This week’s TAMIM Reading List spans finance, technology, and human resilience. As markets shift, we explore perspectives on downturns, why no one should root for a recession, and the growing global pivot away from U.S. investments. Meanwhile, AI’s boom is reshaping power grids, and China is embracing DeepSeek’s potential. We remember the legacy of Daniel Kahneman, dissect Boeing’s worst years, and uncover the hidden insights galaxies hold beyond the cosmic microwave background. Plus, relive the greatest sports moments of the past 25 years, follow the takedown of a crime ring targeting pro athletes, and learn the simple secret to better gut health.
The February reporting season presented one of the most dynamic market environments in recent memory. Earnings results triggered sharp movements, with investors swiftly adjusting their positions based on performance. This created significant shifts in valuations, with certain stocks experiencing price swings of -20% or more in response to earnings surprises.
Portfolio Positioning & Strategic Adjustments
For sophisticated investors, navigating this environment requires a proactive and disciplined approach. Identifying companies with strong fundamentals while managing risk exposure is critical in volatile conditions. Where businesses show genuine structural weaknesses, it is prudent to reassess positions and reallocate capital strategically. At the same time, market overreactions can present opportunities to build on high-conviction holdings at more attractive valuations.
A well-structured portfolio should emphasise quality, resilience, and long-term growth potential. Investors who maintain discipline, refine their asset allocation, and capitalise on market dislocations will likely be well-positioned for the months ahead. Some of the key themes and opportunities in focus are discussed in this report, with further insights to follow.
Market Correction: A Natural Part of the Cycle
Since mid-February, both Australian and U.S. markets have undergone a healthy reset, experiencing a -10% drawdown. This adjustment has been driven by a combination of policy shifts under the new Trump administration and broader economic recalibrations.
History has shown that such periods of adjustment are common and often necessary for long-term market strength. Notably, the recent drawdown from the February 19th highs represents the fastest -10% correction since the COVID recovery in 2020. Understanding these cycles provides important context for long-term decision-making.
The Trump 2.0 Administration: A Structural Shift
The current administration is implementing key structural changes aimed at strengthening the U.S. economy. The focus is on balancing government spending while fostering private sector growth through pro-business policies, tariff realignments, and strategic incentives.
A pivotal figure in this approach is Scott Bessent, the newly appointed Secretary of the Treasury. With a distinguished career in financial markets, his expertise in economic strategy and capital allocation is expected to drive meaningful, long-term improvements. By streamlining regulations and encouraging domestic investment, these initiatives set the stage for a more efficient and resilient economic environment.
Additionally, with true inflation tracking below 1.5% (according to Truflation), the Federal Reserve is expected to adjust interest rates more quickly than current market projections suggest. As the economy stabilises post-adjustment, a supportive rate environment combined with policy-driven expansion could provide a robust foundation for market performance in the coming years.
(Source: truflation.com)
Market Trends & Historical Context
Short-term volatility is a natural feature of evolving markets, particularly in the first year of a new U.S. presidency. Historically, policy transitions introduce uncertainty in the first half of the year before stabilising as frameworks become clearer.
1. First-Year Presidential Cycle: Historically, the first year of a presidential term sees early volatility, followed by greater market clarity as policies take effect. We are seeing this pattern play out now.
2. Bull Market Trends: We are currently in the third year of this bull market cycle. Historically, the third year tends to be a period of consolidation before the stronger performance typically seen in years 4-6 of an extended market cycle.
3. Intra-Year Corrections: Market cycles regularly include multiple intra-year pullbacks. These drawdowns, often averaging around -14%, have historically been part of broader growth cycles.
(Source: @Mike.Zuccardi)
4. Long-Term Market Participation: Market history illustrates that sustained participation is key to capturing growth. Missing even a handful of the best-performing days each year has historically had a significant impact on long-term returns.
The TAMIM Takeaway: Looking Ahead with Confidence
Periods of recalibration often provide valuable insights into market direction and structural shifts. With a balanced economic strategy, a measured interest rate outlook, and long-term growth drivers in place, we see the current environment as part of a broader trend of innovation-led expansion.
As we move forward, the interplay between fiscal policies, technological advancements, and shifting economic frameworks is expected to create a dynamic environment for strategic positioning. This cycle closely resembles the early 1990s, which preceded a decade-long period of economic and market growth, offering strong potential for disciplined investors.
