The market is punishing growth. He’s buying more

When quality growth stocks sell off, it’s easy to reach for the panic button. 

Beyhan Irmako reaches for his buy list.

That’s the key insight from this week’s Q&A with Irmako, Co-Portfolio Manager of the Ausbil Australian Small & MicroCap Funds. The market's rotation out of quality growth has been swift and unforgiving, punishing even companies delivering consistent earnings beats. Irmako is leaning in, adding to positions where valuations have reset to levels he considers genuinely attractive.

It’s a conviction-driven approach shaped by experience across research and distribution before stepping into portfolio management at Ausbil. His investment philosophy traces back to the same first principles he picked up in the family business: know your value proposition, be resourceful, and have skin in the game.

What's striking right now is just how wide the gap has grown between fundamentals and market pricing. Businesses are delivering, but share prices are lagging, as sentiment shifts and the market demands proof, not promises.

In this conversation, Irmako unpacks where he is finding value in the sell-off, what’s landed on his watchlist, the macro signal he is watching as oil prices spike, and why periods like this can be the most rewarding for investors willing to back their convictions.

What’s your most recent investment and why?

We have been adding to our existing position in Generation Development Group (ASX: GDG). The recent sell-off in growth stocks has seen the valuation pullback to more attractive levels, with GDG now trading below the $4.15 entry price of BlackRock’s investment.

I’ve outlined our investment thesis in a previous Livewire article (here). The recent enactment of ‘Division 296’ superannuation tax presents an opportunity to take investment bonds from a niche to the mainstream. 

Even a small reallocation of concessional super contributions to investment bonds could present a major growth opportunity that we believe is not priced into market expectations. 

Which investment did you add to your watchlist this week?

Given that we filter out unprofitable and illiquid companies, our watchlist is typically well defined. 

That said, we are doing our homework on EnergyOne (ASX: EOL), which provides wholesale energy trading solutions across Australia and Europe. The company’s addressable market is expanding as the growth of renewables creates additional connection points into energy grids. 

With a sub <20% market share in Europe and the UK, and approaching a mid-teens ROIC profile, we believe there is a long runway of growth opportunities ahead.

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

We have been trimming our position in Monadelphous (ASX: MND). 

The company has been a strong performer following a series of major contract wins. However, as it approached what we believe to be a relatively full valuation, we have rotated into industry peers at lower multiples where the risk-reward ratio is more favourable. 

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

We are monitoring how the recent spike in oil prices is feeding into long-term inflation expectations. One gauge is the 5-year breakeven inflation rate, which captures the market-implied average inflation expectation over the next 5-years.

It has ticked up slightly but remains within the range of recent historical levels. 

Though the situation is evolving daily, for now, this suggests markets view the oil shock as transitory following recent commitments by the Trump administration to help underwrite the flow of oil through the Strait of Hormuz.

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

Distribution and performance are the two pillars of success for any asset manager. 

Despite a difficult environment for capital raisings, it was pleasing when L1 Capital (ASX: L1G) announced the scale back of cornerstone commitments for the IPO of their new gold LIC, given over-demand. This follows the successful capital raising into the new Global Long Short capability last year.

We think this founder-led business exhibits all the characteristics necessary to successfully build a diversified asset management platform.

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

Undoubtedly, it’s the rotation out of quality growth. 

Take for instance, Life360 (ASX: 360), which has continued to de-rate despite delivering two quarterly earnings beats and strong CY2026 guidance in recent months. 

The market has demanded a ‘show, not tell’ response after the company emphasised the weighting of earnings to the 2H. 

We think this is explainable following the acquisition of a seasonal advertising business. 

We believe full-year guidance remains conservative, noting the company beat the mid-point of CY25 guidance by 33% over the course of last year. 

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

Growing up in my family business gave me an early appreciation for commerce. 

You learn to focus on your core value proposition, to be resourceful and the importance of having skin in the game. 

That experience sparked my interest in markets, particularly small and micro caps, where the same first principles still apply when uncovering future leaders. 

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

It would be the advice that I was given when I first joined Ausbil, best summarised by a quote from Howard Marks in his memo Dare to Be Great II:

“Are you willing to be different, and are you willing to be wrong? In order to have a chance at great results, you have to be open to being both.”

Simple, but not easy, I think. Having the curiosity to challenge prevailing assumptions and the conviction in your own work are worthwhile characteristics to develop.

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

My wife would say I don’t switch off from markets as often as I should. Thankfully, we make a point of exploring our shared interest in food, most notably by scouting new bakeries.

Rapid fire! 🔥

Favourite investing book?

The Little Book that Beats the Market by Joel Greenblatt. There is profound insight expressed in such a small book. 

Favourite investing or finance/markets-related podcast?

Probably ‘The Meb Faber Show’ given the quality of his guest speakers. 

The first thing you read each morning?

Bloomberg and checking overnight market moves. 

Favourite restaurant?

Nothing beats Mums cooking! But living in North Sydney, Piato is a close second. 

Something people are surprised to learn about you?

In 2014, I was a reserve Goalkeeper with the Central Coast Mariners for a few pre-season games. It was a short, but very memorable experience. 

Think there’s a better pick? Prove it. Share your rapid-fire book, podcast, and daily read in the comments.

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