I agree @YStrategy.The role of financial markets is to take...

I agree @YStrategy.

The role of financial markets is to take money away from mediocre and underperforming companies and put it in stable, growing, high return on capital companies. You can fight this trend, but it will always be an uphill battle. As an investor, you want to find opportunities to support the latter not the former, ideally before the market does the same.

What I’ve learned so far from a decade in the financial markets is that the small, micro and nano-cap arena is the best place to go hunting for these types of companies. Sometimes, you are catching these opportunities before institutional funds are allowed to invest, sometimes these stocks are temporarily misunderstood and sometimes they are simply missed among the forest of opportunities in the small-cap ASX universe.

I believe Ensurance Limited to be one of these such companies; having held shares in ASX:ENA since circa May 2021. For those who aren't following the story, Ensurance Limited is a speciality underwriter providing insurance underwriting on behalf of larger insurers in niche sectors primarily within the U.K and Australia. The company offers a comprehensive suite of products through its extensive insurance broker network and is backed by several significant agreements with major global insurers (AXA XL and Beazley).

Ensurance has a low-risk, high-margin business model (Ensurance does not retain or incur any underwriting profit or loss), is restructured and backed by proven business leaders (particularly Executive Chairman Tony Leibowitz) and is expanding into niche fast-growing sectors. Board and management are aligned and have significant skin in the game. Moreover, the company is competitively positioned having secured ongoing agreements with leading insurers such as AXA XL, AXA UK and Lloyd’s; which are difficult to secure, and grant Ensurance significant capacity to provide specialised underwriting.

I recently produced an equity research report on the company. In this research note, I’ve done my best to provide a balanced view of the company; its history, industry overview, valuation analysis (initiating a 50c share price target), the investment case and consideration of key risk factors. If you are interested, you can read it here: Ensurance Ltd (ASX:ENA) ‘Maiden U.K. profit achieved & global growth strategy refined: accelerating accretive acquisitions within the underwriting sector’

You can also view management's latest presentation here on Youtube at the Coffee Microcaps Morning Meeting on the 5th of November. I, for one, look forward to watching the Ensurance Ltd story unfold over the coming quarters. It is one of those businesses that aren't necessarily 'sexy' that will double overnight, but it might double in size across the next handful of quarters due to steady strong ongoing profitable growth. It is a top 8 holding in my portfolio for good reason; I'm expecting to see a very solid return here over the next couple of quarters and beyond.

T.E.P.

P.S. I think we are seeing a cup and handle formation play out on the chart. With TL and TK (and the top 20 more broadly) holding a very significant amount of shares on issue, the share price should start to tighten up. Moreover, it is worth noting that the major share price spike up to 30c in March and April of this year was driven by TK's buying (over $1m+ AUD), which gives one a level of insight into how confident this management team is that the current share price is undervalued and that they can deliver on their ambitions. Personally, I wouldn't be surprised to see a breakout beyond 40c+ in the coming months. Let's see how it plays out.