June 26, 2025

The S&P 600 Small Cap Index rose modestly this week but not quite to the 1,340 level the index reached on June 11.

We’re seeing what could be an early pattern of higher highs and higher lows for the index, though for that trend to firm up we need to see the index get closer to its 200-day line (currently at 1,367) in the next week or two, and not fall below 1,284.

There is a bullish case to be made for the small-cap index based on comparatively low valuation, a decade of underperformance (very long by historical standards) and reshoring potential due to Trump administration policies.

That said, and as I’ve stated many times before, it’s very tough to compare a broad-based small-cap index carrying a 19% allocation both to financials and industrials and 14% to consumer discretionary to a large-cap index weighted 31% to tech.

The S&P 600’s top 10 holdings carry less than a 6% weight, while the S&P 500’s top 10 carry a 36% weight.

In other words, this is an apples to oranges comparison.

Honestly, with the largest company in the S&P 600 carrying a market cap over $8 billion sometimes I wonder if it really should be considered “small cap” anymore. It might be time to change the way the index is put together.

This is why I often talk about the small-cap index like it’s separate from what we do here in Cabot Small-Cap Confidential, where we’re focused on 10 to 20 individual small-cap stocks that typically have market caps under $3 billion when I add them.

That all said, for those of us that carry a healthy allocation to small caps in funds and/or ETFs it’s obviously important to monitor performance and potential in the asset class, even if we’re not making specific buy and sell calls on ETFs and funds in this newsletter.

On to the macro, briefly.

The big news from the week is that the retaliation from Iran was limited and the ceasefire between Israel and Iran continues to hold. There is talk of President Trump meeting with Iran next week to discuss nuclear deal terms. Iran Supreme Leader Khamanei hasn’t been heard from lately, causing some speculation as to his whereabouts.

It seems unlikely that this is the end of the conflict, but who knows. The market has essentially shrugged it all off so far and seems to care more about who the new Fed chair might be when Jerome Powell’s term is up next May. Contenders include former Fed Governor Kevin Warsh, NEC Director Kevin Hassett, World Bank President David Malpass, Fed Governor Christopher Waller and Treasury Secretary Scott Bessent.

One thing is certain: Trump will only name a new Fed Chair that leans more toward rate cuts than Powell.

With recent economic data signaling a potential slowdown (the Citi Economic Surprise index is at its lowest level since September, housing starts, permits and sales are all weak and some recent weakness in the labor market) it seems like cuts sooner rather than later are starting to make a lot of sense.

Recent Changes

Delcath Systems (DCTH) moves to Buy a Second Half

Updates

Artivion (AORT) ticked up modestly over the last week and hit multi-month highs just above 31 on Wednesday. AORT is currently trading near multi-year highs and I’m looking for a breakout above 32.3. Artivion plays in very specialized areas of aortic-specific grafts, arches, stents and valves. It’s the leader in these areas and is developing the market for its solutions in the U.S., partially by completing trials in Europe. The multiple pieces of the business add up to a decent revenue stream and management says EBITDA should grow at about twice the pace of revenue (expected to grow by 10% this year). The company’s AMDS hybrid prothesis is expected to be approved in the U.S. by mid-2026 and the NEXUS aortic arch stent graft system should be approved toward the end of next year. Each product opens up another $500 - $600 million market and the company has a string of additional solutions it expects to bring to market on a roughly 18-month cadence. BUY

AvePoint (AVPT) dipped this week but is right back to it was at the time of our last update. The company announced another set of Command Centers that have been added to the AvePoint Elements Platform – the Optimization and ROI Command Center and the Resilience Command Center – as well as expanded agentic AI governance capabilities for Microsoft (MSFT) Copilot agents. Management was scheduled to speak at a Northland conference yesterday but I haven’t seen a transcript yet. HOLD

Axogen (AXGN) was sold last week. SOLD

Byrna (BYRN) hit a multi-month intraday high of 33.6 yesterday. I’m looking for the stock to move up through 34.8, the intraday high from February 10. Management said official Q2 results will be out on July 10, though we’ve already seen preliminary Q2 results. Those came in better than expected and have helped BYRN stock move higher since I added the position at the beginning of June. BUY

Delcath (DCTH) fell below its 50-day line last Friday and got close to its 200-day line on Monday but has popped back up a little since. Stephens was out earlier in the week reiterating its price target of 25 on the stock (which closed at 12.9 yesterday). I believe the firm reiterated this target after meeting with management. MedTech stocks have not been particularly strong lately, though the IHI ETF enjoyed a rally on Tuesday after Health Secretary Robert F. Kennedy Jr. talked up the potential of wearables and fitness trackers as a way to help America get healthy again. Delcath is an oncology company specializing in treating tumors in the liver so it’s not a wearables company, but any positive news for MedTech is welcome. We’re going to add to our position today. BUY A SECOND HALF

Enovix (ENVX) has moved sideways over the last two weeks on no company-specific news. We’re looking for the first smartphone battery purchase order to come in the September to November time frame. In the beginning of May management said this timing would work if the customer received custom samples in June and was able to wrap up qualification in August. There is a second smartphone customer in the pipeline as well. HOLD

FTAI Infrastructure (FIP) stock has paused its upside move just shy of its 200-day line. Shares had more than doubled from their April lows through the middle of last week when FIP traded up to 6.8 and looked ready to break above the 200-day line at 6.9. That hasn’t happened yet and we’re now looking for FIP to stay strong above the 6.0 level. No comment yet from management on Nippon’s acquisition of U.S. Steel, which they previously said would likely be an “incrementally good thing.” BUY

Hannan Metals (HANNF, HAN.CA) shares continue to be volatile (as expected) with the most recent move being to the downside. The slide has undone much of the progress that was made in the back half of May and early June. However, drill results could change all that for the better. We’re awaiting drill results from the first hole (HDDVA001) at Belen, which is sampling the Vista Alegre target. That hole has been completed and the drill is working on the second hole (HDDVA002). Once Vista Alegre has been drilled the team will move on to the Sortilegio target, then the Ricardo Herrera target, all of which are within the Belen prospect. The company is also working on more detailed sampling to define the high-grade structures recently found within an expanded zone at the Previsto prospect, which is about 20 km to the north of Belen. In short, many potential catalysts for this stock. BUY

Natural Grocers (NGVC) stock has also been volatile lately. Shares firmed up just above their 200-day line at the end of last week and saw some strength on Monday. That move came after Kroger (KR) reported a very solid quarter last Friday and saw its stock rally to new highs over the Friday and Monday sessions. There has been no company-specific news for NGVC and I suspect yesterday’s weakness (-12%) was exacerbated by a move below its 200-day line, which may have triggered sell orders. I don’t believe the steady growth story has changed at all here so keeping at buy half and considering adding to our position. BUY HALF

Perpetua Resources (PPTA) stock has been steady since it closed a $425 million public offering, priced at 13.2, last early last week. One interesting nugget from that offering is that John Paulson, the billionaire investor that was in the running for Trump’s Treasury secretary before he dropped out in mid-November since “complex financial obligations would prevent me from holding an official position in President Trump’s administration at this time,” has increased his stake in Perpetua. On June 16 Paulson funds paid $100 million for 7.6 million more shares of Perpetua, bringing his total ownership to 32.3 million shares. That represents 31.2% of the company. Marcelo Kim, a partner at the Paulson & Co. home office serves as chairman of Perpetua. BUY HALF

Currently Open

Copyright © 2025. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.