by Amy | Dec 19, 2024 | Energy, Market Insight
Robert Swift, Portfolio Manager of TAMIM Asset Management’s Global High Convictions Portfolio, dives into the contentious global discourse on nuclear power. With the stakes higher than ever due to growing energy demands, environmental challenges, and geopolitical pressures, he argues for a balanced, fact-driven conversation. Highlighting examples from international markets, Robert explains why nuclear power deserves a fresh evaluation and identifies investment opportunities in undervalued sectors that could significantly benefit from this shift.
The Ideological Divide on Nuclear Power in Australia
Australia’s energy debate has reached an ideological impasse, with nuclear power often dismissed without thorough consideration. This ideological lens has obstructed a rational, data-driven evaluation of nuclear’s potential benefits. Robert Swift emphasises the need to break through this impasse, noting that renewables, while essential, are not free of environmental trade-offs. He highlights that the production and deployment of renewable energy systems, particularly wind and solar, rely heavily on cement, a material that emits a wide range of harmful substances, including but not limited to carbon dioxide, and lithium which is essentially a hazardous material.
Japan: Unlocking the Potential of Mothballed Nuclear Plants
Turning to Japan, Robert highlights how mothballed nuclear facilities represent untapped opportunities. Following the Fukushima disaster in 2011, numerous plants were shut down, leaving valuable assets underutilised. Companies like Kansai Electric, Shikoku Electric, and Hokkaido Electric stand out as possessing significant potential for investors and operators of data centres should the Nuclear Regulation Authority in Japan allow them to re-start.
Hokkaido Electric’s (TYO: 9509) Tomato-Atsuma Power Station
One of the most intriguing opportunities lies with Hokkaido Electric’s Tomato-Atsuma plant. Idle since 2011, this facility boasts a capacity of 4,000 GW. Located near Sapporo, it presents a strategic opportunity for powering data centres, which are increasingly critical in today’s digital economy. Additionally, reintegrating such plants into the energy grid could enhance energy interconnectivity across Asia, providing a reliable and efficient supply chain for regional markets.
Hokkaido Electric’s undervalued stock price reflects market skepticism but could offer significant upside potential as Japan accelerates its nuclear revival. Similarly, Kansai (TYO: 4613) and Shikoku Electric (TYO: 9507), with their own dormant assets, are positioned to benefit from increased political and public acceptance of nuclear power as a sustainable energy source.
Data Centres and the U.S. Energy Challenge
In the U.S., the rapid growth of data centres has placed enormous pressure on an aging power grid. These energy-intensive facilities require consistent and high-capacity power, but existing infrastructure often struggles to keep up. This scenario highlights the urgency for scalable energy solutions, including nuclear.
Robert sees parallels between the U.S. and Japan, noting that the undervaluation of Japanese electric utilities could lead to substantial outperformance. While the market has been captivated by the AI boom, he argues that the underlying infrastructure needed to support this technological revolution is where investors should focus.
Australia: Falling Behind in the Nuclear Race
Australia remains an outlier in the nuclear energy discussion, hindered by political and regulatory barriers. Despite having abundant uranium reserves and a stable geological landscape ideal for nuclear facilities, the country has yet to seriously consider nuclear as a viable component of its energy mix.
Robert stresses that Australia’s reluctance to embrace nuclear could have long-term consequences. While renewable energy remains a vital part of the solution, the integration of nuclear power could address issues of grid reliability and energy storage that renewables alone cannot solve. He believes that a pivot toward nuclear energy is not only possible but essential for meeting Australia’s future energy needs.
Investment Opportunities: Where to Focus
Robert identifies a number of companies and sectors poised to benefit from a renewed focus on nuclear power:
- Hokkaido Electric Power (Japan) (TYO: 9509): Undervalued with substantial capacity in mothballed plants like Tomato-Atsuma, this utility could see significant gains if nuclear power regains traction. West Sapporo is essentially cold and remote; an ideal location for both PWR reactors and data centres which generate heat. If I were a US tech company I would be proposing an offtake agreement for a newly constructed data centre in exchange for a capital injection to reduce the balance sheet leverage of Hokkaido Electric.