The world is shifting under our feet. Global markets are being reshaped by technological advancements, economic realignments, and geopolitical shifts that demand a new approach to investing.
As investors, it is no longer enough to simply track historical trends or rely on the same old blue-chip strategies, we must look forward. The key to success in 2025 and beyond is identifying long-term structural trends and positioning accordingly.
In my latest investment presentation, I outlined a global roadmap for navigating this new environment. The short version? The world is changing, and investors must adapt.
The Global Economic Pivot: A Market in Flux
I often say that “the world is being turned upside down,” and I mean it. This is not hyperbole, it’s a reflection of fundamental changes in how economies function, how industries operate, and where capital flows.
While equities remain the preferred asset class, the real challenge is knowing which ones to own. Investors need to go beyond the headlines and dig deeper into valuation, resilience, and sectoral positioning.
The U.S. Market: The Mega-Cap Illusion
Many investors remain captivated by a handful of mega-cap technology stocks in the United States. These companies dominant as they may be now trade at valuations that are, frankly, difficult to justify.
The top seven mega-caps in the U.S. market now account for an outsized share of market capitalisation, creating a distorted investment landscape.
These stocks trade at 30 times earnings, compared to just 16 times earnings for small and mid-cap companies.
I see much better value in smaller-cap stocks. The S&P 600 Index of smaller companies provides a more reasonable entry point, with businesses that have adapted to economic pressures and are better positioned for resilience.
Reindustrialisation: America’s Next Big Investment Theme
One of the biggest themes for the decade ahead is reindustrialisation, the process of bringing manufacturing and supply chains back to American shores.
This is not just political rhetoric; it is an economic reality.
Infrastructure investment is essential. The American Society of Civil Engineers has given U.S. infrastructure a failing grade – this must change
Manufacturing is being reshaped, and companies involved in industrial automation, logistics, and materials science stand to benefit
Supply chain resilience is now a corporate priority, creating new demand for domestic production capabilities.
This movement presents a once-in-a-generation investment opportunity, particularly in sectors that support domestic production and industrial transformation.
The AI and Energy Nexus: The Next Critical Shift
Much has been written about AI’s potential, but one overlooked consequence is its massive energy consumption.
Artificial intelligence models require enormous processing power, which in turn demands significantly more electricity.
Energy grids will need upgrading, and those who control energy infrastructure stand to gain.
Where are the opportunities?
Power generation companies that can meet surging electricity demand
Grid infrastructure providers upgrading systems for efficiency
Nuclear energy resurgence, as plants extend their lifespans to accommodate AI-driven power need
Renewable energy and traditional energy sources integrating to support a sustainable future
This isn’t speculation – it’s a necessity. Data centers, cloud computing, and AI workloads will drive the next wave of energy investment.
Japan: The Overlooked Gem in Global Markets
One of the most underappreciated investment stories today is Japan.
Japanese companies have historically underperformed due to poor corporate governance.
But now, things are changing companies are becoming more shareholder-friendly, boosting dividends and share buybacks.
At the same time, Japan is home to some of the world’s most technologically advanced companies.
For investors willing to look beyond the usual suspects, Japan presents a compelling valuation opportunity.
The China Factor: Mutual Dependency, Not Decoupling
While many analysts continue to discuss “decoupling” from China, the reality is far more complex.
China remains deeply entrenched in global supply chains.
The U.S. and China are economically interdependent, whether policymakers admit it or not.
Instead of a total separation, I expect a future of “mutually agreed dependency.” While political rhetoric may suggest otherwise, the economic reality means trade will continue just under different terms.
Europe: Defense and Infrastructure in Focus
Europe often flies under the radar, but investment opportunities exist, particularly in:
Defense spending, as nations reassess military budgets in response to geopolitical tensions.
Infrastructure investment, as European governments allocate funds to modernisation.
While growth in Europe remains sluggish, targeted investments in these sectors could yield strong returns.
Investment Playbook for 2025
Given this backdrop, where should investors focus?
Look beyond mega-cap tech stocks. The best opportunities are in smaller, more reasonably valued companies.
Reindustrialisation is real. Companies involved in infrastructure, manufacturing, and logistics will benefit.
Energy is undergoing a transformation. AI-driven demand will push investment into power grids and energy production.
Japan is an underappreciated market. Improving governance and attractive valuations make it worth considering.
China remains an economic force. The West may reduce reliance, but full decoupling is unrealistic.
