on acquisitions (as mentioned, this is the most common way managements piss away cash). However, the bulk of that was the £9.5m acquisition of A&A Electrical Distributors in June 2018. In the 5 years from 2019-2023 alone (2024’s results are not yet available), A&A earned £9.6m, paying for itself. Not only that, but the current CEO, John Bailey, came with A&A. It was highly value-generative acquisition — and what else do you expect when the board are paying with their own cash?

Altogether, DWHA seems like a strong pick — the downside is wonderfully well-protected, alignment is excellent, the trailing shareholder yield (dividends + buybacks) on a £44m valuation is a healthy 7.3%, and you could even make a case that there’s a catalyst for revaluation now that the company suddenly has an extra £1.6m/yr to distribute (if they do distribute it all, the shareholder yield jumps to 10.9%).

4. Empresaria Group (EMR): £15m

Empresaria primarily provides a range of staffing services, as well as outsourcing/offshoring of business functions like recruitment, compliance and finance:

• Temporary staffing - 53% of net fee income

• Permanent staffing (headhunting, executive search) - 24%

• Offshore services (teams in India and Philippines): 23%

They are geographically diversified, generating 59% of staffing net revenue (i.e. revenue less wages of temporary/outsource workers) from UK & Europe, 27% from APAC and 14% from the Americas. By sector, the split is 40% commercial, 33% professional, 16% IT and 11% other.

2024 was a poor year for the staffing industry as a whole, with global revenues down ~2% YoY, after a similar decline in 2023. Empresaria’s results reflected this — gross revenue of £246m was down 5.5% from 2022. However, the net revenue picture was much worse, getting squeezed from £65m to £50m. Unable to reduce overheads by the same amount, EBIT (before exceptional expenses) collapsed from £10.2m to £3.8m.

2022 had not been an unusually profitable year either — EBIT averaged £9.2m from 2015-2023 (though “exceptional” expenses averaged £1.4m, so £7.8m is more representative of actual profitability).

The thesis is pretty obvious, then — if the company can get back to historical levels of profitability, they’re gonna suddenly look VERY cheap. They currently have £21.5m of net debt (including leases) charging £1.6m of net interest, so £7.8m EBIT would imply an EV/EBIT of only 4.6, and a P/PBT as low as 2.4.

That’s not the only path to upside, though. In February, the company announced it would be selling non-core operations over the next 2 years. That’s more significant than it sounds — core services, as they define them (staffing services in UK & US, plus offshore services) only account for 37% of net revenue. Selling the non-core businesses (which are themselves profitable) should therefore generate a good chunk of change, which Empresaria plan to use to reduce debt.

There are two big questions:

1. How much will the core businesses be able to earn alone?

Offshore services accounted for £5.8m of EMR’s £7.9m adjusted operating income before central costs in 2024, and did £7.5m in 2023. It’s likely the most valuable part of the business.

Conversely, UK & US (in the core sectors), lost £1.4m. However, management say they are confident that, with increased focus, they can return this segment to the profits seen pre-2023 (~£2m/yr). They plan to implement a single brand across the two countries, “develop a more integrated strategy”, and ultimately increase scale to drive profitability. Will they succeed? Lord knows.

Management expect to be able to reduce central costs significantly following the sales. In 2024, central costs totalled £4.1m — I would hope, with the business a fraction of the size, they can be reduced to at most £3m. If we assume Offshore + UK & US can do £7m (which seems conservative given Offshore alone did more than this in ‘23), that’s £4m of operating income.

2. How much will they be able to sell the non-core businesses for?

Now I’m really out of my depth. These non-core businesses provided £4.5m of adjusted operating profit, ex-central costs, in 2024, so I’d hope they sell for at least the value of EMR’s net debt — £21.5m. But it’s hard to say for sure — there aren’t exactly hordes of companies lining up to buy miniscule staffing subsidiaries.

