The funds management team from Wilson Asset Management have outlined why they see a few ASX small-cap shares as compelling opportunities right now.
The two names in this article that WAM highlighted were among the top 20 holdings of the WAM Active Ltd (ASX: WAA) portfolio, a listed investment company (LIC) that seeks to identify mispricing opportunities in the Australian market.
Let's look at why the following businesses appealed to WAM.
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Forrestania Resources Ltd (ASX: FRS)
The first business WAM mentioned was Forrestania Resources, a Perth-based resource exploration company that's targeting gold, lithium, nickel and copper deposits. It's searching for these resources largely in Western Australia's Eastern Goldfields, Forrestania and Southern Cross greenstone belts.
WAM noted that the company is led by executive chair David Geraghty, who has spent 30 years in the resources sector, including 21 years at Mineral Resources Ltd (ASX: MIN), where he played a key role in its breakout success.
Last month, Forrestania Resources executed a binding purchase agreement with Westgold Resources Ltd (ASX: WGX) to monetise ore stockpiles of up to $38 million in gross revenue, with first funds expected in the third quarter of 2026.
The fund manager said the agreement effectively transitions the ASX small-cap share from a developer to a producer, which is typically a major valuation catalyst.
WAM noted that the Lake Johnston mill project is fully funded and, based on current resources, is expected to support several years of production at a low cost. At the current resource prices, this is expected to generate "significant free cash flow relative to the company's current market capitalisation of over $600 million".
The fund manager also noted that the company is assessing additional tenement opportunities, having flagged interest in the Edna Gold Mine, owned by Ramelius Resources Ltd (ASX: RMS).
EchoIQ Ltd (ASX: EIQ)
The other ASX small-cap share that WAM highlighted was EchoIQ, which the fund manager described as an Australian medical technology company focused on improving decision-making in cardiology. It operates an AI-driven software platform.
Its flagship EchoSolv platform harnesses proprietary AI to scan echocardiogram reports and dramatically improve detection of structural heart disease, starting with severe aortic stenosis (AS) and now expanding into heart failure (HF) and beyond.
In December, Echo IQ formally lodged its US Food and Drug Administration (FDA) submission for EchoSolv HF after a standout clinical validation study with Mayo Clinic, with a decision expected in March or April.
WAM said that clearance would significantly expand the ASX small-cap share's US addressable market, with heart failure as the leading cause of rehospitalisation and accounting for 17% of total US healthcare spending.
The fund manager said that industry sources confirm Echo IQ's technology is market-leading, positioning the company for rapid US penetration.
Strategic partnerships remain a near-term catalyst, according to WAM, with active interest from multiple parties, while there is also potential to improve existing reimbursement rates for severe aortic stenosis.
