| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | 46.9% |
SRK Fund returned 46.94% in H1 2025, dramatically outperforming the S&P 500's 6.20% return after disappointing 2024 results. The concentrated small-cap strategy delivered strong performance across most holdings, led by ISSC which contributed significantly following record quarterly results with 104% revenue growth and 35% EBITDA margins. The manager emphasizes that strong returns reflect disciplined research, appropriate sizing, and conviction rather than luck. Key holdings include ImmuCell Corporation, positioned at an inflection point with stabilized production and pending FDA approval for Re-Tain, and Sanuwave Health, achieving 51% revenue growth with recent Nasdaq uplisting. However, momentum in several positions led to less favorable risk-reward ratios, prompting significant position reductions. The fund now holds elevated cash levels to deploy into new opportunities as they arise. The manager cautions against extrapolating recent returns and emphasizes judging performance over many years rather than short periods, maintaining focus on long-term value creation through concentrated positioning in undervalued small-cap companies.
SRK Capital employs a concentrated small-cap strategy focused on undervalued companies with significant upside potential, emphasizing thorough research, appropriate position sizing, and patient capital deployment.
The manager is not finding an abundance of new opportunities currently and has been raising cash levels to allocate to attractive opportunities as they become available. He cautions against extrapolating strong H1 returns forward indefinitely and believes the elevated cash position likely reduces risk for the fund.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Aug 7 2025 | 2025 Q2 | ICCC, ISSC, SLSN, SNWV | Biotechnology, concentrated, growth, Manufacturing, Medical Devices, small caps, value |
ISSC ICCC SLSN SNWV ISSC ICCC SLSN SNWV |
SRK Capital delivered 46.94% H1 returns through concentrated small-cap investing, led by ISSC's record performance and strong execution across holdings. The manager reduced positions amid momentum, raising cash for future opportunities. Key themes include biotechnology inflection points at ImmuCell and medical device growth at Sanuwave, with disciplined capital allocation driving outperformance. |
| Jan 2 2024 | 2023 Q4 | HGBL, HROW, ISSC, SGMA, VASO | aerospace, concentrated, Credit Stress, Manufacturing, small caps, SPACs, value |
ISSC VASO HGBL SGMA |
SRK Capital's concentrated small-cap value fund delivered 17.15% in 2023 despite costly Harrow mistake and positioning away from year-end rally beneficiaries. Current portfolio includes aerospace growth story ISSC, SPAC uplisting play VASO, and deeply discounted manufacturers positioned for recovery. Manager optimistic on 12-18 month outlook with multiple catalysts and minimal downside risk across holdings. |
| Aug 31 2023 | 2023 Q2 | HGBL, HROW, SGMA, SRDX, VASO | - | - | |
| Feb 16 2023 | 2022 Q4 | HGBL, HROW, JOB, MLC CN | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q2 |
Small CapsThe fund focuses on concentrated small-cap investments with significant upside potential. The manager emphasizes doing the work, sizing opportunities appropriately, and having conviction to wait to get paid. The concentrated strategy may yield surprising results over short periods. |
Small Cap Concentrated Value Growth Conviction |
BiotechnologyImmuCell Corporation represents a biotech investment focused on animal health products including scours prevention and mastitis treatment. The company is at a major inflection point with production stabilized and pending FDA approval for Re-Tain product. |
Animal Health FDA Approval Veterinary Pharmaceuticals | |
Medical DevicesSanuwave Health operates in the medical device space with rapid revenue growth of 51% and recent Nasdaq uplisting. The company has expanded to national sales presence and trades at a discount to similar medical device companies with less attractive growth prospects. |
Medical Technology Growth Sales Expansion Nasdaq | |
| 2023 Q4 |
AerospaceISSC operates in aerospace with robust double-digit growth and attractive margins, focusing on cockpit and cabin products for business, cargo, and military aircraft. The company completed an acquisition from Honeywell for $36M that nearly doubles earnings for FY24. |
Aerospace Defense Manufacturing Acquisitions OEM |
SPACsVaso Corporation is uplisting from OTCQX to Nasdaq via merger with SPAC Achari Ventures, valued at $176 million pro forma equity value. This unusual transaction involves a SPAC merging with an already publicly traded company. |
SPACs Uplisting Nasdaq Merger Valuation | |