Management & Alignment

Rhona Driggs has been the CEO since June 2019, which means she has overseen the entirety of the company’s steady decline. She originally joined as COO in November 2018, a move which spurred Empresaria’s first ever Glassdoor review:

Pros

None that I can think of.

Cons

Announcement yesterday of new COO from Volt Consulting should concern shareholders that the board did not do their due diligence.

Advice to Management

Reconsider.

Rough.

Rhona owns shares worth only £66k, barely a fifth of her salary. She also looks like a bad wax sculpture (page 12) though whether that makes any difference is up to you. We do, however, have to give her some credit for the decision to reduce the size of the ‘empire’ (something execs are generally reluctant to do, due to the correlation between business size and executive pay) — whether or not it was motivated by the £1.4m of LTIP shares vesting between now and 2027.

This is not my favourite idea on this list. However, the possible upside (should the business return to prior profitability) seems quite large, and I would be interested to hear if anyone does or has done further work on this.

5. Enwell Energy (ENW): £61m

Disclaimer: I’m not convinced this would make for a very prudent investment, but the situation is pretty fascinating (& possible upside very large) so I’ve decided to include it.

Enwell is an oil and gas comany which owns production licenses on 3 fields in Ukraine (and an exploration license on a fourth). These fields produced after-tax profits of £26.5m in 2023 and £60.1m in 2022.

Locations of Enwell’s four fields. MEX-GOL & SV represent ~85% of production capacity. SC is the exploratory field.

1P reserves (economically extractable with >90% certainty) total ~30 MMboe, ~35 years’ worth at 2023 production rates.

The company had cash of £75m as of March 31, 2025, and liabilities totalling £15m — a pure-cash net-net.

Shockingly, there’s a catch. The business is 82.65% owned by Vadym Novynskyi, a Ukrainian billionaire who was sanctioned by Ukraine in December 2022. This was due to his association with the Ukrainian Orthodox Church (which is regarded by Ukraine as still having close ties with the Russian Orthodox Church, despite having formally separated in May 2022), as well as his alleged pro-Russian stance when he was an MP. Novynskyi attempted to disguise his holding by moving it into two Cyprus-registered trusts, which he claimed were not connected to him.

In January 2023, Ukraine introduced legislation allowing the O&G exploration regulator to suspend or revoke licenses where the beneficial owner is under sanctions. In May 2023, they used this to suspend the VAS production license and SC exploration license for 5 years. These were restored in June 2024, I believe because the Ukrainian government began recognising the trustees as the beneficial owners, not Novynskyi. However, in October, the trustees themselves were sanctioned, and all 3 of Enwell’s production licenses were suspended for 10 years.

Naturally, Enwell quickly took the regulator to court, and requested in the meantime to have its suspensions temporarily lifted — which was granted. The regulator appealed, and in January the licenses were once again suspended.

Now, if valuing a staffing agency’s microscopic Chilean subsidiary is just a smidge outside my circle of competence, evaluating the legal precedent of oil license suspensions in Ukraine is the other side of the country. But as far as I can tell, there are broadly 4 things that may happen from here:

1. Enwell somehow wins the case, the licenses are restored, and they go back to doing £30m+ in annual FCF (assuming Russia doesn’t completely conquer Ukraine).

2. Enwell loses, but either the war ends and sanctions are removed, or the trustees and Novynskyi genuinely sell out of the business. The licenses are probably restored, and Enwell probably goes back to making lots of money.

3. Enwell loses, and either sanctions on trustees & Novynskyi remain in place, or Ukraine decides what the hell is the point in suspending the licenses if Novynskyi could just sell the business at fair value, so continues withholding the licenses for the full 10 years, or completely cancels them.

4. Russia make their way to Poltava and decide to kindly liberate the fields into Gazprom’s control.

I haven’t a clue how likely each of these are (other than a suspicion that the first is unlikely). I think that Enwell still has access to its ~£75m of cash – that it hasn’t been frozen – but I would not and have not staked my money on it.

