Overreaction? 5 ASX stocks this fundie is snapping up

We’re at the tail end of reporting season, a period often known for separating winners from losers. Strong results are rewarded and weak ones punished. At least, that’s how it usually goes.

This time around, the market has been quick to punish companies even when their underlying performance remains solid.

Sound familiar? Well, Henry Jennings of Marcus Today predicted this environment could be just as unforgiving as the last, which he famously described as a "killing season". 

For George Capozzi, Partner and Portfolio Manager of the Hayborough Opportunities Fund, the indiscriminate selling isn’t a cause for panic, but instead an opportunity.

"There's been a lot of really good businesses that have actually reported really well, but the market's thrown them out with the rest of the market.”

From AI-driven tech re-ratings to industrials being penalised for investing in their own growth and macro fears around interest rates, Capozzi believes investors are reacting to short-term signals rather than looking through to the underlying fundamentals.

That disconnect has been creating opportunities and Capozzi has been methodically buying into the weakness.

Below, I summarise the key themes from our catch-up and the stocks he’s acting on. 

The AI panic that's repricing everything

The biggest theme this reporting season has been the market's sudden reckoning with AI disruption, particularly for software businesses, a time many are referring to as the "SaaSpocalypse".

A wave of engineering blogs arguing that large language models like Claude would rapidly transform how companies build and use software caught investors off-guard, triggering a broad selloff in SaaS names. 

"SaaS companies have been hugely derated across the board," Capozzi says.

But he says the market isn’t distinguishing between the vulnerable and the defensible. The key question he asks is: who owns the data? 

Technology One (ASX: TNE) is one he points to as being on the right side of that line. 

"They own the data. They're highly confidential, encrypted data sets that they control - they won't be impacted, they'll only be stronger." 

By contrast, businesses that scrape and resell public data face a genuine threat from AI tools that can replicate that function cheaply.

Another holding he was watching closely heading into results was Objective Corporation (ASX: OCL), which manages sensitive government data. "Governments will actually have to have their own AI application within their data set," he says, making it structurally difficult to disrupt. 

On the trimming side, Capozzi reduced positions in Catapult Group (ASX: CAT) and Bravura Solutions Ltd (ASX: BVS) during November and December, not because he lost conviction, but because valuations had run hard. 

"We still like the businesses. We just don't like the valuation." He still holds both in a smaller size and would look to add back at better prices.

Industrials: Punished for investing in their own future

Beyond tech, Capozzi sees a similar dynamic playing out in industrials. Companies that are deliberately investing ahead of the curve, such as taking on costs now to fund future growth, are being sold off because margins are temporarily compressing. Even when management has explained why.

"The market's not willing to look through for companies investing ahead of the curve." 

The result: stocks down 30-40% on results that, fundamentally, are quite good.

Symal Group (ASX: SYL) is his clearest example. The founder-led infrastructure services business has been busy hiring people, buying plant and opening offices nationally. All of which has clipped margins from around 11% to 10.5%. While it makes sense that margins would be reduced, the market's verdict was brutal. 

"The market's like, oh, their margins are dropping - what's wrong with the business?" 

Capozzi has been adding to his position on the weakness, backing management's execution over the short-term noise.

The capital allocator play: Maas Group (ASX: MGH)

One of Capozzi's newer additions is Maas Group, a name he wasn't previously holding. The company is selling its construction materials business to global player Heidelberg Materials for $1.7 billion, leaving it with approximately $700 million in cash after tax, plus an ongoing business earning around $130 million in EBITDA.

The market sold the stock from $6 to $4 on uncertainty about what management will do with the cash. He sees that as the opportunity. 

"What has this management team done over the last 25 years? He started with a bobcat and built this incredible business." 

The CEO's stated intention is to redeploy capital into data centres and electrification - two of the most compelling structural themes in the market - and his historical return on capital is 28% against a self-imposed 20% hurdle. 

"The market hates uncertainty. That gives you the opportunity to buy the stock."

Nanosonics (ASX: NAN): Trading below the value of just one business

The third stock Capozzi has been buying is Nanosonics, a global medical disinfection business best known for its Trophon device, which automates the cleaning of ultrasound probes. 

It's a high-quality, cash-generative business with a large install base and recurring consumable revenue. At around $3.20, Capozzi argues you're getting the business for less than it's worth on a standalone basis.

"The valuation just on the Trophon business - we get a valuation of around four bucks. Just that, plus the cash." 

Nanosonics holds $160 million in cash and no debt. On top of that, its CORIS product, which automates endoscope disinfection, is in the early stages of commercial rollout and currently generating no revenue. Capozzi sees this as a free option on a second business:

"You've got to back them over the next three years - you're going to start getting some revenue."

The market's frustration is the $17 million being invested in CORIS for the half, with nothing to show for it yet. But for Capozzi, this is a pattern he's seen before and is willing to be patient.

The winners: What's actually worked

Not everything has been caught up in the sell-off. Capozzi flags two positions that have genuinely performed. Ramelius Resources (ASX: RMS) has been a standout gold holding, driven by capital discipline and sensible acquisitions. 

"Fantastic management team... very capital disciplined, very tight on their costs."

L1 Capital (ASX: L1G) is the other significant winner. The funds management group merged with Platinum Asset Management and has been systematically cutting costs through integration. Capozzi entered after binding takeover terms were announced, when the stock was trading around 50 cents. It has since more than doubled to roughly $1.25.

"A funds management business with momentum, good performance, run by the principals who are highly engaged, motivated and have huge skin in the game."

If I learned anything from my catch-up with Capozzi, it's that reporting season volatility isn't something to back away from. If anything, it's when some of the best opportunities emerge. 

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