Emma Fisher is sticking with fundamentals and backing these 5 ASX stocks

Please note this interview was recorded Tuesday 27 January 2026.

“Grounding yourself in fundamentals is the only way to survive irrational markets", says Airlie Funds Management's  Deputy Head of Equities Emma Fisher.”

Whilst the market's cheese hasn't slid entirely off its cracker, there are certainly pockets that could fairly be described as displaying irrational exuberance. 

In such cases, the challenge, according to Fisher, is not identifying what is fashionable but resisting the temptation to abandon principles.

“Businesses with low return on equity have outperformed those with high return on equity. Businesses with high levels of debt have outperformed those with low levels of debt,” Fisher notes, "But that’s not what you see over the long term, and I wouldn’t expect any sustainability to that kind of junk-driven part of the market.”

Fisher's response has been to double down on fundamentals: sustainable returns, strong balance sheets, and disciplined capital allocation. That approach has seen Airlie avoid loss-making companies and remain wary of sectors where valuations imply perfection, even as other areas of the market have been heavily sold off.

In the discussion above, Fisher walks through how she navigates cycles, why emotional signals can be useful indicators at extremes, and where she believes markets are mispricing both risk and opportunity. For good measure, she also put theory into practice by identifying a handful of ASX stocks she likes right now, as well as the areas of the market she's avoiding. 

INTERVIEW SUMMARY

Quality versus speculation

Fisher describes the past year as one where many traditional quality signals have temporarily stopped working. Low return on equity, high gearing, and loss-making companies have all outperformed, despite long-term evidence suggesting the opposite approach compounds value.

“One of the worst strategies of all time in the ASX has been to just buy loss-making companies,” she says. 

“Over the last 25 years, a portfolio of loss-making companies has compounded at something like negative 20% per annum.”

While these rallies can be powerful, Fisher does not see them as durable. She argues that long-term equity returns are driven by businesses that generate sustainable profits and reinvest those earnings effectively, not by speculative narratives.

Cycle awareness and emotional signals

Fisher believes some of the most useful signals come from recognising where markets sit in the cycle. She recounts her experience holding IGO Limited (ASX: IGO) during the lithium downturn, noting how extreme pessimism became embedded in investor psychology.

“When you’re at the bottom of a cycle, your mind will start to construct a narrative around why prices will never rise again,” she says. 

“If you feel that way as a professional investor, everyone’s probably feeling that way.”

Conversely, she points to gold as an example of potential late-cycle behaviour, citing widespread retail enthusiasm, crowded trades, and narrative-driven optimism. While she does not call a definitive top, she views the sector as speculative at current levels.

Sectors and stocks of interest

Fisher says Airlie is seeing no shortage of opportunities, particularly where quality businesses have been caught up in broad sell-offs. She highlights technology-exposed sectors as an area worth revisiting after sharp repricing.

“We didn’t own tech stocks for a long time because valuations were pricing in incredible optimism,” she says. 

“Now that most of these businesses have halved, they’re interesting again.”

Airlie has initiated small positions in Xero (ASX: XRO) and Life360 (ASX: 360). Fisher argues Xero is less vulnerable to AI disruption than the market fears, particularly given its sticky small-business customer base and relatively low cost.

“You’re paying about $45 a month for Xero,” she says. “It’s unlikely three million small businesses all decide at once to switch to a less secure, AI-native alternative.”

She also highlights ResMed (ASX: RMD), noting the disconnect between earnings growth and share price performance. “Earnings are up nearly 20% this year, and the share price is down 10%,” she says.

In classifieds, Fisher sees value emerging after indiscriminate selling. While Airlie does not own REA Group (ASX: REA) directly, it owns News Corp (ASX: NWS), which holds a majority stake. She views News Corp as a lower-risk way to gain exposure, supported by assets like Dow Jones and The Wall Street Journal.

Management discipline and M&A risks

A major focus for Fisher is capital allocation. She says there are often few warning signs before management teams make value-destructive decisions, but certain red flags consistently concern her.

“I don’t like bet-the-farm acquisitions,” she says. “If you’re buying something worth more than a third of your market cap, you can destroy a lot of value if it goes wrong.”

Other risks include heavily debt-funded deals, acquisitions where value resides in people rather than assets, and entering new geographies via M&A rather than organic growth. She contrasts these risks with examples like Chemist Warehouse’s (since merged with Sigma (ASX: SIG)) organic international expansion.

Areas to avoid

Fisher remains cautious on gold and banks. In banking, she highlights the disconnect between earnings and share prices.

“If you add up the Big Four banks from 2023 to 2025, earnings have fallen 4% and share prices are up 50%,” she says. “That doesn’t square.”

She also points to competitive pressure from Macquarie, arguing its technology advantage is steadily eroding industry returns.

Returning to fundamentals

Ultimately, Fisher believes markets will revert to rewarding earnings and sustainable returns.

“I’d much rather allocate capital to businesses that are growing double-digit and have no debt than highly geared assets that aren’t growing at all,” she says. 

“I’m not ready to throw out fundamentals just because they haven’t worked over the last six months.”

Managed Fund

Airlie Australian Share Fund

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