6. Fiske (FKE): £6.3m

Fair warning, first. While most of the stocks on this list trade at least a couple of times a week, Fiske tends to trade roughly once per month. When it does, a decent volume changes hands – often £5-10k – but this is not one for those of you with 7 figure portfolios. Shares last traded at 53p (£6.3m market cap), but the current ask is 60p (£7.1m).

Fiske is a family-run investment manager and stockbroker. They run mainly private accounts, with AUMA totalling £882m. On this, Fiske saw management fees of £3.9m and stockbroking commissions of another £3.9m in 2024. Expenses totalled £7.2m, leaving operating profit of £660k. Revenue has been growing for the last 8 years, and is up roughly 3x since 2016 – with IM being the larger contributor.

This alone is not sufficiently interesting to justify inclusion on this list. It’s what’s on the balance sheet that’s more interesting.

First, £6.4m of cash (accounting for dividends received since the most recent published balance sheet). They have no debt, which means the EV is already negative, and other current assets roughly equal total liabilities, making this a net-net (or very close). Unlike Dewhurst, this is not a company that has historically held an unnecessarily large amount of cash in the bank, so it’s more likely they’ll do something with it.

More interestingly, they own 0.071% of Euroclear – probably one of the most important companies you’ve never heard of. They are by far the largest central securities depository in Europe, with a market share of ~65% in blue-chip equities and 50% in domestic debt. Euroclear provided settlement services for €1.16 quadrillion worth of transactions in 2024, collecting a tiny fee on each. After removing the windfall effects of Russian sanctions (which ~tripled profits), they saw operating profit of £1.31b. This figure has CAGR’d at 16% over the last decade, despite it not exactly being a bonanza for European markets. After tax, they delivered net income of ~£970m.

How much is this business worth? I’m afraid, once again, I am out of my depth. I’m sure just understanding the regulations applying to Euroclear could take me the best part of a year. But in very simple terms, we have a business with a majority market share in a winner-takes-most industry, which has been able to grow at a 16% CAGR while paying out 60% of profits out as dividends. Were it publicly listed, I’d be shocked if it traded for less than 20x earnings, or ~£20b. That would make Fiske’s stake worth ~£14m.

Recent transactions disagree with that guess. In December 2024, LSEG sold a 4.92% stake in Euroclear to TCorp for €455m, valuing the business at ~£7.75b. Accordingly, Fiske value their stake at only £5.3m.

And look, LSEG and TCorp are highly sophisticated parties transacting hundreds of millions, while I’m some fella who doesn’t know the business well, using the entirely rigorous “slap a multiple” valuation method. I may well be wrong. But even if I am, you’re basically buying this business for an EV of 0, and getting a holding worth 80% of the market cap, and an underlying business which is probably worth another 80%, completely for free. This is cheap. The question is what management will do with all the value on their books.

Management & Alignment

As mentioned, this is a family-run business. The Harrison founding family continue to own at least 40% of the business, and the CEO – who has been in since 2015 and oversaw Fiske’s impressive growth since – personally owns 20%. Alignment is excellent. There is not a huge amount to be gleaned from the cash flow statement, since profits of the past few years have mostly built up on the balance sheet, but I would not be surprised to see a large special dividend or introduction of a very meaningful non-special dividend, now that their coffers are suddenly full.

7. Goldplat (GDP): £11m

I’m sorry, but I couldn’t go through 150 AIM companies and not talk about at least one dodgy African mining company.

Goldplat run gold recovery plants in Ghana and South Africa. These buy various kinds of waste from mines and refineries - such as surface material, mineshaft timber, mill liners and even gear grease - which each contain tiny amounts of gold. They then use kilns, mills, and cyanide to extract this gold.

The Ghana operation produced £45m of revenue in 2024. It sources waste from across the West African “gold belt”, as well as certain areas of South America.

