These top growth picks have struggled. Here’s what the fund managers who picked them learned

When it comes to picking stocks, sometimes you get onto a winner early and look like a genius and other times the exact opposite happens. Either way, there should be some reflection.

Are you actually a genius or did the best case scenario play out? Was your investment thesis wrong or did some kind of unforeseen circumstance derail an otherwise sound pick? It can be hard to tell.

At the end of last year, Livewire got 10 fund managers to share their top growth picks for 2026. Among those picks there was a clear standout with Armina Rosenberg’s choice of South Korean memory chip manufacturer SK Hynix, which even after the recent “chipwreck” is still up almost 200% for the year.

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It wasn’t the only winner, but some of the other stocks have struggled over the last six months.

However, instead of shying away from these picks, in this wire four of those fund managers examine what happened, if there was a flaw in their methodology, and whether they would still buy the stock.

After all, a loss is only a failure if you don’t learn anything.

#1 - HUB24 (ASX: HUB)

The top pick for Fidelity International’s James Abela was financial services software company HUB24. It seemed like such a safe bet that he wasn’t even the only fund manager who chose the company.

“We believe the stickiness of that client base is quite strong, the stock has delivered growth and it's also a technology leader. All these things combined reinforce my view that HUB24 is a business that I am very keen to hold,” Abela said at the time.

HUB24 finished 2025 at $96.25 and is down 14.02% as of 15 July, though a recent rally has helped that figure after hitting a 14-month low less than a month ago.

So, why didn’t HUB24 perform the way Abela had projected?

“Our investment thesis centred on HUB24's ability to deliver sustained structural earnings-per-share (EPS) growth, and that aspect of the thesis remains intact,” he says.

“However, broader market concerns around the so-called ‘SaaSpocalypse’ and the potential disruption posed by artificial intelligence weighed heavily on valuation multiples across the software and fintech sectors.”

Despite this, Abela argues that the underlying industry backdrop has remained largely supportive, with financial advisers increasing their usage of the platform and HUB24 clearing $100 billion in funds under administration.

“The business continues to be recognised as a market leader, with strong adviser satisfaction and best-in-class decision-support capabilities underpinning its competitive positioning,” he says.

“While HUB24 was not involved in either the Shield or First Guardian fraud cases, these events increased scrutiny across the broader financial services industry. The possibility of class actions and compensation claims relating to investor losses on other platforms contributed to heightened sector-wide concern, despite HUB24's strong reputation and lack of direct involvement.”

The Fidelity Future Leaders Fund has implemented a “modest net reduction in the position”, largely due to uncertainty around AI potentially impacting software valuations, but Abela says HUB24 is still the firm’s preferred exposure to financial services tech platforms.

“Australia's adviser market continues to consolidate and modernise, with independent platforms gaining share as wealth management moves beyond the historical dominance of the major banks, AMP and Macquarie. HUB24 is well positioned to benefit from these trends,” he says.

Calling the strategic investment case “compelling”, Abela also cautions that the “pace of innovation in software product development and AI-driven workflows makes it difficult to accurately assess how competitive dynamics may evolve, how HUB24 will respond, and what the long-term implications could be for pricing power and profitability”.

As things stand, the investment case for HUB24 is on hold until its August results announcement, with the portfolio manager unsurprisingly keen to hear the management team’s commentary on the impact of AI.

“The upcoming result should provide greater clarity on whether HUB24 can continue to balance growth, innovation and profitability in this evolving environment.”

Takeaways

The key lesson from HUB24’s stock price slide: “Even high-quality businesses can experience significant multiple compression when investors begin to question future capital requirements, competitive intensity or the durability of industry leadership.”

#2 - Qoria (ASX: QOR)

Qoria is an interesting case, with a takeover bid for the digital safety and student wellbeing solutions provider recently being approved and its shares now suspended from trading. Eley Griffiths’ Ben Griffiths had backed Qoria for 2026 and expected the business to move into at least a cashflow neutral position, and ultimately become cashflow positive.

Then the SaaSpocalypse struck. The majority of the plunge occurred early in the year but it never recovered and was down 59.83% when trading was suspended.

Griffiths says he was “pretty confident” in his initial analysis, but had not seen the software rout coming.

“The continuing software stock sell off was certainly unforeseen and the dampening effect that would have on investor interest,” he adds.

“If anything, the regulatory drive in the area of child protection whilst navigating the internet has only increased. Witness the calamitous stock price of US-listed Roblox, a child/teen focused business that provides online gaming and tutorial services. It continues to feel the wrath of governments and regulators across the globe.

“Anthropic’s Claude unveiled a cyber security AI model, Mythos, around this time and this was a shot across the bow for us that AI-driven change was afoot in the space.”

“Qoria received a takeover bid in the early days of February at a 100% premium to last trade from US group Aura Consolidated. Mergeco looks something like 2/3 Aura and 1/3 Qoria, somewhat diluting the defensive and unique qualities that appealed in Qoria back when we did our work.”

