This week we put a spotlight on a company in the Global High Conviction Strategy at TAMIM Asset Management, led by Portfolio Manager Robert Swift. While it may not be the first company that springs to mind, it should need no introduction to most Australians (at least those over the age of 30): eBay (NASDAQ: EBAY).
The NBN/Connectivity market is high in competition and concentration.
According to the ACCC's latest NBN Wholesale Market Indicators Report, smaller providers such as Superloop (ASX: SLC), Aussie Broadband (ASX: ABB) and Vocus continue to acquire a greater share of the NBN wholesale services pie during the December 2023 quarter. Smaller providers now command a quarter of NBN wholesale services, steadily expanding their customer base while competing with larger retailers. Conversely, major providers like Telstra, TPG, and Optus experienced declines. This dynamic underscores the evolving landscape of NBN connectivity in Australia, with smaller players demonstrating resilience and competitiveness in the market. While international headlines have been dominated by the "magnificent seven," the ASX has previously harboured its own notable tech stocks encapsulated within the WAAAX acronym.
The Australian consumer has navigated a complex landscape over the past 12-18 months.
Grappling with the repercussions of a post-pandemic surge in inflation, the Reserve Bank of Australia has raised interest rates 13 times since May 2022 with the current cash rate target at 4.35%. Price hikes have placed considerable strain on households, triggering a cost-of-living crisis. As investors anticipated the worst, a large sell-off and re-rating of ASX consumer discretionary businesses during 2023. Microsoft is a business most readers will be familiar with. In fact, many will likely interact with products owned by the software giant daily. Office 365 programs such as Word and Teams are ubiquitous in workplaces, schools and homes. Professionals peruse LinkedIn for new jobs and connections, while Xbox and Minecraft are staples of gaming entertainment.
The final six months of 2023 presented a challenging backdrop with prevailing macroeconomic conditions and a sense of uncertainty.
Anticipations for the earnings season until the end of December were initially subdued. Despite this, the period delivered results that exceeded expectations, particularly for several companies within the TAMIM portfolio. In general, we had a strong reporting period. Companies looking to cut costs are now starting to show the results of those measures. Consumer spending has remained resilient while labour shortages are beginning to alleviate. The prospect of rising interest rates continues to recede and inflationary pressures show signs of easing. It’s been almost impossible to avoid the hype around NVIDIA (NASDAQ: NVDA) in the financial media in recent times. It’s been pinned as the poster child for the AI revolution–a title its shareholders must be loving. The NVDA share price has risen a staggering 19 times over the past 5 years (despite a more than 60% decline in 2022), including adding a record US$277 billion in market capitalisation after its most recent financial results release last week. It has been nothing short of a nightmare for short-sellers attacking the company’s meteoric rise, with Bloomberg reporting a whopping US$3 billion in (short selling) losses following just the last quarterly earnings. With NVIDIA on everyone’s lips, what’s the state of play?
In a market captivated by megacaps like Nvidia (NASDAQ: NVDA) and the allure of AI, our focus remains steadfast on the fruitful terrain of ASX small and mid caps. Two recurring themes have emerged in our portfolio: unearthing small-to-mid-sized businesses with improving fundamentals that have either been overlooked or remain unrecognised, and identifying potential takeover targets within this group.
While these ASX small caps are a drop in the ocean compared to the earnings anticipation of global behemoth NVIDIA Corporation (NASDAQ: NVDA) the below-mentioned companies continue to produce exceptional results in the face of challenging environments.
This report examines three notable companies within the TAMIM Australia Small Cap Income portfolio that have recently reported strong results. In today's fast-paced world, the demand for instant gratification has permeated almost every aspect of life, including investing. The allure of quick gains often overshadows the virtues of patience and long-term thinking.
As markets surge, with the S&P 500 reaching new heights, it's easy to get caught up in the short-term frenzy. As company earnings reports roll in, investors will see multiple examples of why it pays to be an optimist and to ignore apocalyptic forecasts. For much of late 2022 and 2023, the media was fixated on rising interest rates and the potential of a damaging recession. As a result, while some retailers had seen share prices recover strongly as the world emerged from the pandemic, the momentum reversed as increased costs and slowing sales emerged.
The gaming sector, having navigated the turbulence of the COVID-19 pandemic, is on the brink of resurgence.
Firstly, the pandemic-induced restrictions significantly curtailed the operations of casinos, gaming venues, and related establishments, causing a temporary dip in revenue for many gaming companies. Yet, as the world steadily emerges from these constraints, an anticipated surge in consumer engagement with gaming activities is expected to fuel sector recovery. Global equity markets finished the year on a tear as investors gained confidence that inflation had abated and interest rate hikes were in the rear vision mirror. There was a clear bifurcation however, with the bounce led by a small number of suspects (we’re looking at you big tech) while 70% of companies in the S&P500 underperformed the index in 2023.