- Kansai Electric and Shikoku Electric (Japan) (TYO: 4613): Both have dormant assets that could become critical as Japan’s energy strategy shifts back toward nuclear.
- Data Centre Infrastructure Providers: Companies involved in data centre development, particularly in regions like Sapporo (TYO: 2501), could gain from increased power stability offered by nuclear energy.
- Grid Modernisation Firms: In the U.S., companies upgrading grid infrastructure to handle higher power demands represent another compelling opportunity.
- Renewable-Nuclear Synergies: Firms leveraging a combination of renewable and nuclear technologies to create hybrid energy systems could redefine energy efficiency standards.
The TAMIM Takeaway
The debate over nuclear power requires a shift from ideological posturing to pragmatic problem-solving. With the right investments, countries like Japan and the U.S. are already demonstrating how nuclear power can complement renewables to create a balanced and sustainable energy future. For Australia, the message is clear: by reconsidering nuclear energy, the country could unlock new opportunities for economic growth and environmental stewardship.
TAMIM Asset Management, through its Global High Conviction Portfolio, continues to identify and invest in undervalued companies that stand to benefit from these transformative trends. As the energy landscape evolves, so too will the opportunities for investors prepared to think beyond conventional narratives.
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Disclaimer: Hokkaido Electric Power (TYO: 9509) is held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.
by Amy | Dec 19, 2024 | Weekly list
As the holiday season approaches, this week’s TAMIM Reading List invites you to pause, reflect, and explore. Discover the future of clean energy with a deep dive into nuclear fusion and consider the potential reshaping of the Middle East as Khamenei’s influence wanes. Contemplate the mysteries of the universe as scientists challenge the Big Bang theory, and examine why “Big Medicine” might need a reset. Reflect on the tragic loss of UnitedHealthcare’s CEO and rethink familiar narratives about “waste, fraud, and abuse.” As we wind down the year, let curiosity be your holiday gift to yourself.
📚 The Big Guide to Fusion
📚 Khamenei Loses Everything
📚 Exploding the Big Bang
📚 It’s Time to Break Up Big Medicine
📚 No Place for Violence: Reflecting on the Tragic Death of UnitedHealthcare CEO Brian Thompson
📚 The Fraudulence of “Waste, Fraud and Abuse”
by Amy | Dec 12, 2024 | Weekly list
2024 has been a year of rapid technological advancement and societal change. As we reflect on the year that was, it’s clear that staying informed has been more crucial than ever. Our weekly reading list has been a constant companion, providing insights into the evolving technological landscape, ethical considerations, and societal implications.
From the rise of artificial intelligence and its potential impact on society, as discussed in The AI We Deserve:: Critiques of artificial intelligence abound, to the enduring relevance of philosophical thought explored in Who can claim Aristotle?, our curated articles have covered a wide range of topics. We’ve delved into the complexities of technological advancements, the ethical considerations surrounding their development, and the potential impact on our future.
As we embark on a new year, we remain committed to providing you with the knowledge and tools you need to navigate the complexities of the technological age. Stay tuned for our 2024 outlook, where we’ll share our insights into the trends and themes that will shape the year ahead.
📚 Tim Cook Wants Apple to Literally Save Your Life
📚 The AI We Deserve:: Critiques of artificial intelligence abound
📚 The world of tomorrow: When the future arrived, it felt… ordinary.
📚 Asleep at the Wheel in the Headlight Brightness Wars:
📚 Who can claim Aristotle?
📚 The $60 Billion Potential Hiding in Your Discarded Gadgets
by Amy | Dec 12, 2024 | Stock Insight, Technology
Ron Shamgar, TAMIM’s Australian Equities Portfolio Manager, continues his 2025 stock picks series with Gentrack (ASX: GTK) a standout performer in mission-critical software solutions for utilities and airports. With a business model built on recurring SaaS revenue and professional services, GTK exemplifies innovation and resilience in an increasingly digitised world.
