There’s only so much money to go around in the market, and now, some of that money that was finding its way to low-quality companies during the easy money days is going to continue to make its way into the higher-quality microcap universe that we play in (a trend that began in 2022). 

For well-managed, undervalued microcaps with great fundamentals and a clear path to growth, the current environment could allow them to shine as capital becomes more selective. We also think the environment is fantastic for high-probability turnaround situations, where balance sheet restructurings or small tweaks in business plans put a company back on track for growth.