The South Africa operation produced £20m of revenue. It sources waste pretty much solely from South African miners and refiners (though, with Ghana facing capacity constraints at the moment, they have started taking some from South America). The company has noted that the SA gold industry is consolidating and improving its efficiency, reducing the quantity and quality of waste available as reprocessing is in-housed – so the SA operation is probably a business in decline.

They are also currently starting an operation in Brazil, allowing them to get much closer to their South American sources. They have invested/undertaken to invest ~£270k so far, which will allow them to perform the first processing step in Brazil, reducing mass significantly before shipping the concentrated material to Africa.

On the combined £65m of revenue, Goldplat generated £4.4m of profit in 2024, ~40% of its market cap. This may dip in the short-term, because the Ghanian government has decided companies must refine all gold to a certain level in Ghana, before exporting it (the Ghanian operation was not set up to handle this, which has required them to reduce throughput while they invest in additional capacity).

It's important to note that the price of gold averaged $2400/oz in 2024, while today it sits at $3300 – meaning, once operations are back on track, earnings may be well in excess of £4.4m.

The TSF

As well as the very low multiple, there is a free option here which could massively increase the company’s value if it plays out. Since 2003, Goldplat have been depositing their tailings (waste material uneconomical to process, but still containing some gold) into a tailings storage facility (TSF), with the intention of someday reprocessing it. With the gold price as high as it is, that day has come.

The TSF currently contains 2.2 million tonnes of material, with an average concentration of 1.66 g/t. This works out to 119,000 oz. Valuations typically assume a 60% recovery rate. At this level, the TSF contains $237m worth of recoverable gold (as a reminder, the market cap is £10.8m).

However, while 1.66 g/t would usually be highly economical, Goldplat’s waste is not like normal plants’ waste, since it comes from all these random bits of mine and plant equipment. Consequently, it is still not economical to process it with their existing infrastructure. The plan is instead to build a pipeline to a nearby gold processing facility owned by another South Afrian gold company, DRDGOLD. It's difficult to say how much gold might be recovered, what cut of the proceeds Goldplat will get, or what the cost of the pipeline will be – this I leave to any reader intrigued (read: insane) enough to give it a go (please let me know if you do). It’s also worth noting that they initially said approval was expected no later than June 2023 – they’re now saying December 2025, but I would guess it’s probably going to get pushed back again.

Management & Alignment

Most of the management do not hold a meaningful stake in the company. Of particular note, the CEO seems to be immediately selling shares as soon as his options vest. The one exception is Margin Ooi, a non-executive director, who owns 29% of Goldplat. Notably, he was a shareholder first and only became a director afterwards.

I consider the lack of alignment to be a major red flag here (along with the misrepresentation, intentional or not, of the TSF pipeline timeline).

8. Tortilla Mexican Grill (MEX): £15m

Tortilla is the only company on this list that I had looked into prior to writing this post; and the only one I’m actually a customer of (the two are related). It’s also the only one that isn’t cheap on an underlying earnings basis. But I still think there’s something interesting happening here.

Tortilla is the UK’s largest fast-casual Mexican restaurant chain and the second-largest Mexican chain overall, with 77 locations — behind only Taco Bell, with ~140. The UK market is fairly underpenetrated by Mexican food, and Tortilla’s management believe there’s an attractive opportunity to fill that gap – given how much better their food is than Taco Bell’s, at a fairly similar price point, I’m inclined to agree.

65 of the UK locations are company-operated, with the remaining 12 franchised by two multi-unit operators. There are another 10 franchised locations in the Middle East.

Tortilla also own Fresh Burritos, which has 13 company-operated and 14 franchised locations across France – and which they are planning to convert to Tortilla restaurants starting in H2.

Altogether, store count has grown healthily over the years:

However, the stock chart at the top (which goes back to IPO) is obviously pretty brutal – and the financial performance doesn’t look too great either, at least on the bottom line:

But I think there is a story here the market isn’t fully appreciating. In April 2024, a fella called Andy Naylor replaced the previous CEO, after a couple of years of pretty poor performance – and, as new managers so often do, started a ‘transformation’ – except this one is actually working.

