Weekly Issue
THE FLAGSHIP REPORT
Small-Cap Momentum Portfolio
May 2026 Edition
A Note From the Editor
The market has a way of humbling the certain and rewarding the patient. This month the portfolio delivered both lessons simultaneously. 3 positions have run their course and will be exited, while the remaining 22 names are holding up well on both the fundamental and price momentum axes. The twin momentum system is working as designed.
We are selling MPAA, VREX, and OESX this month. Motorcar Parts of America (MPAA) has seen deteriorating momentum signals alongside increasing competitive pressure in the automotive aftermarket remanufacturing space. The fundamental story has not kept pace with what we originally underwrote. Vericel (VREX) lost its price momentum pattern, and with insider ownership at a thin 1.99%, the alignment we require is simply not there. Orion Energy Systems (OESX) has been a frustrating hold. The LED and controls business is sound in theory but the execution has been inconsistent and the momentum indicators have turned decisively negative. When a stock stops doing what it is supposed to do, we sell it. There is no sentiment here, only discipline.
The remaining portfolio is 22 positions deep, carries a weighted average insider ownership approaching 30%, and continues to generate the kind of fundamental news flow that keeps momentum screens happy. We will cover each holding below.
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