While equity markets have rallied in 2025, much of the enthusiasm has been concentrated in large caps – leaving the smaller end of the market largely overlooked. In a recent interview on ausbiz, Alvia Asset Partners’ Chris Scarpato spoke about where we’re seeing value emerge in this underappreciated part of the market.
Chris highlighted that ongoing pressures – from Trump-era tariffs to softer investor sentiment – continue to weigh disproportionately on smaller companies. But in our view, that’s precisely where opportunities often arise: when short-term headwinds obscure long-term fundamentals.
On the home front, PWR Holdings (ASX: PWH) stands out as a compelling example. Known for its high-performance cooling systems used in motorsports, electric vehicles and now aerospace, PWR combines technical expertise with long-tenured client relationships – yet remains undervalued relative to its growth potential.
Overseas, Chris points to Vail Resorts (NYSE: MTN), a leading ski resort operator. Despite recent challenges including union disputes and leadership changes, Vail’s shift toward season pass revenue has materially improved its cash flow profile. The recent return of former CEO Rob Katz adds a layer of strategic continuity and market confidence.
These are just two examples of the types of businesses we continue to favour: strong fundamentals, durable competitive advantages, and valuations that don’t reflect their full potential.