First, the Food Director was replaced, and the menu overhauled. This has already resulted in an improvement in average Google review score from 4.5 stars to 4.7.

Next, employee satisfaction was tackled, with additional incentives introduced and career progression emphasised. Turnover has dropped 35% and employee engagement has increased 25%.

Next, operations. Automation at the central production kitchen was increased, reducing costs. The in-store quesadilla prep time was reduced from 7 minutes to 90 seconds, allowing it to be served all day and resulting in its sales volume doubling. Most importantly, they began putting ordering kiosks in some locations – these have meaningfully increased both average spend and speed, resulting in a 10% LFL sales improvement in such locations. The incorrect order rate is also down from 4.5% in 2023 to 2.9% last year.

Finally, they’ve tackled marketing – working with influencers, introducing limited-time offers, doing publicity stunts such as free burrito giveaways nationwide. This has resulted in 62k loyalty app sign-ups and a 70% increase in Instagram followers in the last 6 months.

Okay, all of that sounds great, but what about the financial impact? I think this chart is useful – it shows the YoY change in like-for-like sales leading up to and following the change in leadership, for both Tortilla and the overall market.

LFL sales are now up 9% versus a year ago, while the overall restaurant market is down almost 4%. It also explains why topline performance has been lacklustre in 2024 – the first half of the year saw them digging themselves out of quite a deep hole.

(Note, this chart is potentially misleading. For example, it’s natural to read the improvement from -6% in March 2024 to +9% in March 2025 as a 15% improvement, but since the numbers are YoY, that would be double-counting the -6%. And if you want to compare to 2023, March 2025 was only up 3% over 2 years. Still, it shows 2025’s performance should look a lot better than 2024’s, if the first 5 months are any indication.

Note also that the blip in April was due to them pushing back their annual price hike to May.)

EBITDA margins have also improved, from 14.3% in 2023 to 16.3% in 2024 (at the restaurant level). One reason for this is simply locations maturing, as they’ve hit the brakes on company-operated unit growth in 2024 (ex-France). Apparently mature locations run at almost 20%.

The focus is now on expanding the franchise base – and this seems to be going well. 4 franchise locations have already opened in 2025, and they expect another 2-4 – which will bring the total franchise count up to 28-30, versus an average of 21 in 2024 (again, ex-France).

France is worth dwelling on for a second. Tortilla bought Fresh Burritos in July 2024 for €4m. For this, they got (after closing several locations outside France) 13 owned and 14 franchised restaurants in prime locations in major French cities. Tortilla had previously expressed their intention of expanding into Europe primarily via franchising, and this provided a great way to do so at a cost of only ~£125k per store. Now, FB is unprofitable – at the time of the acquisition, they estimated it would produce -£0.5m EBITDA in 2024 – but Tortilla management stated by opening a central production kitchen, eliminating duplicated costs and using Tortilla’s buying power, they could get it to £2.5m in 2026/7. Actual EBITDA was -£0.7m, so slightly below expectations, but not miles away.

The Bottom Line

Back to the financials. Tortilla reported a £3.3m loss in 2024, but it’s not as bad as it sounds. £1.4m of this was a non-cash impairment relating partially to FB and partially to a couple of Tortilla locations. Acquisition costs for FB made up another £1.3m. Additionally, while depreciation (ex-leases) was £4.1m, maintenance capex was only £1.8m. Management obviously have a lot of leeway as to what’s considered maintenance versus growth capex, but if we believe this figure, that actually puts us back in the green, with underlying pre-tax owner earnings of £1.7m.

That may be a little optimistic, but the point I’m trying to make is this: with 2025 looking a lot better, and accounting stuff + non-recurring expenses making 2024’s results look worse than economic reality, Tortilla may be a lot more valuable than the bottom line suggests. And at a P/S of only 0.22, the current valuation could suddenly start looking very cheap if margins can improve.