Transformative Growth Across Key Segments
Gentrack’s FY24 results underline its strong growth trajectory, with total revenue reaching $213 million well ahead of its $200 million guidance. The company’s two core business segments have been pivotal to this success:
- Utilities (G2): Representing two-thirds of total revenue, the segment grew by 23% to $181 million in FY24. Stripping out one-off insolvency revenues, growth exceeded 50%, driven by a 33% rise in recurring revenue. The segment’s non-recurring revenue also doubled, reflecting heightened demand for upgrades and new implementations among existing and new customers.
- Airports (Veovo): Revenue from this segment grew 25% year-over-year (45% including hardware sales), reflecting GTK’s leadership in automating airport operations. The company is actively exploring M&A opportunities to expand Veovo’s offerings and enhance its appeal to global tier-1 and tier-2 airport clients, including Dubai, Sydney, and London airports.
Source: Gentrack Presentation
Operational Efficiency and Margin Expansion
Despite robust revenue growth, GTK has managed to keep headcount increases moderate, driving significant operating leverage. This efficiency, combined with its high-margin recurring revenue streams, allowed the company to expand EBITDA margins.
Source: Gentrack Presentation
GTK’s FY24 EBITDA of $23.6 million was impacted by one-time costs related to its long-term incentive schemes and UK payroll taxes. Adjusting for these, underlying EBITDA grew an impressive 42% to $41 million. The company’s practice of expensing all development costs further highlights the strength of these results compared to peers.
Looking ahead, GTK expects these one-time costs to decline, supporting its medium-term EBITDA margin target of 15-20%.
Strong Cash Flow and Strategic Investments
GTK reported free cash flow of $30 million in FY24, closing the year with a 35.6% increase in its cash balance to $66.7 million. This was achieved despite a $12.9 million investment in Amber Electric, reflecting GTK’s ability to execute while maintaining financial strength.
Growth Catalysts for the Future
A key driver of GTK’s future growth is its G2 platform, which has been widely adopted by its existing customer base. The platform’s advanced features and capabilities set it apart from competitors, making it the go-to choice for new contracts.
Source: Gentrack Presentation
While GTK remains strong in its core markets of Australia, New Zealand, and the UK, it is also making inroads into Asia and Europe, with new client wins in Saudi Arabia and the Philippines. Though these regions present longer sales cycles, they provide significant long-term growth potential.
TAMIM Takeaway
Since our initial investment in mid-2022 at $1.50, GTK has delivered over 8x returns, now trading at $12.50. Its journey from a niche software provider to a highly profitable tech company underscores its ability to execute and capitalise on long-term tailwinds like the energy transition.
We believe the stock is now being more fully appreciated by investors with substantial growth tailwinds for the next decade. The energy transition is real and every utility company (Energy/Water) will need to upgrade their billing stack in the next few years.
We see significant catalysts in the next 12 months as the pipeline of new business has reached a maturity inflection point and some larger contract wins should be announced in the near term. Hence we believe GTK’s growth story is far from over. Our updated valuation of $25.00 reflects this confidence, with key drivers including:
- Continued expansion of the G2 platform in core and emerging markets.
- Growing market awareness of GTK’s role in the energy and infrastructure transition.
- Larger contract wins that signal a maturing sales pipeline.
For 2025, Gentrack (ASX: GTK) remains our highest-conviction holding in the TAMIM Australian Equities portfolio. It exemplifies the type of transformative companies we seek businesses with strong fundamentals, clear growth drivers, and a commitment to delivering shareholder value.
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Disclaimer: Gentrack (ASX: GTK) is held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.
by Amy | Dec 12, 2024 | Market Insight, Technology
Atkore Inc. (NYSE: ATKR) is a standout holding within the TAMIM Global Tech and Innovation Fund, managed by Ryan Mahon. As a global leader in electrical and mechanical products, Atkore operates across critical industries such as data centers, telecommunications, and renewable energy. Balancing operational excellence with exposure to long-term growth drivers, the company exemplifies the fund’s focus on transformative themes sitting at the intersection of both the Technology & Energy pillars, and as a prime beneficiary of the upcoming reshoring acceleration. 
