Tim Johnston, a newly appointed portfolio manager in Bell Asset Management’s Australian small companies team, brings a robust track record to his role. He previously managed Tyndall Asset Management’s Australian small companies strategy, which achieved a 39 per cent net return over the 12 months to December 2025 before its closure. Bell Asset Management is a financial firm that oversees investment funds, managing approximately $2.9 billion in capital for its clients. Johnston’s transition to Bell, along with colleagues James Nguyen and Scott Hudson, was prompted by the sophisticated platform, quality leadership, and growth ambitions of the organisation.
Despite a recent sell-off, the Australian small-cap market is currently trading at one of its most attractive aggregate valuation levels in a decade. However, Johnston advises caution, noting that underlying sector-level valuations are not as uniformly compelling. He points to crowding in some sectors and cyclically elevated earnings in others, leading to stretched valuations in parts of the market. Recent earnings downgrades and ongoing geopolitical uncertainty pose risks for further, more widespread pressure, underscoring the necessity for investors to be highly selective and diligent in their research to avoid overvalued areas and negative surprises.
Bell Asset Management is strategically positioning its portfolio to leverage mispricing created by these conditions, while not relying on any single macroeconomic outcome. Johnston identifies compelling opportunities in quality retailers and property developers that have been unduly penalised by macroeconomic sentiment. Furthermore, quality resources companies generating significant free cash flow are proving attractive. He highlights Lycopodium, a Perth-based engineering consultant focused on resources and energy, as a capital-light, well-managed entity with a strong dividend track record, trading around 11 times earnings. Insurance broker AUB Group is also considered significantly undervalued, despite market concerns over softening premium rate increases and potential AI disintermediation, given its strong forecast free cash flow yield and relationship-driven business model.
