How Conviction Forms in Underfollowed Markets

Hugo’s Path From Substack to Fund Advising

We opened this Skull Session by catching up with Hugo Navarro (@HugoNavarroPer2) after meeting him in person at Planet MicroCap Las Vegas. Hugo discussed his move into advising a fund in Spain while continuing to publish on Substack, where he focuses on undercovered small-cap ideas.

Hugo described his approach as both bottom-up and top-down, with a focus on cheap companies that often trade below five times free cash flow and still have growth optionality. He also explained how sharing research online helped him build relationships with fund managers, gain access to management teams, and eventually move into fund advising.

Building a Research Audience

The conversation then shifted to how Hugo grew his Substack (Undervalued and undercovered). He said he publishes deep-dive research, often thirty to forty pages, with a clear focus on why the market views a company one way and why he may see it differently.

He also discussed the importance of updates on existing holdings, management conversations, and primary research. The broader point was simple: consistent public research can become more than content if it builds trust and shows a repeatable process.

CareCloud and the Serial Acquirer Setup

Hugo’s first idea was Carecloud, Inc. (NASDAQ:CCLD), which he framed as a cheap healthcare software and services company rather than a dying small-cap software business. His core argument was that the market is focused on perceived churn and weak organic growth, while he is focused on cash flow, acquisitions, and capital reinvestment.

He walked through the preferred stock overhang, the refinancing into lower-cost debt, and why he believes dilution risk has been reduced. He also explained that acquisitions can be more efficient than organic customer acquisition in this market, because small medical practices are difficult to win through traditional sales channels.

We also discussed AI risk. Hugo argued that Carecloud, Inc. (NASDAQ:CCLD) has already been investing in AI-enabled products and that small healthcare practices may be slower to replace trusted billing and record systems because accuracy and reliability are critical.

Enterprise Group and the Canadian Energy Recovery Setup

The next idea was Enterprise Group, Inc. (OTCQB:ETOLF) (TSX:E), a Canadian energy services company Hugo had been following closely. He explained that the stock had been pressured after a major client stopped ordering, weak gas prices weighed on activity, and the company expanded its fleet without seeing immediate growth.

His view is that the setup has improved because the large customer has returned, utilization can rise, and new customers may begin contributing. Hugo also highlighted the company’s niche turbine offering, which can operate in extreme cold and use produced gas, making it well-suited for Canadian oil and gas operators.

The investment case, as framed in the session, is more about a re-rating and near-term execution than a fully proven multi-year compounding story. Hugo said he has higher confidence in the next twelve months than in predicting how the energy turbine market develops over several years.

SED Energy Holdings Plc and the Offshore Dividend Angle

Hugo then moved to SED Energy Holdings Plc (OSL:ENH), an Oslo-listed offshore services name. He described it as a cheaper way to gain exposure to the offshore cycle, with no debt and a high guided dividend yield.

The discussion focused on tender barges, offshore maintenance work, and how the company can benefit if offshore activity continues improving. Hugo also explained that recent selling pressure was tied to former holders exiting after a reverse merger, rather than necessarily reflecting a change in the company’s outlook.

The main risk is still the offshore cycle. Hugo said the idea depends on oil prices staying in a range where offshore projects remain economic, rather than needing a sharp move higher in oil.

Oriola and the European Value Setup

The final idea was Oriola (HEL:ORIOLA), a Finnish and Swedish pharmaceutical distributor. Hugo described it as a duopoly business with stable demand, but one that screens poorly because of accounting issues and losses tied to a pharmacy retail joint venture.

His view is that the core distribution business is better than reported results suggest. He pointed to negative working capital, steady growth, an activist presence, buybacks, and a dividend policy change that could make the value more visible over time.

This was the slowest-moving idea in the session, and Hugo was clear that catalysts may take years. Still, he framed it as a cheap, stable asset where the market may be assigning too much weight to the joint venture and too little to the core business.

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