Management & Alignment

I think the CEO is doing all the right things with the company, and he seems like a genuinely nice guy to me. Seeing as he only joined a year ago, he naturally doesn’t have a big stake in the business. However, he is granted LTIP equal to his £220k salary, and with the stock having been in the doldrums for two grant periods now (meaning more shares/£), he has a strong financial incentive to deliver good performance. Additionally, he’s only 41 – a good showing at Tortilla could open up some very lucrative positions for him in the long term. So the alignment is not bad altogether, though not perfect.

Overall then, I think recent results are showing signs of a meaningful turnaround which the £15m valuation doesn’t really seem to be pricing in. There is a lot of execution risk, but if Tortilla is successful in its franchising-led expansion in the UK and across Europe, the returns from this valuation could be excellent. I’m still hesitant to buy into a company that’s only breaking even – but it’s definitely one to watch.

9. Northern Bear (NTBR): £9.6m

Northern Bear own a collection of 9 small construction/housing-related businesses in the North East of England. These are split into three divisions:

• Roofing (44% of revenue, 64% of pre-corporate profit)

  • Jennings Roofing, Springs Roofing, Wensley Roofing, System Roofing

• Specialist building services (4.5% of revenue, 10% of profit) – maintenance, refurbishment, electrical, fire, sound insulation

  • Isoler, MGM, J Lister Electrical, Arcas Building Solutions

• Materials handling (51.5% of revenue, 26% of profit) – supply forklifts and other warehouse equipment, both via hire and sale

  • Alcor Handling Solutions

These are simple, boring businesses. I could explain what each of them does, but there really isn’t much point. They don’t really have moats, but they’re localised and well-run, and as a result they earn above the cost of capital (17-23% ROIC, by my calculation). Margins are slim, but revenues are stable – in fact the biggest impact on any given year’s profits is how much it rains. More rain means less roofing work.

The last reported fiscal year, ended March 31 2024, was not a good one in this regard. Rainfall in the North-East was 153% of the long-term average, and the third-highest since records began. On the other hand, the 12 months to March 31 2025 were slightly below average:

FY24 in red, FY25 in green.

In FY24, EBIT was £2.4m. A trading update in early March this year stated FY25 EBIT is likely to be between £3.15-3.45m (even after accounting for losses on the closure of a business). March continued to be very dry so we’re likely to be towards the upper end of that (assuming the remaining 25 days, more than a lack of financial info, were the source of that uncertainty).

I estimate interest expense is run-rating £350k at the moment, on about £4.6m of net debt. The company consistently pays 25% income tax. Hence, at a £9.6m market cap, this company is trading at about 4.3x earnings.

That’s the stuff.

Once again, it comes down to what they’re doing with the cash. On this front, I cannot fault them – they have consistently returned most cash of the cash to shareholder, via both dividends and buybacks. In particular, they tendered for 26% of the company in FY24 at 62p per share (£3.1m total), while also paying £836k in dividends. This was funded by the issuance of £3.5m of debt, which has already been paid down to just £1.6m.

In purely financial terms, alignment is not great. There is one manager with a meaningful shareholding – an executive director and one of NTBR’s founders who holds 6%. The current CEO only entered the position in April 2024. Unfortunately, the previous non-executive chairman and the previous operations director, both of whom held significant shareholdings, both retired in the last couple of years. The record of cash usage provides some assurance, but the poor alignment remains the biggest issue with this idea.

10. Orchard Funding (ORCH): £9.8m

Fuck!

Okay, last one. When I added Orchard to the list a couple of weeks ago, it was at 37p, having already doubled in the last year, and I couldn’t make heads or tails of the valuation. Infuriatingly, it’s now at 48p, up 30% - so not quite as cheap anymore.

