As we close the books on another calendar year, we are pleased to report yet another exceptional year of performance for the TAMIM Australia All Cap portfolio. In CY2024, the portfolio delivered a +28.93% return net of fees, following an impressive +31.25% return in CY2023. Over the past two years, the portfolio has significantly outperformed key benchmarks, with the ASX300 gaining +11.37% and the Small Ords +8.37% in 2024. Meanwhile, in the U.S., the S&P500 gained +23.0%, and the Nasdaq +24.9%, continuing the momentum from the previous year.

Since assuming portfolio management of this strategy on 1 January 2019, the portfolio has annualised +17.73% per annum net of fees, positioning it among the top-performing mid/small-cap funds in Australia over this period*.

The AI Revolution and Market Outlook

One of the dominant themes of 2024 was the continued strength of U.S. equity markets, largely led by the Magnificent 7 tech stocks. The AI revolution is accelerating at a pace comparable to or even exceeding that of the dot-com era. Unlike the late 1990s, where much of the value creation was speculative, AI is delivering tangible benefits in business productivity, automation, and technological advancements. We believe we are transitioning from the AI infrastructure phase to the application layer, where businesses will develop commercial models leveraging AI to enhance operations and drive profitability.

Additionally, we are now two years into the current bull market, which began in early 2023. Historical data suggests that bull markets reaching their second year tend to persist, with an average duration of 5.5 years. Notably, tech-driven and industrial revolutions have sustained bull markets for up to 12 years. We believe AI will be the driving force behind a long-term bull market in the coming years.

A New U.S. Administration – Policy and Market Impact

As we go to print, Donald Trump has been inaugurated as the 47th president of the United States. His administration is expected to implement pro-business policies that could lead to strong GDP growth and potentially reduce U.S. government debt. Combined with anticipated interest rate cuts, we see a positive backdrop for markets in 2025. Historically, the first year of a new U.S. presidency starts with uncertainty, but market performance tends to accelerate in the second half of the year.

Investors should remain aware that market pullbacks of 5-15% are common even in strong bull markets, presenting attractive buying opportunities.

Portfolio Positioning and Key Learnings

As we enter 2025, we are highly optimistic about our portfolio holdings and see substantial upside ahead. That said, we remain committed to continuous learning and improvement. One of the key lessons from 2024 was position sizing and knowing when to reduce exposure to stocks that remain undervalued for extended periods. While valuation remains a crucial factor, it is equally important to respect market momentum and avoid swimming against the tide for too long.

Looking ahead, we anticipate a catalyst-rich reporting season in February, followed by an expected increase in M&A activity post-results. Several holdings remain ripe for acquisition, reinforcing our conviction in the current portfolio structure.

Key ASX Stocks on Our Watchlist

Bravura Solutions (ASX: BVS)

Bravura upgraded its FY25 guidance following a successful business transformation and return to profitability. Cash EBITDA is now expected to be in the range of $33m – $36m (previously $28m – $32m), while reported EBITDA has been upgraded to $41m – $44m (previously $36m – $40m). Revenue is anticipated to be between $240m – $245m (previously $235m – $240m). Additionally, BVS intends to resume dividend payments in February 2025, supported by its improved financial performance. Since our initial investment in March 2023, BVS has delivered over 7x returns, and we believe consensus estimates remain conservative. Further upside could come from securing a large registry client for Sonata or a major digital advice contract for Midwinter.

EML Payments (ASX: EML)

EML Payments unexpectedly announced the termination of its CEO, with Chairman Anthony Hynes stepping in as Executive Chair. While abrupt CEO transitions are typically concerning, Hynes’ strong entrepreneurial background (having sold his company for AU$900m in 2021) makes this a positive development for shareholders. With no debt and a clear path to $95m EBITDA over the next three years, EML is a prime takeover candidate in 2025.

 

Superloop (ASX: SLC)

Superloop announced the acquisition of Uecomm Pty Ltd from Optus for $17.5 million, adding 2,000km of high-capacity fibre assets across major Australian cities. This deal strengthens SLC’s network footprint and Smart Communities ambitions, providing long-term cost and revenue synergies. Given the significant asset value compared to the acquisition cost, we see this as a highly opportunistic transaction for Superloop.

The TAMIM Takeaway

The strong outperformance of the fund in 2024, combined with a favourable macroeconomic backdrop, reinforces our conviction that markets remain in a long-term bull cycle. AI continues to reshape industries, and we are entering a crucial phase where commercial applications will drive the next leg of growth.

As we enter 2025, we remain cautiously optimistic, keeping an eye on interest rate cuts, M&A activity, and corporate earnings. Market pullbacks will be inevitable, but they should be viewed as buying opportunities rather than signs of distress.

*According to Morningstar website as of 31 December 2024, Category: Equity Australia Mid/Small Blend.

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Disclaimer: Bravura Solutions (ASX: BVS), EML Payments (ASX: EML), and Superloop (ASX: SLC) are held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.