Eley Griffiths is going to keep an eye on the newly merged group, but they had progressively sold down their position after the takeover bid and was off the register by early March.

“Our motivation to sell was informed by all of the above factors. With portfolios like ours we have a ready and available sample space from which to select new investment candidates. It is a wise investor that folds when the original investment thesis shifts somewhat.”

Takeaways

The key lesson from Qoria’s stock price slide: “A none too subtle reminder that catching falling knives is an occupational hazard for fund managers, even one that has seen a few cycles! Despite the fact that the fundamental picture was improving and that Qoria had fallen 35% at the time of recommendation, you never quite know how to calibrate a precise margin of safety to protect your unitholders.”

#3 - SAP (ETR: SAP)

German enterprise software company SAP has seen a gradual (and sometimes sharp) decline in its stock price since the middle of last year. When Magellan Investment Partners' Alan Pullen singled the firm out as his top growth stock for 2026, it was based on its strong fundamentals and its transition from an on-premises solution to the cloud.

Unfortunately, the slide has continued and SAP is down 32.30% for the year, but Pullen argues this is thanks to sector rotation rather than company specific issues; i.e. another victim of the SAASpocalypse.

“SAP’s company specific performance has been solid over the first half of the year, with Q1 underlying earnings-per-share rising 20% yoy driven by a 30% increase in revenue for their cloud Enterprise Resource Planning software, in line with the investment thesis. Our earnings forecasts and valuation estimate have both increased over the period,” he says.

“The main cause of the share price weakness has been a sector wide sell-off in software stocks due to fears of AI disruption, the so-called SaaSpocalypse. In a related trend, bubble-like conditions have emerged in semiconductor stocks and other data centre supply chain ‘trades’, resulting in rotation out of other parts of the market including SAP.

“Finally, geopolitics was a small headwind, with some concerns that the war in the Middle-East may delay some sales.”

Far from dissuading Pullen, SAP’s tumble coming as part of the indiscriminate AI sell-off has done nothing to shake his confidence in the investment thesis.

“SAP’s software is deeply embedded in customer workflows and acts as a system of record for global enterprises, supported by proprietary data and network effects,” he explains.

“These sustainable competitive advantages contribute to the company’s economic moat and are unlikely to be disrupted by AI. In fact, they allow SAP to act as an orchestration layer for AI agents, providing trusted data and governance to allow enterprises to utilise AI effectively and safely.”

In line with this confidence, the Magellan Global Opportunities Fund has actually added to its position in SAP. The fund determines position sizing through a combination of quality and intrinsic value support, subject to risk constraints.

“SAP’s quality remains robust and the discount to intrinsic value has increased, resulting in an increase in the stock’s position sizing within the portfolio.”

Takeaways

The key lesson from SAP’s stock price slide: “In the short-term the market is a voting machine, and this is especially evident in today’s short-term, speculatively driven, market. Stocks can move away from intrinsic value for extended periods, and move further than you think.

“But in the long-term the market is a weighing machine, returning stocks to their fair value. In times like these it’s especially important to have a disciplined investment process. To not be driven by greed or fear, but to invest based on fundamentals in order to grow investors’ wealth over the long-term.”

#4 - Dimerix (ASX: DXB)

Dimerix was, in the words of Joel Fleming from Yarra Capital Management, a “high risk, high reward” pick. Given the clinical-stage biopharmaceutical company is down 56.36% for the year, that certainly seems like a fair assessment.

As he flagged when making the pick, Dimerix was in the trial phase for a rare kidney disease drug treatment.

“We believed that the company would have a reasonable chance of pushing forward with an interim analysis for accelerated approval of its DMX 200 Drug targeting Focal Segmental Glomerulosclerosis (FSGS),” Fleming says.

“While the upside remains and we retain confidence in a positive outcome, the timing has been pushed out. In the short term the company is in a holding pattern given the time horizon (1H CY28) for the all-important trial results.”

Unlike the other growth picks that were all hammered by the SaaSpocalypse, Fleming says Yarra simply got the timing expectations wrong. That doesn’t mean he is selling out of the position, opting instead to hold firm.

“If anything, I think the odds of success have improved and we are just dealing with a longer timeframe. The company continues to successfully pursue licensing deals, most recently with Everest Medicines for Greater China, South Korea and South-East Asia. There is an unmet need, strong partners in place, and we now just have a longer wait than we had hoped,” he says.

“There is clearly an opportunity cost given the revised time frame. We believe it’s worth holding the position here and look for opportunities to top up on any significant weakness.
“Patience is something that has tended to serve us well, and I think the holding cost versus the return potential when running a portfolio of 40-55 names means it deserves to keep its spot.”

Takeaways

The key lesson from Dimerix’s stock price slide: “You always wish you own more stock when things go well, and when they don’t you wish you had none. Given the risks around a product going through clinical trial, we appropriately sized the position given the potential risk/return trade-off. We have been early when looking now at the acceleration of the process but remain as positive today on the upside as we ever have been.”