The ASX's "great mispricing": Airlie's Emma Fisher on the stocks finally back in the frame

If I had a dollar for every time I've heard a fund manager talk about how overvalued the ASX's biggest stocks are recently, I'd almost have enough to buy one CBA share.

But the very real dislocation between the top end of the town and the rest of the market is so pronounced that it now represents, in the words of Airlie Fund Management's Emma Fisher, the "greatest mispricing of my career". 

That's all well and good, but what's the opportunity for investors watching the rest of the market lag behind? 

Speaking at the 2026 Magellan Roadshow in Sydney, Fisher says the takeaway is that it's meant quality Australian companies are now back at a price where they should absolutely be on the radar of investors. 

"I've never seen a market like this," said Fisher. "There are fantastic businesses, great balance sheets, great managers that we have wanted to own for years that have been too expensive, and they've all come back into frame."

"Historically leaning into quality at this point in time is the right thing to do. Normally you see an enormous bounce back."

A confluence of lost mandates, rising passive flows and the growing nosiness of markets has created a growing disconnect between how companies are actually performing in the real world and how their share price is behaving, and that's where fund managers earn their crust, says Fisher. 

"Active managers effectively set up to exploit the very, very slow pace of change in the real world for businesses and the frenetically fast pace of change in the share market."

To me, it almost recalls Matthew McConaughey's Mark Hanna in Wolf of Wall Street, who tells Leonardo DiCaprio's Jordan Belfort that the stock market is "a whazy, it's a woozie. It's fairy dust. It doesn't exist. It's never landed. It is no matter. It's not on the elemental chart.”

Fisher obviously isn't going that far, but she's touching on a very real phenomenon playing out in the Australian equities right now. 

"It's not normal for high growth businesses to be cheaper than very, very low growth or even declining businesses."

When quality companies with compounding growth are trading at lower multiples than low-growth stalwarts, any active manager (or investor) worth their salt should be seeing that as an opportunity. 

Judging quality

While it's hard to argue that the Big Four banks aren't quality companies, extreme valuations make them increasingly hard to justify as investments. And valuation is key to Airlie's process.

"Valuation is a really important part of our strategy," says Fisher. "Happily, we're entering a market where there are a lot of businesses that we haven't owned for a number of years - because that valuation piece was too aggressive in our minds - that are now coming back into the frame."

These are companies that Fisher categorises as having "high profitability, growing earnings and good returns", but yet have derated. Part of the reason they have derated is because they were on high multiples themselves driven by strong growth and performance.

And that valuation piece goes both ways. A stock that has substantially derated isn't necessarily now an attractive prospect if the valuation still doesn't make sense, even if the company is solid.

"Last year Cochlear was $320 and today it trades below $100," she said. "That doesn't necessarily mean that it's cheap, it could have been that it was extremely overvalued and that I think that's a case in point why valuation matters. You cannot just buy all the good businesses and just ignore valuation." 

It's why the Airlie Australian Share Fund, of which Fisher is portfolio manager, is focused on companies with better net debt to EBITDA ratios than the ASX, better balance sheets, better return on equity, but collectively trading at the same multiple as the broader index. 

Owner-managed companies have also a fertile hunting ground, says Fisher, especially in a landscape where many other businesses are making poor decisions. 

"When we find these founders that we think are the real deal that have a fantastic decade or two ahead of them, we really wanna own these businesses in the portfolio and avoid equally the others."

"You'd be amazed at how much of corporate Australia don't know what they're doing."

CAR Group 

A prime example of a quality ASX company whose valuation has now flipped positive for Airlie is CAR Group (ASX: CAR), says Fisher. 

"For years when we ran it through our process, it was the valuation piece that we kept us on the sidelines, we thought it was a great business, very well managed, we just thought it was very expensive."

While it has sold off in the face of local AI disruption fears, Fisher points out the fact that half of Car Group's earnings come outside Australia, and in markets that are growing and maturing, like Brazil and South Korea. 

"What you're really looking for in active management is compound earnings growth and rerate potential," she said. 

Now at a P/E ratio of 21x, CGR is one such example. "As they monetise offshore and continue to monetise in their Australian business, there's a lot of earnings growth ahead for this business."

Even if the predicted rerate doesn't arrive, forecasted earnings growth and resulting dividends could still drive an attractive return for investors over the next three years. 

It's also an example where the stock market has behaved independent of real world valuations, she says.

"The stock's been weak for the last couple of weeks because everyone thought it was gonna get deleted from an index, so people were shorting it ahead of that."

That didn't come to pass and the stock then jumped 5% as a result, even if the fundamentals hadn't moved at all. 

"Nothing's changed in the real world for Carsales, but the share price is just throwing up all of these opportunities. If you've got a really firm view of what a business is worth, then you can take advantage of this as an active manager."

Pinnacle Investment Management Group

Another great company now back at an attractive valuation is Pinnacle Investment Management Group (ASX: PNI). 

The affiliate investment management firm has seen a recent derate driven by concerns over two companies in its stable, Metrics and Hyperion. But Fisher says fears over what amounts to 20% of the company's earnings ignores the growth prospects in the 15 funds that make up the other 80%. 

"We think the next decade looks really good for them, they've got 17 affiliates, everyone's worried about 2 of them, everyone's ignoring the rest, and we think there's a lot of growth there that will drive profit," she said. 

"We have added Pinnacle to the fund because I think it's a fantastic model."

If you're watching from the sidelines as the top end of town outperforms, the equation for finding value on the ASX is fairly straightforward, says Fisher. 

"That combination of good balance sheet, good management, high quality business, and an attractive valuation - that is the path to long-term wealth creation through the cycle when you're investing in Aussie equities."