If you can’t beat them, join them. That’s the mindset Marc Robinson brings to small cap investing right now. The Managing Director at FAX Capital makes the case that the traditional small cap playbook is broken—capital is leaving public markets, private equity is stepping in, and more companies are choosing to go private. His solution: blend public and private investing, take concentrated positions, and actively push for outcomes. He explains how his 70/30 strategy works, why active ownership is critical in Canada’s inefficient small cap market, and how investors can capture a “second bite of the apple” when companies get taken private. Along the way, he breaks down the growing disconnect between public and private valuations—and why that gap is creating opportunity.
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The Christmas lights are still up. At this point, I’m willing to take them down but I’m just waiting for warmer weather. Ball is in your court, Mother Nature.
Here are five things to know today:
Waiting to exhale: Markets are higher this morning after the NASDAQ ended its 13-session win streak yesterday. The market is hoping for a peaceful resolution to Iran with the US headed back to Pakistan. The ceasefire between the US and Iran ends tomorrow and the Strait of Hormuz remains closed. There may be volatility around Iran developments, but generally the market is moving on. In April the S&P 500 has surged nearly 9% while the NASDAQ is up 13%. The TSX, which is outperforming in 2026, has lagged in April with a gain of just under 5%. Energy stocks are down over the past month and indeed down since the conflict began in early March. A sign the market doubts high oil prices will be permanent. One proof point is the fact that rig counts in the US haven’t increased meaningfully since the war began. If you want to take advantage of higher oil prices in the future, shouldn’t you be putting more rigs to work? This morning we heard from US President Donald Trump who appeared on CNBC and declared victory in Iran (again). He said wants to make a good deal with Iran but it can’t be rushed. Later this morning we get the confirmation hearing of Kevin Warsh as Fed Chair, which Trump also weighed in on reiterating his desire for lower rates. Issues like Fed independence and rate direction will no doubt be a focal point this morning. But there is a chance none of this matters because a key Republican member said he will not vote in favour until the investigation into Powell is over. Powell has said he will stay on past May 15th (when his term is set to end) if his successor is not confirmed by then. The betting markets show just a 31% chance that Warsh will be confirmed by May 15th.
Johnny Apple Seed: Apple surprised the markets announcing Tim Cook would step down as CEO this summer and John Ternus would become the new CEO. Cook will still be around, becoming Chair of Apple. Over the course of 15 years, Cook took Apple from a $350 billion company to a $4 trillion company. Revenue went from $108 billion to $466 billion this year and its services business went from non-existent to $123 billion in sales. His greatest triumph was around supply chains and logistics keeping China on the company’s no matter the state of relations with the US government. Ternus was the head of hardware before being tapped to become CEO and has been with the company since 2001. His appointment comes as AI has burst onto the scene and Apple doesn’t seem to have a player in the game. Indeed it has been an outlier with spending going DOWN, while others are blowing their budgets in the AI race (see chart below). With his hardware background, perhaps this signals that Apple will remain a hardware-first business. “There are many opportunities for Ternus to define his own path and the future success of Apple out of the gates,” wrote Dan Ives of Wedbush. Chief among them will be to define a clear strategy in AI. “We can’t say it enough but Apple cannot watch the AI era from the sidelines as this 4th Industrial Revolution takes hold. In essence, Apple is a toll collector on the consumer AI highway and Ternus needs to finally get the AI strategy right and focus on monetization going forward,” said Ives. He also argues that Apple should be more aggressive with M&A because it has the cash and the brand to do so. Apple’s World Wide Developer Conference in June could be the first opportunity for Ternus to set the tone of his tenure.
In recovery: UnitedHealth is surging 7% after profit beat expectations by the widest margin in five years and it boosted its profit forecast for the year. The embattled health insurer cut its forecasts three times last year so the fact that it is increasing its outlook suggests the clouds may be parting. In short, the company had to deal with many issues including rising costs, higher usage and political scrutiny over its insurance practices following the assassination of its division CEO. Shares are down nearly 50% from their 2024 peak. This quarter, a measure of its medical costs came in at a two-year low. It also announced it would buy back $2 billion worth of stock. I own shares (Obviously…Broken healthcare stock? Sign me up!)
Circle of AI: Amazon is popping 2.5% after announcing a $5 billion investing in Anthropic with the option to invest an additional $20 billion. In turn, Anthropic will spend $100 billion on Amazon Web Services technology over the next 10 years. Amazon is already one of Anthropic’s biggest backers. Anthropic has been roiling the software market over the past several months with its various Claude updates and upgrades. It is expected to go public later this year.
I will teach: Watch shares of Docebo which are pumping nearly 7% in the pre-market. The small cap Canadian software company has been pummeled over the past year but today released preliminary results and boosted its outlook for sales and profit. Rather than be disrupted by AI, the online learning platform, said demand for its AI-enabled workforce readiness platform. It’s a universally loved name on the street with mostly buy ratings trading at just 13x earnings. On the podcast, Robinson tells us another Canadian software play that is trading at half that which he says is a screaming buy.
We are going down cap for our next episode! If you love microcaps, send us an email! Questions@inthemoneypod.com
