Small-cap ASX shares have been brutalised in 2022, with some funds specialising in that area shrinking by 38% over the last financial year.
The month of June was especially horrifying, with the S&P/ASX Small Ordinaries Industrials (ASX: XSI) taking a whopping 10.4% fall.
However, small-cap investor Celeste Funds Management told its clients in a memo that three of its holdings actually increased in value last month.
And what's more, it is looking forward to further gains in the future:
All smiles as Australians get their teeth checked again
Dental centre operator Pacific Smiles Group Ltd (ASX: PSQ) saw its share price skyrocket 15.8% in June after the company indicated patients are returning and staff absence due to COVID-19 has started to slow.
"Pacific Smiles' same centre patient fees for May 2022 were up 2.8% on pcp [prior corresponding period] while total patient fees were up 7.4%."
But the best indicator was that in an environment of rising rates the business is already well funded.
"Pacific Smiles also extended its $40 million CBA loan facility for a further 3 years," read the memo.
"Pleasingly, the board confirmed that due to the headroom in the facility and the improving operating outlook, the company is adequately funded and has no need or desire to raise capital."
The team at Celeste isn't the only one bullish about Pacific Smiles shares.
According to CMC Markets, all three surveyed analysts recommend it as a buy.
A tech stock that's also defensive
Financial services software provider Iress Ltd (ASX: IRE) enjoyed a nice rise in its stock price last month despite making no price-sensitive announcements.
"Iress rose 9.9% over the month of June, outperforming the broader ASX 200 technology sector which fell 11.0%," stated Celeste analysts.
"We remain positively disposed to management's renewed focus to its capital base and delivery on FY25 targets."
For a tech company, Celeste reckons it boasts defensive characteristics in the face of possible recession or an economic downturn.
"Looking ahead, we believe the nature of Iress' recurring revenues, its cash flow generation and defensive qualities will provide ballast in a macro environment where earnings predictability has become increasingly difficult."
The wider analyst community is polarised on Iress.
Five out of the nine surveyed on CMC Markets are neutral, rating the stock as a hold. Three recommend it as a strong buy and one labels it a strong sell.
'A string of positive announcements'
Omni Bridgeway Ltd (ASX: OBL) operates funds that pay for litigation cases.
Celeste analysts attributed the 5.3% rise in the share price last month to "a string of positive announcements".
"Firstly, they announced the successful completion of a US law firm portfolio that resulted in US$23 million of income into Fund 4, with the same law firm entering into a second $30 million portfolio funding also from Fund 4," read the memo.
"Omni Bridgeway has also launched its new Fund 8 which is a EUR300 million insured, leveraged special purpose vehicle with materially higher expected returns to Omni Bridgeway than previous funds."
The company also sold a 20% stake, worth $7.5 million, in a Commonwealth Bank of Australia (ASX: CBA) shareholder class action.
"Omni Bridgeway expects to be an active participant in the secondary market due to the improved liquidity it provides," stated Celeste analysts.
"We see significant upside in OBL as the transition to legal fund manager continues."