The Tamim Takeaway
The investment landscape in 2025 is undergoing a profound transformation, and investors who fail to adapt will find themselves on the wrong side of history.
U.S. markets remain strong, but investors should seek value beyond the overvalued mega-caps.
AI’s rise will drive unprecedented energy demand, making power infrastructure a key investment theme.
Japan is one of the most attractive, yet ignored, opportunities in global markets.
China remains deeply interconnected with global markets, making a full economic break unlikely.
Europe’s defense and infrastructure investments will provide new openings for investors.
As we move through 2025, the best investors will be those who embrace change, seek value in underappreciated markets, and stay ahead of long-term structural shifts.
At TAMIM, we remain committed to spotting these emerging trends early and investing with conviction.
The world is changing – make sure your portfolio is changing with it.
This week’s TAMIM Reading List unpacks the fine line between financial wisdom and deception. Learn how to protect your parents from scammers and why so many investors fall for financial traps. As crypto stirs controversy, Cliff Asness takes aim at the idea of a “Crypto Fort Knox,” while the president faces pressure over a bitcoin bailout. In a world where everything seems to be on sale, are discounts even real? We also explore radical ideas on how the mind emerges from matter, the lessons from 150 years of market crashes, and why government spending plays a crucial role in GDP. Dive in for insights on finance, philosophy, and survival in uncertain times.
The ASX continues to be a hub for fintech innovation, with digital payments playing a crucial role in reshaping financial transactions and business operations. As businesses transition toward cashless transactions, demand for seamless, efficient payment solutions continues to rise. Tyro Payments (ASX: TYR) has positioned itself at the forefront of this transformation, providing tailored solutions for small and medium-sized enterprises (SMEs). With a focus on technology-driven growth and financial discipline, the company seems well-placed to capitalise on the evolving payments landscape.
Strong Financial Performance
Tyro Payments (ASX: TYR) has solidified its position as a leading fintech player, reshaping payment solutions for small and medium-sized enterprises (SMEs) through technological innovation, strategic market expansion, and disciplined financial execution.
Tyro’s financial turnaround has been remarkable. The first half of FY25 marked its most profitable period to date, underscoring the company’s focus on operational efficiency and strategic growth. Since its IPO, Tyro has achieved an 18% compound annual growth in gross profit, rising from $68 million to $112 million, alongside 12x EBITDA growth, reaching $33 million. The company has also transitioned from an $11 million loss to a $10.5 million profit. These results highlight a well-executed strategy centered on disciplined cost management and targeted expansion into high-growth sectors.
(Source: Tyro Payments Investor Presentation)
Beyond these financial metrics, Tyro’s disciplined approach to cost control and margin improvement demonstrates a sustainable growth trajectory. The company has successfully optimised transaction processing costs, renegotiated key supplier agreements, and enhanced merchant retention, further strengthening its bottom line. This ability to drive profitable growth, even in a highly competitive market, reinforces Tyro’s position as a leading payments provider for SMEs.
Healthcare Payments as a Growth Engine
The healthcare sector is a key growth engine for Tyro. With Australia’s healthcare payments market expected to reach $100 billion annually, Tyro processes $7 billion, capturing a 7% market share. The company has outpaced industry growth with a 24% compound annual growth rate in healthcare transactions. Tyro’s edge lies in its omni-channel capabilities, seamlessly integrating online and in-person payment solutions. The company’s proprietary technology connects with over 120 payment providers, including private health insurers and Medicare.
(Source: Tyro Payments Investor Presentation)
In key healthcare segments, Tyro has established a strong presence, holding a 30% market share in general practitioners, 2% in allied health, and 1% in dental. These figures highlight a significant growth opportunity, particularly in underpenetrated sectors such as allied health and dental. Given the ongoing digital transformation in healthcare, Tyro’s ability to offer seamless payment solutions tailored to industry needs positions it for further expansion.
Additionally, as healthcare providers increasingly adopt integrated payment and billing systems, Tyro’s technology enables a frictionless experience for both practitioners and patients. By leveraging its deep integration capabilities, Tyro can continue to capture market share in this highly resilient and growing industry.
Expansion into High-Growth Verticals
Tyro is entering a new, high-potential vertical with a total addressable market of $5-10 billion. In collaboration with a market leader holding over 50% market share, the company aims to automate manual processes and enhance merchant value. This initiative is expected to generate $2-3 billion in transaction value over three years, with a gross profit potential of approximately $39 million and a target market penetration of 30-40%.