Diverse Product Portfolio Driving Resilience
Atkore’s comprehensive portfolio includes conduits, cables, metal framing, perimeter security, and cable management solutions. These products are indispensable for industries undergoing infrastructure upgrades and modernisation, particularly in areas like data centres, solar energy, and telecommunications. Atkore’s ability to provide a one-stop solution for its clients positions it as a key player in addressing the evolving needs of these sectors. As a U.S.-based manufacturer with a strong domestic presence, Atkore is well-positioned to benefit from the reshoring and reindustrialisation trends which will likely dramatically accelerate under the Trump administration. In addition, the company’s extensive product portfolio and manufacturing capabilities make it a key supplier for infrastructure development, electr ification projects, and industrial automation initiatives. This diversified approach mitigates risks tied to any one segment, ensuring resilience even in volatile market conditions.
Strategic Measures to Enhance Shareholder Value
Atkore has demonstrated a strong commitment to creating value for its shareholders through a series of proactive initiatives:
- Dividend Program: In 2024, Atkore launched a quarterly cash dividend program, signaling confidence in its cash flow generation and commitment to returning capital to shareholders.
- Share Buyback Plan: A newly authorised $500 million share repurchase program underscores management’s belief in the company’s long-term growth potential.
- Operational Efficiency: The company continues to streamline operations, driving productivity and reducing costs without compromising innovation or customer service.
These measures highlight Atkore’s disciplined approach to capital allocation, which has been instrumental in maintaining investor confidence and positioning the company for sustained growth across cycles.
Financial Performance and Growth Potential
Although Atkore reported a slight decline in revenue and net income for fiscal 2024 primarily due to pricing pressures and industrial challenges, the company remains highly profitable, with $472.9 million in net income. This decline is largely cyclical, does not detract from the company’s long-term growth trajectory, and is one of the reasons why we view now as a unique opportunity to evaluate a position. Atkore has maintained robust free cash flow, enabling reinvestment in high-growth areas while rewarding shareholders. Its financial strength positions it to capitalise on future opportunities, particularly in data centre infrastructure and renewable energy.
Why Atkore could be a Top Pick for 2025
Atkore stands out as a top pick for 2025 due to its strong market position, exposure to high-growth industries, and commitment to innovation. Key reasons include:
- Riding Market Tailwinds: The rapid expansion of data centres (driven by both reshoring and AI-driven rearchitecting), renewable energy projects, and telecommunications infrastructure provides a strong growth runway for Atkore’s products and solutions.
- Reshoring and Reindustrialisation: As the U.S. focuses on reshoring and domestic infrastructure investment, Atkore is a direct beneficiary of these macroeconomic trends.
- Multiple Pillars: Atkore hits multiple pillars central to TAMIM’s investment philosophy Technology and Energy aligning it with the fund’s transformative focus.
- Attractive Valuation: With a favourable 12-month analyst price target above current levels, Atkore presents a compelling investment opportunity.
- Strategic Positioning: Likely to find a bottom in early 2025, Atkore is well-positioned for a multi-year push as a core beneficiary of policy tailwinds, including the Trump administration’s agenda to drive industrial growth.
A Strategic Holding in the TAMIM Global Tech and Innovation Fund
As part of the TAMIM Global Tech and Innovation Fund, Atkore aligns perfectly with our investment philosophy of identifying businesses at the forefront of technological transformation. Its role within the fund reflects its potential to benefit from transformative trends in Technology and Energy. Under the guidance of Ryan Mahon, the fund seeks companies with strong fundamentals and exposure to long-term growth opportunities. Atkore’s innovative solutions, market leadership, and ability to adapt to evolving trends underscore why it is an important holding in the portfolio.
The TAMIM Takeaway
Atkore Inc. is a story of resilience, innovation, and growth. Its diversified portfolio ensures relevance across multiple high-growth industries, while its proactive initiatives demonstrate a clear commitment to enhancing shareholder value. Looking ahead, Atkore’s strong fundamentals, market tailwinds, and alignment with major policy initiatives position it as one of the most compelling opportunities in the TAMIM Global Tech and Innovation Fund. For investors seeking exposure to transformative sectors with the potential for sustained growth, Atkore has the potential to be a top stock to watch for 2025 and beyond. ___________________________________________________________________________________________________ Disclaimer: Atkore (NYSE: ATKR) is held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.
