Australian Equities

Dear Investor,

We provide this monthly report to you following conclusion of the month of December and the 2024 calendar year.

The TAMIM All Cap Fund was up +0.35% (net of fees) during the month, versus the Small Ords dand the ASX300 both down -3.07%.

Once again we finished the calendar year with an exceptionally strong performance where in CY2024 the fund was up +28.93% net of fees. This follows CY2023 net return of +31.25%.

For comparison, in 2024 the ASX300 was up +11.37% and the Small Ords was up +8.37%. In the US the S&P500 was up +23.00% and the Nasdaq was up +24.9%, both following a similarly strong performance in 2023.

Since taking over the portfolio management of the strategy on 1/1/2019 the Fund has annualised +17.73% pa net of fees over the 6 year period. This positions us as one of the best performing funds in Australia for mid/small caps over that time period.

The US markets were once again led by the leading tech stocks (Mag7) doing most of the heavy lifting. The AI technology revolution is gaining pace and we believe is of the same or greater magnitude than the Dotcom era of the 1990s. We believe AI will have greater benefits to business productivity and human advancements than what the internet enabled.

We see this as the early investment phase in the infrastructure phase of the AI cycle and we are now starting to see the beginning of the applications layer phase, or in other words, the business models that are emerging to utilise and commercialise AI and develop business models and applications around it.

We have said this in the past but we are now 2+ years in this current bull market which began early 2023. Historically, bull markets that make it to their 2nd year anniversary tend to continue and last an average of 5.5 years. Every 20 years we have seen bull markets average up to 12 years in length and those were driven by tech/industrial revolutions. We believe the current AI advancements will deliver such a bull market in the years to come.

As we go to print, Donald Trump has been inaugarated as the 47th president of the US. We see the Trump administration as extremely business friendly and we believe his many policies will lead to strong GDP growth for the US, and hopefully a reduction in their government debt.

With this pro business backdrop and the tailwinds of further interest rate cuts – we are confident both will drive a continued strong US economy and bouyant markets. The ASX will follow once the RBA begins cutting rates this year and we get through the federal elections in May.

Historically the first year of a new president in the US starts off tentatively before picking up and delivering solid returns in the 2nd half of the year. History doesn’t always repeat itself but it does rhyme. It’s also important to keep in mind, that on average and especially during bull markets, we expect 2-3 pullbacks every year. These pull backs vary from 5-15% and are great buying opportunities. This year will be no different.

We are quite excited about the portfolio holdings in the fund as we head into 2025 and see significant upside ahead – just as we flagged a year ago heading into 2024. Last year we made some mistakes in some key holdings which cost us significantly in further upside. We have reflected on these and will try and improve.

Some learnings for example are position sizing when a stock doesn’t perform for a period of time even though the valuation looks attractive. In other words – in future we will try not to swim against the tide for too long. There’s a reason why stocks stay/look cheap for too long and we must respect that.

Finally we look forward to the upcoming quarterly updates in January and the important and catalyst rich reporting period in February. We also expect M&A activity to pickup post results in February and although we werent fortunate enough in the second half of last year from an M&A perspective, we still believe several holdings are ripe for a takeover.

We provide a brief commentary on portfolio updates during the month in the portfolio section of the report. We look forward to providing further updates in our next monthly report in February.

Sincerely yours,

Ron Shamgar and the TAMIM Team.

EML Payments (ASX: EML) unexpectedly announced the CEO was terminated and the Chair, Anthony Hynes, will become executive chair in the meantime. It’s never good to see a recently appointed CEO get moved on so quickly but in this case we believe there was no culture fit and we believe this will end up being very fortunate move for shareholders.

The chair is a very successful entrepreneur- having sold his company in 2021 for AU$900 million. The fact that he has chosen to step in and take the helm is extremely positive in our mind. We believe there’s a high likelihood he will be come the permanent CEO in due course.

The board also reaffirmed guidance and the recently announced strategy from the AGM. EML is ripe for a takeover this year and we believe it’s only a matter of time before one emerges. At $300 million EV, no debt, and a clear path to $95 million in Ebitda next 3 years, EML offers huge upside on successful execution.

Superloop (ASX: SLC) has entered into an agreement to acquire Optus’ subsidiary Uecomm Pty Ltd for $17.5 million, which will add over 2,000 kilometres of high-capacity fibre assets (including 800 kilometres of owned duct). The fibre network is located across Sydney, Melbourne and Brisbane/Gold Coast CBDs and metropolitan areas. It will also provide access to more than 1,900 buildings and approximately 50 data centres.

This acquisition will increase the size of SLC’s network in key metropolitan areas, complementing their existing network and expanding their high-speed data and internet service offering across their three segments.

More importantly the location of the assets also boosts their Smart Communities ambitions, lowering capex connections to new buildings and broadacre developments. While the initial contribution to EBITDA will be neutral in the first year, the acquisition provides SLC greater control over a broader fibre network and will result in longer term cost and revenue synergies.

We believe Optus was a willing seller and there wasn’t a proper sales process. We have seen Large conglomerates sell assets at bargain prices from time to time and we believe this is such a case. Interestingly the current SLC CFO was the architect of the build for Uecomm prior to Optus acquiring the company for circa $200 million about 20 years ago. To replicate such a network today would cost over $150 million versus the $17.5 million SLC paid.