A rare buying opportunity in 1 of Australia's top shares?

Thanks to its record of delivering business growth over the long-term, I'm calling L1 Group Ltd (ASX: L1G) one of Australia's top shares.

Since the L1 Group share price has fallen 16% since 26 August 2026, it could be a good time to consider buying.

L1 Group is a fund manager offering several strategies that investors use, including a long-short strategy, a global long-short strategy, a gold strategy, international share strategies, and a UK residential fund.

I think this is a great time to invest in one of Australia's top shares for the following reasons.

Volatile ASX share opportunity

Fund managers are often among the most volatile stocks on the market. This is because the share market can experience significant ups and downs, which can severely impact funds under management (FUM) and therefore the company's monthly profitability.

But I think periods of decline can be the best time for brave investors to invest.

Don't forget that the business has experienced strong FUM growth, which is a more important driver than ultra-short-term FUM movements. In FY26, L1 Group's FUM increased by around 17%. It also said that quarterly flows improved every quarter in FY26.

According to the projection on CMC Invest, the L1 Group share price is now valued at 20x FY27's estimated earnings.

Strong long-term investment performance

One of the most important drivers of a fund manager's performance is the returns of the funds.

L1 can point to strong performance in both FY26 and the long term, particularly in what I consider the most important strategy. In fact, the long-short strategy has returned an average of 20.7% (net) per year between September 2014 and August 2026. I think that level of long-term performance earns it the classification as one of Australia's top shares.

Of course, past performance is not a guarantee of future performance. However, those sorts of returns help drive the FUM higher organically. It can also help attract additional client FUM in the coming years.

Future profit growth expected

Following the L1 acquisition of/merger with Platinum, the medium-term outlook for profit margin growth seems very positive.

It recently announced it was increasing its target merger cost synergies from $35 million to around $43 million. The incremental synergy savings are expected to fund ongoing investment in the group during FY27.

On top of that, the company points out a number of core growth pathways. It notes growth of existing funds through performance and flows, joint ventures, extensions of existing strategies (such as the global long-short strategy and gold strategy), and the acquisition of existing investment managers.

According to CMC Invest, the business is projected to grow its earnings per share (EPS) by around 20% in FY27. This should be a strong growth tailwind.

The post A rare buying opportunity in 1 of Australia's top shares? appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has positions in L1 Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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