As we highlighted in our previous article back in November, the so-called “Magnificent 7” contributed a substantial proportion of the S&P 500 gains during 2023. Come the beginning of 2024, it was time to see whether these blockbuster share price performances were justified. Nvidia (NASDAQ: NVDA) is the only one of the 7 yet to report, with this scheduled for 21 February (there shouldn’t be a need to mark your calendar as there will likely be considerable media coverage). The remaining six (Alphabet, Amazon, Apple, Meta, Microsoft and Tesla) each reported their earnings for the October to December period in the last week. Often viewed as a group, their performance was, in fact, quite varied. Let’s start with the good and take it from there.
Note: All figures are quoted in U.S. Dollars. EML Payments Ltd (ASX: EML) has indeed charted a tumultuous course over the last five years, captivating investors with its roller-coaster share price and stirring the investment community with its complex structure and bold acquisitions. Peaking at an enviable high of over $5 in April 2021, the company's valuation has since experienced a significant recalibration, prompting diverse perspectives and intense scrutiny.
Volpara Health Technologies (ASX: VHT) shares rocketed 41% on last Thursday to $1.10 following a takeover offer from Lunit Inc for $1.15 per share.
The advent of transformative technologies often begins inconspicuously, much like the early days of motorised carts and airplanes. Initially, the investigation of horseless carriages in 1886, now known as cars, was seen not as a consumer product but as a military tool for transporting heavy ordinance. It wasn't until Henry Ford's innovations and the Model T Ford in 1908 that their consumer potential was fully realised. Similarly, the airplane, at its inception, was not immediately recognised for its capacity to transport people. It took over a decade before its use in mass transportation became apparent.
Small businesses remain the lifeblood of daily life and the backbone of every economy. Despite the dominance of tech giants like Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN), millions of everyday transactions still occur outside their reach. Consider the simple acts of buying a coffee or a beer - the ubiquitous tap of a phone or card is a testament to the ongoing digital revolution in payments.
As we highlighted in last week’s article, semiconductors are a critical component in many of the leading-edge technologies that are transforming industries. This includes well-known innovations such as electric and autonomous vehicles, 5G and artificial intelligence (AI), and those that reach the public media less often, such as industrial automation and robotics. We also discussed the nuance in the semiconductor industry that is often poorly understood by outsiders. As a further illustration, let’s dig into three unique semiconductor producers that we believe have a bright future ahead.
For some investors, Santa Claus has come a little earlier this year.
In November, the S&P 500 concluded the month with an impressive rise, just under 9%, while the Nasdaq posted gains of nearly 11%. Closer to home, the All Ords in Australia showed a modest uptick of 1.3% – a positive stride, though not quite matching the strides seen in the U.S. This leaves investors pondering the possibility of a 'Santa rally' to further bolster the market's performance. At the heart of today's digital revolution lies the semiconductor, a critical component driving the waves of technological advancements and innovation. With the intersection of artificial intelligence (AI), digital transformation, geopolitical dynamics, and global economic competition, the semiconductor sector is on the brink of an unprecedented growth trajectory.
Wise investors, like Warren Buffett, often remind us that 'turnarounds seldom turn.'
However, like many rules of thumb, exceptions can creep into the common narrative and disrupt our views. There are companies that defy this adage, demonstrating that with strategic vision, effective management, and a pinch of resilience, successful corporate turnarounds are not just possible but can be transformative. In an era where cost of living pressures are mounting, Inghams Group Limited (ASX: ING) stands out as a beacon of strength and resilience. Originating as a family business in 1918, Inghams has grown into the leading integrated poultry producer in Australia and New Zealand. Despite the economic challenges posed by rising feed and fuel costs, plus consumers facing tightening budgets, Inghams proves its worth is far from chicken feed.
In the Australian banking sector, the dominance of the "Big Four" banks—Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corporation (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), and National Australia Bank (ASX: NAB) — is a testament to a complex interplay of historical growth, strategic mergers and acquisitions, and significant regulatory shifts.
Private credit, commonly referred to as private debt or non-bank lending, is a growing asset class garnering increasing attention from investors.
Historically, this was space dominated by the big banks. However recent regulatory changes in addition to the Royal Banking Commission have led to traditional lenders exiting the space and limiting their lending activities to big corporates and residential mortgages. |
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TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.
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