Australian Equities

Dear Investor,

We provide this monthly report to you following conclusion of the month of January 2025.

The TAMIM Small Cap Fund achieved a net return of +0.87% for the month, versus the Small Ords which was up +4.59%.

Over the last 12 months the fund is up +21.33% net of fees versus the Small Ords up +12.33%.

Stocks performed well during the month driven by optimism from the Trump inauguration and the pro business policies of this incoming administration. In Australia, consumer optimism is improving but still below historical norms, yet most economists are forecasting rate cuts in February or March. We view any rate cut as very positive for local equity markets and especially small/mid caps.

With US markets finishing the month well, Bulls have reason to smile – historically, when the S&P500 index rises more than +2% in January, it’s a good omen. Since 1951, such starts have led to average annual returns of 18.4%, with positive years being 88% of the time. Let’s hope this trend continues.

 

So the question remains are markets overvalued? In the case of the US market and valuations, there’s no doubt the 10 largest stocks PE ratio is high. Looking back at the internet boom during the dot com bubble, and similar to that the 10 largest stocks then had a high PE ratio although today these stocks have much higher earnings than those in the earlier boom, given their market weight is much higher now.

Another significant difference today is that the remainder of the market, the other 490 stocks in the S&P500, the PE ratio is not very high, and in fact trading below the long term average of the market. Looking back at the dot com boom whereas the PE was high for the broader market and not just the 10 largest stocks.

And this is also the case globally, with other markets not having high PE ratios currently, arguably in part because they don’t have the same world leading tech stocks as the US. This is in stark contrast to the dot com bubble whereas global stocks had high PE ratios during the internet boom.

So to summarise it seems to us that over valuations are more confined this time around to a handful of stocks in a specific sector, and any correction in these stocks, might not affect global markets as broadly as in the past.

Finally 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 March following the February results season.

 

Sincerely yours,

Ron Shamgar and the TAMIM Team.

Praemium (ASX: PPS) reported Q2 highlights during the month with some strong momentum in the business and new clients signed that will drive continued FUM flows to the business next 12 months. Highlights include:

Total funds under administration (FUA) of $62.1 bn (31 December 2023: $48.3 bn, up 29%). PPS’s next generation IDPS Spectrum achieved quarterly gross and net inflows of $69m , almost wholly in the month of December 2024, contributing FUA of $72m for the quarter.

Platform $30.2 bn (31 December 2023: $22.9 bn, up 32%

• • Spectrum $72m
  • Separately Managed Accounts (SMA) $12.5 bn (31 December 2023: $10.3 bn, up 20%)
  • Powerwrap $13.5 bn (31 December 2023 $12.5 bn, up 8%)
  • OneVue $4.2 bn ($4.1 bn at 15 April 2024 acquisition)

Quarterly net inflows of $371m (quarter to 30 September 2024: $139m)

• • Spectrum net inflows of $69m
  • SMA net inflows $261m (quarter to 30 September 2024: $165m)
  • Powerwrap net inflows $78m (quarter to 30 September 2024: net outflow $60m)
  • OneVue net outflows $37m (quarter to 30 September 2024: net inflow $34m)

PPS share price has more than doubled since we took a position last year. We took the opportunity to take profits in the stock as the share price reached our short term valuation target. We maintain a smaller position heading into the February results period where we will reassess our position.