George Capozzi on finding growth before the headlines catch on

In markets, the biggest shifts often happen quietly. Long before headlines catch on, sentiment stirs, liquidity returns, and a certain kind of investor leans into the opportunity. 

Small caps have been living that story this year. Once left behind, they’ve clawed their way back with momentum built not on hype, but on balance sheets, earnings upgrades, and a renewed appetite for growth.

For investors, this isn’t a simple trade. Small caps demand patience, conviction, and a willingness to back business builders who know how to weather cycles. They reward those who can look past the noise, and punish those chasing the latest fad. In this part of the market, experience counts for everything.

That’s where George Capozzi comes in. As Partner and Portfolio Manager at Hayborough Investment Partners, with more than two decades of experience across investment banking, trading, and small-cap analysis, George brings a global perspective sharpened by years inside both large institutions and boutique funds.

Today, he co-manages the Hayborough Opportunities Fund, a strategy built on finding aligned management teams and durable business models with the potential to compound over time.

In this Q&A, George shares the opportunities he’s pursuing, the signals he’s watching, and the timeless lessons that continue to shape his approach to investing.

What’s your most recent investment and why?

We have recently added Nanosonics (ASX: NAN) to the Hayborough Opportunities Fund. The company is a global infection prevention company specialising in automated disinfection technologies for medical instruments helping hospitals deliver safer care for patients.

The company reported a strong FY25 result, beating expectations with revenue of $199m (up 17% year-on-year) and EBITDA of $26m (up 54%). Importantly, 74% of total revenue is now recurring as the installed base of its flagship Trophon infection prevention system reached 37,000 units globally. With $161m in cash and no debt, the business has a fortress balance sheet and significant optionality.

The investment case rests on two pillars:

• Defensive cash generation: Trophon is now entrenched as the global standard of care for ultrasound probe disinfection, generating high-margin, sticky consumables and service revenue.
• Optionality in new markets: The company is investing heavily in Coris, its next-generation platform designed to automate endoscope reprocessing, a much larger global market opportunity where current practices remain highly manual and inefficient.

From a valuation perspective, Nanosonics should trade at a premium multiple to the broader market given its combination of recurring revenue, global growth runway, and balance sheet strength. 

However, since the result, the stock has pulled back towards $4, which we view as an attractive entry point. At this level, the market capitalisation can effectively be justified by the Trophon business alone, giving investors exposure to Coris as a free option within a high-quality growth compounder.

Which investment did you add to your watchlist this week?

This week we added Premier Investments (ASX: PMV) to our watchlist.

Premier has been through a major reshaping following the sale of its Apparel Brands to Myer, returning over $1.03 billion in value to shareholders through an in-specie distribution of Myer shares and franking credits. The business is now a cleaner, more focused retailer centred on two high-margin brands: Peter Alexander and Smiggle.

The long-term alignment of founder Solomon Lew remains one of Premier’s greatest strengths. Since floating as a $60m cash box in 1987, Lew has created billions in value for shareholders, remarkably without drawing a salary or any expense reimbursement. His discipline and alignment underpin the company’s culture and capital allocation.

On the numbers, Premier looks interesting. If you strip out their net cash of $333m and their 25.4% stake in Breville worth $1.1bn, the retail business itself trades on roughly 9x EBIT which is an undemanding multiple, potentially at a cyclical low. 

Peter Alexander continues to compound at double-digit rates, though its UK expansion has faced early challenges. Smiggle has seen staff turnover and softer sales, but management’s depth of experience gives us confidence these issues can be addressed.

When a high-quality business trades at a low valuation, it usually reflects concerns which can create opportunity if those concerns can be resolved. 

With Lew’s alignment, track record and a simplified structure, Premier is a compelling candidate for the watchlist.

What is the most recent investment you have trimmed or sold, and what drove this decision?

Recently, we have been exiting four portfolio holdings that are under takeover. While these transactions provided certainty of value, we saw limited upside from holding through to completion. The most recent was RPM Global (ASX: RUL), following a bid from Caterpillar Inc.

In RPM, we also lose one of the market’s truly outstanding leaders in Richard Matthews. His alignment and track record are rare: in 2012, he bought more than 6 million RPM shares on the market at ~35 cents, and if the current $5 bid succeeds, that purchase will have compounded at almost 23% per annum for 13 years. Combined with his record at Mincom and eServGlobal, it’s a reminder of how powerful aligned leadership can be for long-term investors.

With the upside in these takeover names capped, we believe the better opportunity is in small caps still trading on attractive valuations with strong balance sheets, aligned management, and long growth runways. By recycling capital, we’re positioning the Fund to capture the next leg of small-cap outperformance while staying focused on alignment and long-term compounding.