Credit StressHeritage Global's specialty lending segment experienced credit loss reserves due to slower collections, reflecting industry-wide normalization of charge-offs to pre-pandemic trends. Credit card issuers report increasing net charge-offs above 2019 levels. |
Credit Collections Charge-offs Lending Normalization |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Aug 7, 2025 | Fund Letters | Sean Kirkwood | ISSC | Innovative Solutions & Support, Inc. | Industrials | Aerospace & Defense | Bull | NASDAQ | Acquisitions, Aerospace, Avionics, growth, manufacturing, Margins, Operatingleverage | Login |
| Aug 7, 2025 | Fund Letters | Sean Kirkwood | ICCC | ImmuCell Corporation | Health Care | Biotechnology | Bull | NASDAQ | biotechnology, earnings, FDA, Margins, Optionality, Smallcap, Veterinary | Login |
| Aug 7, 2025 | Fund Letters | Sean Kirkwood | SLSN | Solésence, Inc. | Materials | Specialty Chemicals | Bear | NASDAQ | exit, growth, Margins, materials, Specialtychemicals, Sunscreen, valuation | Login |
| Aug 7, 2025 | Fund Letters | Sean Kirkwood | SNWV | Sanuwave Health, Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | growth, healthcare, Margins, Medicaldevices, Salesforce, uplisting, valuation | Login |
| Aug 1, 2025 | Fund Letters | SRK Capital | SNWV | Sanuwave Health, Inc. | Health Care | Health Care Equipment & Supplies | Bull | NASDAQ | growth, high margins, Key Accounts, Medical Device, NASDAQ uplisting, National Sales Force, Russell 2000, Tissue Regeneration | Login |
| Aug 1, 2025 | Fund Letters | SRK Capital | ISSC | Innovative Solutions & Support | Technology | Aerospace & Defense | Bull | NASDAQ | Acquisitions, Aerospace, Defense, Flight Systems, manufacturing, operating leverage, Pennsylvania, vertical integration | Login |
| Aug 1, 2025 | Fund Letters | SRK Capital | ICCC | ImmuCell Corporation | Health Care | Biotechnology | Bull | NASDAQ | Animal Health, Beef, biotechnology, Dairy, FDA approval, Mastitis, Scours, Single Digit Multiple, Veterinary | Login |
| Aug 1, 2025 | Fund Letters | SRK Capital | SLSN | Solésence, Inc. | Materials | Specialty Chemicals | Neutral | NASDAQ | manufacturing, NASDAQ uplisting, personal care, Russell 2000, specialty chemicals, Sunscreen, turnaround, zinc oxide | Login |
| Jan 1, 2024 | Fund Letters | SRK Capital | VASO | Vaso Corporation | Health Care | Health Care Equipment | Bull | OTCQX | arbitrage, Asymmetric Risk, Healthcare Technology, Medical devices, NASDAQ, SPAC Merger, Special Situation, uplisting | Login |
| Jan 1, 2024 | Fund Letters | SRK Capital | HGBL | Heritage Global | Financials | Diversified Financial Services | Bull | NASDAQ | Brokerage, Credit Normalization, Cyclical, Distressed assets, financial services, Post-Pandemic, Specialty lending, Value | Login |
| Jan 1, 2024 | Fund Letters | SRK Capital | SGMA | Sigmatron International | Information Technology | Electronic Equipment & Instruments | Bull | NASDAQ | Consumer products, contract manufacturing, debt reduction, deep value, Electronic Manufacturing, interest rate sensitivity, inventory management, turnaround | Login |
| Jan 1, 2024 | Fund Letters | SRK Capital | ISSC | Innovative Solutions & Support | Industrials | Aerospace & Defense | Bull | NASDAQ | Acquisitions, Aerospace, Capacity utilization, cash flow, Defense, Flight Systems, manufacturing, operating leverage, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| ISSC | ISSC was the largest contributor to our half-year performance. Record results for their fiscal second quarter released in May have propelled the stock significantly higher year to date. I believe the quarter proved what the company is capable of as they continue to expand their business through strategic acquisitions. Revenue increased 104%, gross margins improved sequentially to 51.4%, and most importantly Ebitda margins reached a high of 35% showing the benefits of operating leverage. ISSC's acquisition strategy has been successful to date and has a large runway for continued growth from their ability to bring products in house and fully manufacturing them at their facility in Pennsylvania to increase product margins and company operating leverage. This strategy has continued runway due to their recent facility expansion which has increased capacity by more than threefold. To further this acquisition strategy, the company just recently announced a new $100 million credit facility. Although I'm optimistic about the company's future, I've decided to take advantage of the momentum and volume in the stock to reduce our position significantly prior to the release of their fiscal third quarter results to add to our cash reserves. The current share price offers a smaller margin of safety compared to when shares traded near our average purchase price of $6.50 per share. |
