The ASX stock market has gone through one of the largest dips since the COVID crash. The S&P/ASX 200 Index (ASX: XJO) is down 8.5% since 14 February 2025. While market declines can be worrying, brave investors may find that some businesses are trading at the lowest level for many months.
You may have heard of one of the most famous phrases in the investment world: "Be fearful when others are greedy and greedy when others are fearful." This may be applicable at times like now.
According to reporting by the Australian Financial Review, one fund manager has outlined why he's not scared by the market decline and has decided to invest in some of the opportunities he's seeing.
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A fund manager is being opportunistic
Chris Stott from 1851 Capital thinks that the best strategy in this environment is to stick with one's investment process, buy more shares, and hope for the best.
Stott said:
It's a very difficult backdrop to invest right now with the volatility in the president's decision-making.
I've been doing this for almost 20 years, there's always something going on in the world that creates volatility, it's just about sticking to your process and holding your nerve and navigating your way through.
Small caps have certainly had probably the toughest five years in a very, very long time.
While the recent 25 basis point interest rate cut by the RBA was hoped to help ASX small-cap shares, the worsening trade war between the US and various countries has hurt the ASX stock market.
1851 Capital has been taking advantage of the lower prices and investing in names that have fallen hard.
Which ASX stocks are opportunities?
One of the shares that the small-cap-focused fund manager has bought is the investment business Pinnacle Investment Management Group Ltd (ASX: PNI). It invests in other funds management businesses and helps them grow through various services. The Pinnacle share price has declined by 31% since 5 February 2025.
Stott suggests that Pinnacle has a "very bright" outlook for the next few years.
Another ASX stock that 1851 Capital has invested in is Iress Ltd (ASX: IRE), an ASX fintech share. Stott believes the 15% decline from 17 February 2025 is "overdone".
Two of the other businesses that the fund manager has invested in include Integral Diagnostics Ltd (ASX: IDX) and Collins Foods Ltd (ASX: CKF).
After meeting management of over 100 ASX stocks in the last month or so, Stott is planning to put even more money to work. He said:
It is difficult but, typically, you want to be buying when there is maximum fear on the street, a capitulation. We're not quite at that point, but we are getting close.
We're very confident on the outlook. We think the interest rate outlook is conducive to equities outperforming over the next few years, and so we see this recent sell-off as more of a correction rather than a crash.
