When quality growth stocks take a tumble, it’s easy to hit the panic button. But for Beyhan Irmako, Co-Portfolio Manager of the Ausbil Australian Small & MicroCap Funds, a sell-off is an invitation to build his buy list. This conviction-driven approach, honed through years of experience in research and distribution before stepping into portfolio management at Ausbil, is rooted in fundamental business principles learned in his family’s enterprise: understand your value, be resourceful, and have skin in the game.
Currently, Irmako observes a significant disconnect between strong company fundamentals and their market pricing. Many businesses are delivering consistent results, yet their share prices are lagging as market sentiment shifts, demanding tangible proof over mere promises. In a recent conversation, Irmako shared his insights on where he’s finding value amidst the current market rotation, what’s caught his eye on his watchlist, the key macroeconomic signals he’s tracking, and why these challenging periods can be exceptionally rewarding for investors who back their convictions.
Current Investment Strategy: Adding to Quality at Attractive Valuations
Irmako’s most recent investment activity involves adding to his existing stake in Generation Development Group (ASX: GDG). The recent downturn in growth stocks has brought GDG’s valuation to a more appealing level, now trading below BlackRock’s entry point of $4.15.
The core investment thesis for GDG revolves around the recently implemented ‘Division 296’ superannuation tax. Irmako believes this presents a significant opportunity to elevate investment bonds from a niche product to a mainstream financial tool. Even a modest shift of concessional super contributions towards investment bonds could unlock substantial growth, an upside that he feels is currently underestimated by the market.
Expanding the Watchlist: EnergyOne on the Radar
While Irmako’s fund typically filters out unprofitable and illiquid companies, keeping its watchlist well-defined, the team is currently conducting thorough due diligence on EnergyOne (ASX: EOL). This company offers wholesale energy trading solutions across both Australia and Europe. The expanding addressable market for EnergyOne is driven by the increasing integration of renewables into energy grids, creating new connection points and demand for their services.
With a market share below 20% in Europe and the UK, and an approaching mid-teens Return on Invested Capital (ROIC) profile, Irmako sees a substantial runway for future growth opportunities.
Strategic Trimming: Monadelphous Position Reduced
On the selling side, Irmako’s team has been trimming their position in Monadelphous (ASX: MND). The company has demonstrated strong performance, bolstered by a series of significant contract wins. However, as its valuation approached what the fund considers a relatively full price, they’ve strategically rotated into industry peers trading at lower multiples. This move aims to optimise the risk-reward ratio in their portfolio.
Monitoring Macro Trends: Oil Prices and Inflation Expectations
A key data point Irmako is closely monitoring is the impact of recent oil price spikes on long-term inflation expectations. He’s using the 5-year breakeven inflation rate, a market-implied measure of average inflation over the next five years, as a gauge. While this rate has seen a slight uptick, it remains within historical ranges. This suggests that, for now, markets perceive the oil price shock as transient, especially following commitments to ensure the flow of oil through the Strait of Hormuz.
A Standout Moment: L1 Capital’s Success
A positive highlight from the week was L1 Capital’s announcement regarding the scale-back of cornerstone commitments for the IPO of their new gold LIC, due to over-subscription. This success, following a strong capital raising for their new Global Long Short capability last year, underscores the strength of this founder-led business. Irmako believes L1 Capital possesses all the essential characteristics to build a diversified and successful asset management platform.
The Challenge of Growth Stock Rotation
The most significant market disappointment for Irmako this week has been the sharp rotation out of quality growth stocks. He points to Life360 (ASX: 360) as a prime example, noting that the company has continued to de-rate despite delivering two consecutive quarterly earnings beats and strong CY2026 guidance. The market’s demand for concrete results, rather than forward-looking statements, has been evident, particularly after Life360 highlighted the weighting of its earnings towards the second half of the financial year. Irmako explains this is partly attributable to the acquisition of a seasonal advertising business, but maintains that the company’s full-year guidance remains conservative, especially considering they exceeded the mid-point of CY25 guidance by 33% last year.
The Genesis of an Investment Career
Irmako’s fascination with markets began in his family’s business, where he developed an early understanding of commerce. This environment instilled in him the importance of a clear value proposition, resourcefulness, and the critical role of “skin in the game.” These foundational principles continue to guide his investment philosophy, particularly in the small and micro-cap space, where he believes they are essential for identifying future market leaders.
Advice for Aspiring Investors
For new investors, Irmako offers a piece of advice he received upon joining Ausbil, encapsulated by Howard Marks’ quote: “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.” He stresses that while simple, this is not easy to implement. Cultivating curiosity to challenge prevailing assumptions and developing conviction in one’s own analysis are invaluable traits for any investor.
Unwinding and Personal Interests
When he’s not immersed in market analysis, Irmako enjoys exploring his shared passion for food with his wife, particularly by discovering new bakeries.
Rapid Fire! 🔥
- Favourite investing book? The Little Book that Beats the Market by Joel Greenblatt. Its profound insights are delivered in a remarkably concise package.
- Favourite investing or finance/markets-related podcast? ‘The Meb Faber Show’ is a top pick due to the calibre of his guests.
- The first thing you read each morning? Bloomberg and a review of overnight market movements.
- Favourite restaurant? While nothing beats Mum’s cooking, living in North Sydney, Piato comes a very close second.
- Something people are surprised to learn about you? In 2014, I served as a reserve goalkeeper for the Central Coast Mariners during a few pre-season games. It was a brief but memorable experience.