What’s your favourite chart or data point from this week?

The standout data point this week is the performance of the ASX Small Ordinaries Index (XSO) and its catch up to large caps since rates began to rise. 

In the September quarter, the Small Ords rose +14.3%, comfortably outperforming the ASX 200, which gained just +3.6%. This marks the best quarterly rise in over five years with the last time being the June 2020 quarter (+23.5%) as markets rebounded from COVID.

This time the rally is underpinned by improving fundamentals and stronger prospects for small caps relative to large caps, rather than just a rebound from crisis levels.

The Small Ords have now delivered six consecutive months of gains and are up +20.6% year-to-date in 2025, the best year since 2009 when markets rebounded +51.9% coming out of the GFC. 

The crucial distinction is that today’s strength is not a recovery from a collapse, but a reflection of the growth opportunities in small and mid-cap companies compared to more mature large-cap peers.

For active managers like us, this renewed small-cap leadership is an encouraging backdrop.

What was your weekly high - a standout market moment or highlight?

Our weekly highlight came from Bravura Solutions (ASX: BVS), one of our largest holdings, which announced an earnings upgrade. Bravura is majority controlled by original members of Constellation Software (TSE: CSU) in Canada, a group we regard as some of the best technology investors in the world. Having followed Constellation closely for many years, it is a privilege to invest alongside such a high-quality team on the ASX.

At the company’s result in August, FY26 guidance was set below market expectations and the share price fell sharply. Drawing on our experience with Constellation, we recognised this as their hallmark approach, to under-promise and over-deliver, and we used the weakness to increase our position. This week, the company upgraded earnings guidance, and the share price responded strongly.

We believe Bravura is well-positioned to compound earnings over time, both organically and through acquisitions, under the stewardship of a proven, world-class investment team.

What was your weekly low – a market disappointment or challenge?

The low point this week came from ASIC’s ongoing actions around the collapse of the Shield Master Fund, which have put Equity Trustees (ASX: EQT) under pressure. EQT is a 146-year-old business that has always prided itself on trust and reputation. We’ve long admired its conservative approach and focus on client outcomes, but the market has reacted negatively, with the share price falling on the back of these regulatory issues.

At the same time, Macquarie agreed to a $321 million compensation package for its clients, while EQT has chosen to defend itself in court. Although confronting, we see a positive in EQT’s decision to stand firm signalling confidence in its governance processes and its interpretation of trustee duties.

What first drew you to markets or this sector and what continues to keep you inspired today?

I’ve always been fascinated by the language of business. That spark was lit early, inspired by my grandfather, who came to Australia without speaking English, no capital or formal business knowledge. 

He built a life for his family through grit and perseverance in business and it made a deep impression on me. During my childhood, my mum would leave investment books and biographies scattered around my room which I read enthusiastically. 

I didn’t realise it then, but those books planted seeds that turned into a lifelong curiosity about markets, savings and compounding, and the people who build businesses. My first taste of investing came with the Telstra float, which gave me the thrill of owning a piece of a company for the first time.

What keeps me inspired today comes down to two things.

First, the opportunity to learn about something I am passionate about every day. 

To meet and hear the stories of great business builders, how they lead people and foster company culture. To follow their execution over years is endlessly motivating and inspires us to find the next great team and business.

Second, the responsibility of knowing that clients have entrusted us with their hard-earned capital. 

Being part of their personal wealth-creation journeys is both a privilege and a responsibility. It pushes us to never stop learning, to improve every day, and to keep working with the same energy and enthusiasm that running an investment fund demands.

What’s one piece of advice you’d give to new investors?

Read and never stop learning. 

The best investors are students of both markets and people, and the learning never ends. Don’t just focus on the numbers; do the qualitative work as well. Culture, alignment, and leadership often determine outcomes far more than a spreadsheet ever can.

And most importantly, start investing with real money. 

Theory is valuable, but nothing teaches you faster than putting your own capital at risk. You will make mistakes in those first few years, as everyone does, but the lessons learned from those mistakes are what shape you into a better investor over time.

How do you unwind when you’re not thinking about the market?

As anyone who shares a passion for investing knows, the hardest part is truly switching off. For me, downtime always comes back to connection with family and friends. 

Saturday mornings are a highlight, coaching my kids’ AFL teams is a great way to be present, step away from markets, and share the joy of sport with them. Away from the oval, I find the same relaxation around sharing a meal with people. 

Whether it’s a big Italian family lunch at home or a longer lunch with friends, food and time spent with people closest are the things that recharge me most.