Over the last few days I’ve been using our chat room to communicate that I’d be recording a video to go over the Stocks in our Microcap Quality Index Platform (MSMqi).
If you’re on the go, we also provided an Audio link of the video that is available at the end of this post.
I ended up going over the 92 stocks in MSMqi 2025, as well as the 23 stocks we removed from the MSMqi 2022 in April 2025, which we refer to as the 2025 rebalancing.
It ended up being a three hour video. However, a Zoom glitch apparently led to the last two hours of the video not displaying the screen share.
So, I decided to quickly publish the first hour of the video (with the screen share) as Part One (27 stocks), while I work on either resolving the issue with Zoom support or recording the last two hours again over the weekend.
Overall, I discussed short and long-term conviction levels, near-term price targets and how I go about deriving short term price targets, on a cursory level.
Relevant Documents And Source Links To Follow Along With The Video
Q3 2025 MSMqi Index Review Spreadsheet, as shown in the video (Link available at the end of this post)
Rebalance Analysis Presentation of 23 stocks removed during the MSMqi first rebalancing in April 2025, as shown in the video (Link available at the end of this post)
This review process really reinforced why we treat the MSMqi as a platform, not just an “index.” For example, even though we removed 23 names from the MSMqi 2022 to create MSMqi 2025, those removed stocks still returned about 41 percent, with 4 multibaggers!
It’s a good reminder that you can’t predict every move. Sometimes the names you flag as “lower quality” or overvalued end up being the big winners. Investing is an evolving process. Companies and fortunes change. “Bad” companies can become “good” and good companies can become bad.
I implemented a color-coding system for conviction levels: green for high conviction, yellow for “still like it but need clarity,” and red for names that we put in the penalty box.
TGEN 0.00%↑ and TSSI 0.00%↑ valuation keeps them in the yellow bucket. For TGEN, backlog is the key number. That’s the kind of thing that could trigger a takeover eventually.
TSSI has the Dell agreement, but without knowing the exact minimum guarantee terms, it’s hard to model with confidence. Hopefully, now that the company is fully moved into its new facility, we will start to gain clarity on the level of DELL’s minimum commitment by observing TSSI financial results over the next few quarters.
ULBI 0.00%↑ moved to the red penalty box. They’ve repeatedly missed their targets and continue to have a shelf sitting out there.
Same with CODA 0.00%↑ . Their subsea products are interesting, but delays and missed targets keep it in the yellow for now.
On the other hand, OPXS 0.00%↑ looks really interesting. Their defense backlog remains strong, and a new product rollout finally gives them a clear commercial angle. It’s worth digging into more.
PPIH 0.00%↑ had a rough quarterly outing on a GAAP basis, but once you strip out the one-time items and normalize margins, it still looks like a solid green. It’s hard not to love it when you have a stock that has both an infrastructure and a new developing data center theme rolled up into one.
KEQU 0.00%↑ is an underperformer I’m sticking with. Sales can be lumpy, but I still have long-term high conviction.
BELFA has been a massive performer since 2022, up more than 450%. A good reminder that even low-multiple electronic manufacturing services names can re-rate higher when they execute well.
Some names are more situational. $WSTL looks cheap on paper, but there’s minimal visibility due to lack of communication to the street by management, so I can’t code it green, despite 2 consecutive quarters of blowout numbers. The lingering unknown is how much of the company’s large revenue performance was driven by its remote monitoring hardware sales and if its related to short or long-term contracts. Furthermore, some of that revenue probably translates into recurring revenue, but we just don’t know how much. The company’s business reminds us a little of MSMqi holding ACFN, which is definitely a competitor of theirs in certain markets and a top performer in the MSMqi. The difference? The CEO of ACFN communicates.
A few more takeaways from this review:
Don’t drop a stock just because of short-term valuation. I probably shouldn’t have pulled $HMDPF during the rebalancing.
Backlog and contracts are key drivers for names like TGEN, TSSI, and OPXS.
Companies like BELFA 0.00%↑ show how patient investing can still pay off.
We’ll keep refining the information arbitrage tear sheets, tracking backlog, and retesting conviction levels. That’s the whole point of treating the MSMqi like a platform. It helps improve our odds of catching the big winners, while staying clear-eyed about the risks and changing opportunities.
The Presentation links that go along the video are available below.
