UK Small-Cap Hidden Gems: Our Q2 2026 Watchlist

AIM and the LSE's standard segment are producing some of the most compelling NCAV opportunities in years. Five names are currently flying below institutional radar with DipBuster Scores above 65, rising insider ownership, and discount-to-NCAV ratios that Graham himself would recognise.

Why Q2 2026 Is Interesting for Small-Caps

Two macro tailwinds converge this spring. First, the Bank of England's rate trajectory is now clearly downward, reducing the discount rate that punishes small-cap valuations relative to bonds. Second, FTSE 100 underperformance has pushed generalist fund managers to hunt further down the cap spectrum for returns — creating early-stage institutional interest that has historically preceded re-ratings.

The Screening Criteria

Each name passes five filters before making the watchlist: (1) trading below 1× NCAV, (2) DipBuster Score of 65+, (3) market cap between £15m–£300m to exclude micro-cap illiquidity traps, (4) positive cash flow from operations in at least two of the last three years, and (5) no going-concern language in the most recent accounts.

Position Sizing for a Small-Cap Basket

AIM names carry higher binary risk than FTSE stocks — a profit warning can move a share 30–40% in a day. Graham's answer was diversification: hold 15–20 names at equal weight, set a 2-year time horizon, and let the statistical advantage play out. Individual position sizing above 5% for AIM names is generally considered aggressive even by professional value investors.

This is not a buy recommendation. Names are illustrative of the screening methodology. Always conduct your own due diligence before investing.