| ICCC | ImmuCell's thesis remains intact following record first quarter results. The highlight of the quarter was the expansion in gross margins to 42%, resulting in record net income and cash flow. Management is targeting further expansion of gross margins to 45% and it appears this is within sight as there hasn't been a contamination issue since last April and production has been operating at full capacity for two quarters in a row now. With production stabilized, the sales team is now able to pivot to bringing in new business from both existing products and the expansion into the new bulk powder First Defense product line. This new scours product will be targeted at large calf raising ranches that don't individually dose calves for scours prevention, introducing a new market that the company historically has not served. On the mastitis side of the business, Re-Tain's FDA license is still in limbo pending a facility inspection approval at their contract manufacturer. Although the continued delay is frustrating, the company has received authorization for investigational use of Re-Tain. This will allow ImmuCell to market the product for use and receive valuable customer feedback and data. Results of this investigational use should be available around year-end, providing valuable information to bring on a potential strategic partner for a full-scale commercial launch. Additionally, the company brought in a dedicated CFO with an impressive background and industry expertise. Sadly, this was followed with news that our CEO Micael Brigham intends to retire by early 2026. Michael has done a praiseworthy job stewarding the company for more than 25 years as CEO and will be sorely missed, luckily, he still plans to serve on the board of directors. I believe that ImmuCell is at a major inflection point, with scours production finally stabilized and the impending FDA approval of Re-Tain, there is a prime opportunity for any talented executive to take over the reigns with a clear path to create immense value for themselves and shareholders in the immediate future. Clearly, I am still very optimistic about the upside for ICCC as it currently is valued at a single digit multiple of earnings with near term optionality to unlock significant value through the eventual FDA approval of Re-Tain and continued growth of First Defense. |
| SLSN | Solésence (SLSN), formerly Nanophase Technologies (NANX), manufactures zinc oxide, a crucial mineral for sunscreens that protects against both UVA and UVB rays. The company caught my attention during the first half of 2024 as an intriguing investment due to its stock price being under pressure despite its rapid growth and attractive product offering. This was due to manufacturing issues that squeezed profit margins and a lawsuit with a long-term customer. However, management's commentary suggested these problems were likely to be resolved favorably in the near term along with continued rapid growth and a potential uplisting to the Nasdaq. The company resolved the litigation favorably last April and continues to do business with the customer, removing an overhang on the stock price. Revenue for the first six months of this year have grown 53%, but the company is still struggling with lower margins due to one-time costs to onboard new large customers. In April, the company uplisted to the Nasdaq and was added to the Russell 2000 index in the most recent reconstitution, this has seemingly led to increased volume and momentum in the stock price. With the stock, at one point, up over 100% for the year and above my estimate of fair value, I chose to exit the majority of our position at favorable prices. |
| SNWV | Sanuwave continues on with the theme of rapid growth and an imminent Nasdaq uplisting. In March, SNWV announced its uplisting to the Nasdaq and was added to the Russell 2000 index at the end of June. For the first half of the year, Sanuwave has grown revenue 51%. Even more impressive, this growth was achieved without a national sales presence. Following the first half of the year, the company now has a national sales force along with a key account manager focused on pursuing large accounts that have several hundred locations across the country. Management reaffirmed guidance for the year, which appears to be on the conservative side as it doesn't include the potential for any new large accounts. Additionally, management indicated that they have been pursuing options to refinance their debt and have received several options with very attractive terms, removing the fear of a potential equity offering. With a large account manager and their first ever targeted outbound marketing campaign I expect Sanuwave to continue to execute. Gross margins should continue to expand beyond the current 78% through manufacturing improvements. Shares continue to represent an attractive investment as the company trades at a discount to similar medical device companies with less attractive growth prospects. |
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