Rudi's View | 4:57 PM
Conviction Buys and sector favourites post the February results season in Australia (including those best to avoid).
By Rudi Filapek-Vandyck, Editor
By Rudi Filapek-Vandyck, Editor
One of the key dynamics that characterised the February results season is investors/traders seemed of the intent to sell certain market segments, no matter what, and a good or even excellent result release was only slowing down that process.
It hasn't gone unnoticed. Datt Capital, in a press release delivered into the FNArena inbox, suggests investors should pay attention, and treat such behaviour as longer-term opportunities.
This too shall pass?
The asset manager assures a time will come when fundamentally sound companies will again start trading in line with their profits and fundamentals. The divergence currently occurring should be seen within such framework.
“What surprised us most this reporting season was the clear divergence between the underlying earnings delivered by companies and the way markets reacted to those results."
Another snippet worth highlighting:
“Businesses with structurally strong earnings drivers were not necessarily rewarded in the short term. In our view, that has opened a broader opportunity set for disciplined investors. Over time, markets will once again differentiate between companies with durable competitive advantages and those facing deeper structural challenges.”
One of the themes that has kept a firm lid on technology and software companies in particular is the threat of industry disruption through AI development. Datt does not hesitate to take the opposing side of the public debate:
"(...) many technology companies remain strongly positioned as they possess access to proprietary or regulated data sets that cannot easily be replicated. These data sets effectively form a structural moat that is hard to compete against.
“Many of these businesses also operate under multi-year contracts with customers, creating a stable revenue base.
“As AI tools improve productivity, operating margins can actually expand significantly over time.”
Equally interesting is analysis by UBS has come to the conclusion AI will actually increase (not decrease) demand for software developers, and for software applications too. Peers at Citi have formed the same conclusion with regards to data centres and AI supporting hardware and infrastructure.
As reported multiple times over in my writings, many a clear-headed sector analyst has nominated global logistics infrastructure services provider WiseTech Global ((WTC)) as one prime candidate whose share price punishment (if we can call it that) seems overcooked, even if there is no short-term relief on the horizon when Iran, Hormuz, inflation, bond yields and RBA tightening continue to dominate investors' mindset.
Datt too has nominated WiseTech Global as structurally "well positioned", in contrast to the steep weakening that has pulled down the share price to circa $47 from $115-plus in July last year.
Another trend highlighted is an increase in M&A for smaller cap companies, equally seen as yet more evidence current market sentiment is too short-term focused.
And yes, history does show this too shall pass, eventually.
See also:
https://fnarena.com/index.php/2026/03/11/rudis-view-taco-time/
https://fnarena.com/index.php/2026/03/04/rudis-view-a-season-of-large-cap-winners/
https://fnarena.com/index.php/2026/02/26/rudis-view-positives-from-february-results/
https://fnarena.com/index.php/2026/02/19/rudis-view-more-surprises-led-by-cba-bhp/
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