Orchard Funding is a non-bank provider of non-standard lending. They provide financing in two areas. The first is insurance premium financing – customers like to pay insurance bills monthly, but insurers like to receive payment upfront (partially to comply with regulatory requirements and reduce how much equity they must have). Orchard solves this by offering loans to the insurance broker, allowing them to convert the insurer’s annual payment into monthly payments without changing their own cash flow profile. These are backed by the consumer receivable, such that both the broker and the insured must default for the loan to go bad.

The second is professional fee financing, which is a similar concept but with slightly different mechanics. It serves customers of professional firms (law firms, accountants, consultancies) who can’t or don’t want to pay it all at once. Crucially, the credit is guaranteed by the professional firm – such that again, both the customer and the firm must default for the loan to go bad. That’s why, between 2008-2015, Orchard did not suffer a single credit loss.

(More recently however, they have suffered a single credit loss equating to ~0.5% of their loan portfolio, which was due to a fraudulent introducing broker faking customers to borrow money – this has raised concerns about Orchard’s underwriting and likely contributed to the low valuation.)

Including fees, Orchard achieves roughly a 15-16% gross yield on their lending – pretty strong given how low the credit risk is.

With £70m total assets and £50m liabilities, the debt to equity is ~2.5, which is quite conservative. As a result, they’re able to borrow at rates rarely seen for companies this small – their average cost of funding is ~6.6% (resulting in a slightly insane net interest margin of 13.2% for the most recent HY).

I won’t go any more into the business – despite its small size, Orchard has been written up several times on Substack already (at prices as low as 22p – it hurts my soul to have missed those at the time). See here and here.

The valuation, then — TTM, Orchard earned £2.3m after tax, putting the multiple at ~4.3. Tangible equity is ~£20m, so they’re still at a 50% discount to book after the recent run.

Profits over time have mostly been reinvested into growth, with the loan book having grown from £28m in 2021 to £60m in January 2025. A dividend of £641k/yr was paid from 2018 until mid-2024, when it was ceased as management explored instituting a tender offer instead, given the share price decline over the period.

Management & Alignment

Orchard is 57% owned by its CEO, Ravi Takhar. Alongside the possibility of a tender offer, Takhar has also discussed delisting Orchard from the AIM (which becomes possible if he reaches 75% ownership). How you feel about getting into bed with a dominant shareholder is up to you.

Summary

I don’t feel I fully understand this company (how can they charge 15% interest?), nor its valuation (and in particular its historical valuation – why on earth was it at £4.6m market cap in the last year with £20m book value and a high-quality business?). I have a niggling feeling I’m missing something, that it is (or was) too good to be true, but maybe that’s just the kind of shit that goes down from time to time on the AIM. In any case, it definitely backs up Buffett on how lucrative it can be to “know everything about everything small.”

I’m gonna spend a bit more time on Orchard in the coming couple of weeks. Hopefully the price doesn’t continue running in the interim (given the stock’s tiny liquidity and the meaningful readership The Newell Street Journal now has, I’m slightly concerned this post might have an effect – hopefully most people didn’t make it to the end). But expect a post with some more complete thoughts on Orchard in the near future.

Performance Tracking

There we go. Those are the 10 AIM companies out of the most illiquid 150 that I think you should know about, for one reason or another.

As a test of the efficiency of this market, I think it would be interesting to track the performance of my picks versus the rejects over the next few years. I’ve created this spreadsheet to do so.

Note that only 8 selections have made it in – I’ve excluded Empresaria, because although I think there is big upside potential there, I’m not that keen on management and it’s way outside my circle of competence; and Enwell, because how it will perform is really a legal and geopolitical question, which I’m not well-suited to answer. The remaining 8 are equally weighted, for the avoidance of regret and to make the results tamper-proof.

To make the fight a little fairer, I’ve also excluded all the companies with zero or negligible revenue from the rejects, leaving a nice round 100.

Also, if you see anything you hold in the spreadsheet’s list of rejects, please tell me why I’m wrong in the comments!

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