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 May, the Mobility portfolio was up 3.45%, while the Kensho Smart Mobility ETF (HAIL) was up 7.68%. While the broader market bounced in the 1H of the month, indices like the Dow gave back almost all of its gains in the 2H of May. Overall, we are currently in a choppy market as liquidity has ebbed in April/May and we’ve seen violent rotations — for example, huge earnings-related moves in software (CRM, MDB, PATH all down over 20% in a day) and semiconductors/hardware (DELL down over 20% in a day). Our view is that the first layer of the AI names + the heavily concentrated (mega-cap) indices are in the process of peaking, with money just beginning to rotate into the bottoming areas like the auto/industrial supply chains. As liquidity begins to come back and flow into the market in ~July, we expect we’ll begin to see a more sustained rally – particularly in these bottoming areas now finally seeing inflows.

With liquidity still flat to down in June, and inflation likely to modestly reaccelerate y/y over the next 2 months, we expect volatility to continue. And we plan to continue to use these opportunities to scale generally smaller/mid-cap names in bottoming areas — notably, the electrification and re-industrialization supply chains, including lithium and copper producers, along with well-positioned analog semiconductor companies that are key enablers to everything from connectivity, to electrification, to automation (few names highlighted below).

While these areas are bottoming, they have been rangebound bouncing along the bottom due to the restrictive rate environment. At this point in the cycle, you’d typically see the public government spending side handing it off to the private lending side to spur the next wave of growth — often initiated by rate cuts. But the high, sticky inflation environment has kept the Federal Reserve tight (even as other Central Bank’s cut), so this hand-off has not yet occurred and interest-rate sensitive areas (like Auto) continue to bounce along the bottom. We are utilizing these attractive entry points to build positions for the turn, as the underlying secular trends — from electrification to reshoring and reindustrialization — remain firmly in place as geopolitical necessities.

Despite the media headline fear-mongering, the aforementioned trends continue to ramp under the surface — from reshoring critical supply chains (see EV chain investments map below) to the acceleration in Automation (with Waymo now serving 50,000 rides per week in CA and AZ, up 5x since last year).

And, with geopolitical tensions again rising, the timeline to reshore critical supply chains is compressing. Tariffs are the latest example of protectionist policies. Neither side is “sitting still.”

https://www.whitehouse.gov/briefing-room/statements-releases/2024/05/14/fact-sheet-president-biden-takes-action-to-protect-american-workers-and-businesses-from-chinas-unfair-trade-practices/

Historically tariffs lead to inflation and value destruction, unless they are strategically paired with thoughtful industrial policy (i.e., semiconductors, energy) and implemented as part of a holistic strategy. With the Inflation Reduction Act, Infrastructure and Jobs Act, and CHIPS+ Act as “carrots” in the US, the latest tariff increases are the respective “sticks.”

Overall, we are witnessing once-in-a-generation type events as the Western led unipolar world is being challenged by Eastern autocracies. We’ve been discussing these developments since the inception of the fund, and noted Russia/Ukraine was likely the beginning, not the end, of this conflict. These continued escalations make all of our core thematics geopolitical necessities – from reshoring critical supply chains, to building out resilient low cost energy sources –  and the Mobility Fund is uniquely set up to capitalize on the acceleration in these trends.

Sincerely yours,
Ryan Mahon and the TAMIM Team

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.

Ambarella (AMBA) is a semiconductor company that designs and manufactures advanced video processing and computer vision chips for AI and autonomous applications. Their chips enable features like object detection, tracking, and classification for applications like advanced driver assistance systems (ADAS), autonomous vehicles, robotics, and industrial automation. Ambarella's chips act as the "eyes" and perception systems for autonomous robots and vehicles, processing data from cameras, radar, and other sensors to enable autonomous navigation and decision-making. The company partners with major automotive OEMs and suppliers like Continental and Bosch to integrate their chips into self-driving vehicles, as well as with robotics companies like Kodiak Robotics for autonomous trucking solutions. With their focus on low-power, high-performance edge AI processing, Ambarella plays a key role in the automation and robotics supply chain by providing the critical perception capabilities required for autonomous operation.

The stock has traded down over 80% from it's peak in late 2021 primarily as a result of the auto and industrial correction, coupled with tightening liquidity conditions. In the last few months, AMBA's fundamentals appear to be finding a bottom -- similar to other mobility supply chain companies (i.e., ADI above) -- and the stock also appears to be in the bottoming process with significant potential upside ahead if they execute and the inventory correction turns into a more durable inventory upcycle.