Profitable, cashed-up and cheap - one of the stocks grabbing this small cap investor's attention

Some weeks in markets serve as a sharp reminder that efficiency is more theory than reality. Trading updates slip past unnoticed, stocks rally on headlines that don’t justify the move, and genuine value quietly appears in places most investors stopped looking.

This past week has been exactly that kind of week: pockets of mispricing, takeover intrigue, and the sort of behavioural quirks that make the ASX both endlessly fascinating and occasionally baffling.

Ben Richards, Co-Portfolio Manager of the Australian Shares and Australian Small Companies Fund at Seneca Financial Solutions, spends his days operating squarely in that gap between sentiment and fundamentals. 

It’s a role that rewards curiosity and demands it, and this week offered no shortage of moments that challenged and clarified his thinking.

In this week’s Q&A, Richards breaks down the ideas, surprises and frustrations that defined his desk: the trading update the market missed, the opportunities revealed by the recent pullback, the behavioural signals he still trusts, and the price moves that left him shaking his head.

For investors, his reflections offer a candid view of where the real action is happening beneath the surface and why the smallest details often reveal the biggest edges.

What’s your most recent investment and why?

We bought more Euroz Hartleys (ASX: EZL) stock this week.

A late afternoon 3.30pm trading update went unnoticed by the market on Monday, but the Perth-based stockbroking business is flying. 

With $5 million in profit in the first four months of FY26 and cash and investments of $91 million, we see scope for EZL to return more cash to shareholders.

This stock has no broker coverage (because it is a broker itself!), and has distributed $400 million to shareholders in its 25-year history. EZL trades on just 4x EV/NPAT. 

Which investment did you add to your watchlist this week?

We don’t have a watchlist. We’re watching everything in our investable universe.

Something that caught my eye was this AFR Street talk article, noting that Healthscope got removed from 12 properties as a tenant, which we think reinforces our thesis that Healthco Healthcare and Wellness Reit (ASX: HCW) should have no issues doing the same thing, and market fears are overblown.

HCW trades at a 46% discount to NTA, and has been one of the issues plaguing the head fund manager stock HMC Capital (HMC).

We’ve been through HMC with a fine-tooth comb and think we can double our money here on a medium-term view. 

What is the most recent investment you have trimmed or sold and what drove this decision?

We have been net buyers of stocks recently, rather than sellers, given the opportunities thrown up by this market pullback. However, we have taken profits in Energy One (ASX: EOL) to redeploy into other positions.

What’s your favourite chart or data point from this week? 

We’ve never owned WiseTech (ASX: WTC) before (until now), but we see this stock as a classic example where share prices can diverge from fundamentals due to narrative-based selling.

Who says markets are efficient?!

What was your weekly high – a standout market moment or highlight?

Monash IVF (ASX: MVF) received a takeover bid from private equity firm Genesis Capital at 80 cents per share. This equates to just 7.7x EV/EBITDA, compared to 12-14x for comparable transactions in the fertility clinic sector.

We profiled MVF as a prime takeover target in this Livewire article late last year – which, if I may say so myself, has aged like fine wine - part 2 coming soon! 

In the meantime, here’s a wire that I wrote this week on the best business model on the ASX, for some weekend reading.

What was your weekly low – a market disappointment or challenge?

Droneshield (ASX: DRO) going up 15%, adding $238 million in market cap, after announcing a $5 million contract. Go figure.

We’ve spoken about DRO’s overvalued bubble-like characteristics in the AFR and Bloomberg when the stock price was trading ~$5. My colleague Luke Laretive covered it well on Livewire’s Buy Hold Sell here. Significant insider selling has come as no surprise.

What first drew you to markets and what continues to keep you inspired today?

Luke and I had a ‘pinch-me’ moment during the week when we were talking to management of a company and discussing the ins and outs of their business, which just reinforced how cool this job is. 

We get to learn about different business models, in a constantly changing economic landscape, meet highly talented people, banter with (annoying) brokers (kidding, we love you!), talk to clients and build mutual respect (if you haven’t subscribed to Luke’s ‘This Week on the Desk’ newsletter, what are you doing?!). All this to say, we are constantly learning and challenging our beliefs and opinions.

The share market is the ultimate unsolvable puzzle. I’m an analytical thinker, and I’ve always loved trying to find an edge through fantasy sports, arbitrage mispricings in betting markets, and, of course, the stock market. 

And the wonderful thing about the stock market is that it’s an infinite game. If you make a bad call, you can always fight your way back the next day, the next month, the next year… etc.

I look forward to the day in 10 years when we can repay the faith to all the people who backed us today.

What’s one piece of advice you’d give to new investors?

Invest your own money. It sounds simple, but nothing teaches and motivates people more than putting their own cold, hard cash on the line.

Other than that, I’m a big advocate for reading as much as you can, and trying to get a little bit better every day, compounding your knowledge and stimulating new ideas. 

And of course, put yourself out there and go to things, speak to as many people as you can, you just never know who you might meet… Shoutout to Luke Laretive for taking a chance on me a few years ago!

How do you unwind when you’re not thinking about the market? 

Trick question – I’m always thinking about the market!

Outside of captaining my futsal (indoor soccer) team to a miserly 7th place out of 10 finish in our local Sunday league, I love to explore new places. 

A highlight this year was Iceland, which has probably the most remarkable natural scenery I’ve ever seen. Ice-picking in the glaciers of Vatnajökull National Park was a highlight. 

Managed Fund

Seneca Australian Small Companies Fund

Australian Shares

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