The decision to expand into this sector aligns with Tyro’s broader strategy of targeting industries where payments are still largely fragmented or inefficient. By providing a streamlined, automated solution, Tyro not only enhances the merchant experience but also unlocks significant long-term revenue potential.
Another key advantage of this vertical expansion is the opportunity for cross-selling. Tyro can leverage its existing merchant base to introduce new products and services, such as embedded finance solutions and working capital lending. This not only deepens customer relationships but also increases transaction volumes and recurring revenue streams.
Banking Services Growth Strategy
Tyro’s banking division is another significant growth opportunity. Currently contributing 7% of gross profit, the company aims to increase this to 20% through its partnership with Constantinople, an Australian fintech platform. The banking expansion strategy includes transaction accounts, cash flow lending solutions, term deposits, and the potential to settle $44 billion in processed payments through Tyro bank accounts.
Banking services represent a natural extension of Tyro’s core business. By integrating financial products with its payment solutions, Tyro can enhance merchant stickiness and generate higher-margin revenue streams. The company’s strong merchant relationships provide a unique advantage in cross-selling banking services, positioning it as a trusted financial partner for SMEs.
Moreover, as traditional banks continue to scale back their SME offerings, Tyro’s ability to provide fast, tailored financial solutions will become increasingly valuable. Whether through cash flow lending, deposit accounts, or transaction banking, Tyro has a significant opportunity to disrupt the SME banking landscape.
Competitive Advantage Through Technology
Tyro’s proprietary switch infrastructure gives it a cost advantage over outsourced solutions, enabling more efficient transaction processing. Unlike many competitors that rely on third-party processors, Tyro controls its entire payments stack, allowing for greater flexibility, cost efficiency, and improved service delivery. The company prioritises industry-specific payment solutions over generic offerings, ensuring a differentiated market position.
Additionally, Tyro’s focus on automation and AI-driven analytics further strengthens its competitive advantage. By leveraging data insights, Tyro can help merchants optimise their payment operations, reduce fraud risks, and improve transaction approval rates. These capabilities not only enhance the merchant experience but also contribute to higher customer retention and long-term profitability.
Financial Strength and Acquisition Strategy
With $155 million in cash and a robust balance sheet, Tyro is exploring capital management strategies, including potential share buybacks, subject to APRA approval. The company is also evaluating strategic acquisitions to enhance its technological infrastructure and market reach. One compelling opportunity is the acquisition of Smartpay (SMP). By processing SMP transactions on its in-house switch instead of through Cuscal, Tyro could unlock significant cost synergies, potentially adding $40 million in EBITDA.
(Source: Tyro Payments Investor Presentation)
The acquisition of Smartpay (ASX: SMP) would not only be accretive from a financial standpoint but also strategically beneficial. It would allow Tyro to consolidate market share, expand into new customer segments, and further strengthen its industry position. Additionally, by bringing Smartpay’s transaction volume onto its in-house platform, Tyro can drive additional cost efficiencies and revenue synergies.
Future Outlook
CEO, John David has outlined a clear roadmap focused on further penetration in the healthcare sector, expansion into new industry verticals, leveraging macroeconomic recovery in hospitality and retail, and advancing banking services to drive long-term revenue growth. With a combination of organic growth initiatives and potential strategic acquisitions, Tyro is well-positioned to capitalise on evolving market dynamics.
Looking ahead, the broader payments landscape continues to shift towards integrated solutions that offer greater convenience, security, and efficiency. Tyro’s ability to stay ahead of these trends by developing industry-specific payment and financial solutions will be critical in maintaining its growth trajectory. By continuously investing in innovation and merchant-centric offerings, Tyro can reinforce its position as a leader in the fintech space.
TAMIM Takeaway
The evolving payments landscape presents substantial opportunities for companies that offer tailored, technology-driven solutions. Tyro’s strategic focus on solving specific merchant challenges positions it well for sustained growth and potential market leadership. Trading at 5.3x EBITDA, Tyro appears significantly undervalued, with considerable upside potential. Given its previous takeover bids at $1.50+ per share in 2022, it remains an attractive acquisition target. From an investment standpoint, Tyro’s strong financial performance, technological advantage, and market expansion strategies suggest significant potential for long-term value creation.
