Stocks to Fire and Hire: Emanuel Datt on Small-Caps

Bapcor vs Pexa

Emanuel Datt, Founder and Portfolio Manager of the Datt Small Companies Fund, was recently featured in Livewire Markets’ “You’re fired! 6 ASX stocks to fire, 6 to hire – small-cap edition.”

In this feature, Emanuel shared his perspective on two companies that illustrate the sharp divide in today’s small-cap market. He outlines why Bapcor (ASX: BAP), once a high-quality auto parts retailer, has slipped into value-trap territory, and why Pexa (ASX: PXA) stands out as a rare combination of monopoly economics and new growth opportunities.

Stock to Fire – Bapcor (ASX: BAP)

Bapcor (BAP) has transitioned from a high-quality automotive aftermarket retailer to a potential value trap.

The core investment thesis: defensive earnings from trade parts, stable growth in retail and optionality in Asia, has eroded under poor execution and excessive management churn.

The July downgrade, cutting NPAT guidance to $31–34m, has crystallised long-held concerns about cost control and strategic clarity.

On valuation, even at around $3.50 per share, BAP trades on an EV/EBIT multiple in the mid-teens despite a significant negative total shareholder return over five years in contrast with peers.

We believe that intrinsic value lies closer to $2.50 per share, implying the stock remains overvalued at current prices with limited positive catalysts on the horizon.

Stock to Hire – Pexa (ASX: PXA)

Pexa offers a rare combination of monopoly economics, new leadership discipline, and emerging growth optionality. The appointment of a refreshed management team has sharpened strategic focus, with clearer capital allocation priorities and increasing traction in its offshore expansion push.

The core Australian exchange remains a cash-generative near monopoly, with more than 90% market share and resilient margins. The company trades at an attractive multiple despite its infrastructure-like revenue profile.

Pexa is also well positioned to integrate AI across workflow automation, fraud detection, and data services. These developments should enhance scalability and unlock new revenue streams in property analytics.

We recently increased our position due to the combination of stronger management discipline, prudent capital stewardship, and imminent UK expansion optionality as catalysts for a re-rate over the medium term.

Read the full article from Livewiere here.

About the Datt Small Companies Fund

The Datt Small Companies Fund invests in a focused portfolio of Australian small-cap companies with resilient balance sheets and long-term growth potential. Small-cap stocks often present overlooked opportunities, and through disciplined stock selection and independent research, the Fund seeks to capture these opportunities while managing risk. The objective is to deliver attractive risk-adjusted returns across different market conditions for wholesale investors seeking high-conviction exposure to small-cap equities.

Our disciplined, research-driven process identifies undervalued companies in Australia with durable long-term growth drivers. We invest alongside our clients, ensuring full alignment of interests.

To learn more or to invest in the Datt Capital Small Companies Fund, visit our Fund page or contact our Head of Distribution, Daniel Liptak, via call at 0419 004 524 or email at daniel@datt.com.au.