Global Equities

Dear Investor,

The TAMIM Global Mobility portfolio is a global long/short strategy that seeks to invest in companies which benefit from the ongoing $7-10 trillion autonomous and electric vehicle revolution while shorting those that will suffer.

For the month of April, the Mobility portfolio was flat at -0.03%, while the Kensho Smart Mobility ETF (HAIL) was down -9.37%. The bottoming out of the mobility supply chain continues, which is seemingly in tandem with China bottoming. As highlighted by a few of the positions below, we utilised the weakness in the last ~month to begin to scale up key commodity producers — notably in lithium and copper, both critical for energy & electrification supply chains and re-industrialisation — along with well-positioned analog semiconductor companies that are key enablers to everything from connectivity, to electrification, to automation.

On the Electrification front, the most interesting developments are around BYD’s international expansion. Given BYD’s vertical integration and automation strategy, they are able to produce incredibly low-cost electric vehicles — right now as low as ~$10K USD. BYD is dramatically ramping it’s ex-China business, with goals of doubling it year over year. And with entry-level vehicle pricing so low, they are dramatically expanding the overall addressable car market — people in emerging markets who never owned / could never afford a vehicle, now can. This is a positive for those supplying into the supply chain, but a dangerous position for anyone competing with BYD. In our view, only Tesla has a viable shot. And we expect to see tariffs and other protectionist policies out of the West (e.g., Yellen’s latest remarks on China goods) to ‘defend’ against cheaper China alternatives. Overall, as the auto inventory downcycle begins to bottom out, re-industrialisation continues to accelerate, and the energy supply chain for AI applications begins to ramp, the next gen energy suppliers are well positioned in the next upcycle. Geopolitical tensions continue to be a wildcard, and we will use related volatility to accumulate positions in companies that should benefit regardless of who is in the White House and/or what policy toward China is.

On the Automation front, there have been several under-the radar areas of significant progress. The automation of factories remains a key theme that is just beginning to inflect, and will be a critical component to re-shoring supply chains in the West (where human labor costs are certainly higher than Asian counterparts). As noted above, BYD and Tesla are the leaders when it comes to vertically-integrated, automated electric vehicle plants. On the autonomous delivery front, Serve Robotics — a supplier of autonomous sidewalk delivery robots — announced an agreement to scale up production of its delivery robots and begin to deploy them in several markets across the US for food delivery. And finally, on the autonomous vehicle front, Waymo has begun scaling service in four cities (Phoenix, LA, Austin, San Francisco) in the US this year and has dramatically outperformed human drivers across a range of tests. Overall, with the key breakthrough on the AI front (notably with LLMs), we expect to see the automation theme begin to scale at an accelerated rate.

Sincerely yours,
Ryan Mahon and the TAMIM Team

Teck Resources is a diversified Canadian mining company with operations spanning Asia, Europe, South America, and North America. Their core business has historically been in steelmaking coal, copper, and zinc mining. However, Teck is pivoting towards positioning itself in the electric vehicle (EV) supply chain by leveraging proceeds from the recent sale of its steelmaking coal business. The company recognises the rapidly growing demand for lithium, a critical component in EV batteries, and is exploring opportunities in lithium extraction, particularly in Argentina which holds significant lithium reserves. Teck aims to capitalise on the booming EV industry and the global shift towards sustainable transportation by strategically scaling the copper business, and potentially entering the lithium and battery value chain.

Given Teck’s main business today remains focused on copper, it’s stock price tends to closely track the price of copper over time. As highlighted by the chart below, the price of copper has finally started to move higher in March of 2024 after a ~2 year consolidation. Copper is a critical input into the broader electricity and energy buildout (from transmission lines to batteries), and is highly levered to the industrial re-shoring/friend-shoring theme as the West rebuilds mission-critical supply chains.

Analog Devices (ADI) is a leading semiconductor company that provides innovative solutions for the electric vehicle (EV) and charging infrastructure market. They offer a wide range of products, including energy measurement ICs, battery management systems, power semiconductors for on-board EV chargers, and wireless battery management systems. ADI’s solutions enable longer EV range, improved battery lifetime, increased efficiency of electric powertrains, and faster charging times. Additionally, ADI is at the forefront of developing technologies for the automation supply chain, offering products like isolated gate drivers and power supply controllers for energy storage systems that support fast EV charging infrastructure.

Analog semiconductors in general are critical enablers of everything from connectivity, to electrification, to automation -- and Analog Devices is a leader in the space. The stock (and the analog group in general) has been consolidating for an extended period as the auto and industrial supply chains have been going through a significant inventory downcycle. The inventory cycle is beginning to bottom out (~Q2 2024), which historically tends to be a positive time to accumulate for the next upcycle.