Opening the doors to L1 Capital - FY26's top performing Australian equities manager

Arriving in the foyer of L1 Capital’s Collins Street office, one is greeted by large, steel-framed glass doors. They are equally imposing and impressive, as one might expect from one of Australia's leading investment managers. Today, L1 Capital forms part of L1 Group, which manages close to $20 billion on behalf of clients. 

There is one detail, however, that stood out to me the very first time I visited the office, and that is the large, wood-carved L1 logo that doubles as door handles – the ‘L’ on one door, the ‘1’ on the other. It’s a detail that could easily have been left out altogether, and whilst visitors might overlook it, that’s not the L1 Capital way.

Someone had the idea, brought it to life, and saw it through to completion. That is, they did the work. It feels like a fitting metaphor for the way the team approaches investing.

Details matter. Execution matters. And the work must be done. Only then can the team take confidence that positive results will follow.

Follow they did in the past 12 months, with the L1 Capital Long Short Fund – Wholesale, and the L1 Capital Catalyst Fund occupying the top two spots in the top-performing Australian equity funds list, as per the Livewire database, delivering 45.63% and 38.32%, respectively. You can see the full rankings in the wire below.

Funds

The top-performing Australian equities funds of FY26

View

Off the back of this one-two finish, I spoke with L1 Capital Co-Founder and Co-Chief Investment Officer Mark Landau, who co-manages the L1 Capital Long Short Fund, and Partner and Head of the Catalyst Fund James Hawkins, who oversees the L1 Capital Catalyst Fund, about what drove performance over the past year, the lessons they learned, and where they see opportunities from here.

The L1 Capital Long Short Fund: finding value where others don't

While several holdings contributed across both portfolios, including Mineral Resources (ASX: MIN), BlueScope Steel (ASX: BSL), James Hardie (ASX: JHX) and Aurizon (ASX: AZJ), Landau says one area set the Long Short Fund apart — gold equities.

The team began building meaningful positions around 18 months ago, at a time when many investors still viewed the rise in the gold price as a cyclical phenomenon rather than a structural shift.

"We believed the move in gold wasn't cyclical; it was structural, driven by central-bank buying, persistent fiscal deficits, concerns about currency debasement and heightened geopolitical risk", says Landau. 

Importantly, the investment wasn't simply a macro bet on bullion. Instead, the team sought companies capable of generating meaningful earnings growth regardless of where the gold price ultimately settled.

"We focused on identifying high-quality mid-cap producers with strong management teams, credible production growth and attractive valuations."

Holdings such as Westgold Resources (ASX: WGX) and Eldorado Gold (NYSE: EGO) (the Long Short Fund is able to invest in international securities up to 30% gross exposure) combined leverage to higher gold prices with company-specific operational improvements, becoming meaningful contributors to the fund's performance.

For Landau, the experience reinforced one of the core principles underpinning the strategy.

"The outcome reinforced the value of combining a differentiated top-down view with rigorous bottom-up stock selection."

That discipline also shaped how the team approached one of the year's most volatile periods. Rather than retreating during the March and April 2026 market sell-off, L1 Capital selectively increased exposure to sectors where short-term macro fears had driven valuations well below its assessment of medium-term value.

Copper, construction materials and travel all featured among the areas where the team added capital. As markets stabilised through the June quarter and investors refocused on company fundamentals, many of those positions recovered strongly.

For Landau, the episode served as another reminder that successful investing often requires looking beyond the headlines.

"Changes in market structure, positioning and investor flows can amplify volatility and create sharp dislocations," he says.

"The key is to remain disciplined on valuation and focused on the underlying earnings outlook rather than being drawn into short-term market momentum."

Looking ahead, Landau remains firmly focused on stock selection rather than macro forecasting.

"We're not trying to predict the macro environment. We're trying to own businesses where the valuation, earnings outlook and balance sheet stack up in a broad range of macro scenarios."

He continues to see attractive opportunities across gold, copper, construction materials, infrastructure and selected financials, sectors that are supported by structural demand, constrained supply or company-specific opportunities to improve earnings.

At the same time, he remains cautious of parts of the market where share prices have been driven primarily by expanding valuation multiples rather than improving business fundamentals.

The L1 Capital Catalyst Fund: concentrated conviction

If the Long Short Fund demonstrates L1 Capital's valuation discipline, the Catalyst Fund showcases another defining feature of the firm's investment philosophy - concentrated conviction.

Unlike most Australian equity funds, the Catalyst Fund typically owns between six and no more than 10 companies, with each position required to have the potential to materially influence returns. That approach paid off handsomely over FY26.

Hawkins points to the previously mentioned Mineral Resources, BlueScope Steel, Aurizon and James Hardie among the portfolio's biggest contributors, with investment theses that had been developing over several years finally coming to fruition.

“The investment thesis in a few of our stocks such as Mineral Resources and BlueScope started to play out over the last 12 months. Value got a bid and had a really good 12 months. The market started to appreciate the type of stocks that we like."

He also highlighted companies with significant US earnings exposure, including BlueScope and James Hardie, as important contributors as investors increasingly rewarded businesses benefiting from stronger US economic conditions.

For Hawkins, however, success rarely happens overnight. Reflecting on Mineral Resources, he points to governance changes, balance-sheet repair and improved operational execution at the Onslow iron ore project as catalysts that took time to emerge.

BlueScope followed a similar path. Hawkins had long argued that the company's US operations alone were worth more than BlueScope's entire market capitalisation. When interest later emerged in those assets, the broader market finally began recognising the value he believed had always existed.

Asked which investment made him proudest, Hawkins doesn't hesitate; "MinRes was the most anti-consensus call. It was one we were very public on," he says.

"When we do the work and we take a significantly anti-consensus position that ultimately we're rewarded for, that's the one I’d call out."

That willingness to back high-conviction ideas sits at the heart of both the Catalyst Fund and the broader L1 Capital culture.

"We know we've done the work and in order to generate alpha, you need to be prepared to take concentrated bets," Hawkins says.

"Whilst a concentrated portfolio means there is going to be volatility, if you just focus on the downside, you won't make money as an investor."

He describes the Catalyst Fund as a satellite allocation rather than a core portfolio allocation, designed to provide meaningful alpha through differentiated stock selection rather than benchmark-like diversification.

Looking ahead, Hawkins believes that a similar opportunity set remains available over the next 12 months. Rather than chasing consensus themes, he continues to look for businesses generating significant US-dollar earnings or companies with structural catalysts the broader market has yet to fully appreciate.

“We’re going to continue to look for companies that have structural unlock opportunities," he says, “Opportunities that the market's looking past and not seeing."

The common thread

Although the Long Short Fund and Catalyst Fund are constructed very differently, speaking with Landau and Hawkins reveals connected investment philosophies.

Both place independent thinking ahead of consensus. Both are prepared to endure periods where the market disagrees with them, provided the underlying thesis remains intact. And both view volatility not as something to fear, but as an opportunity to build or increase positions when prices disconnect from long-term value.

Perhaps that's why those L1 door handles stayed with me after my first visit. They're just a small design detail, but they capture the culture behind one of Australia's most successful investment firms. 

Details matter. Conviction is earned through research. And above all else, the work has to be done.

James Hawkins will be speaking at Livewire Live in September this year. If you would like to hear him speak, you can buy tickets and check out the full lineup of guests here.