BRM – December 2017 monthly update

1
Monthly Update
December 2017
BRM NAV
$
0.69
SHARE PRICE
$
0.60
DISCOUNT
13.6
%
as at 30 November 2017
A word from the Manager
Barramundi’s portfolio was up 2.2% for November, outperforming the benchmark by
0.9%. The Australian market had a good month, with the ASX200 index reaching its
highest level since January 2008. Among Australian sectors, the real estate investment
trust sector outperformed while the telecommunication and banking sectors
underperformed. Standouts in the Barramundi portfolio included four-wheel drive
equipment maker and reseller ARB and data centre owner NextDC.
Market environment
We have been cautiously optimistic about the outlook for the Australian economy for a
while now although there are clearly divergent forces at play.
Businesses are growing increasingly confident and have backed this confidence up
with activity. The NAB Survey of Business Conditions for October skyrocketed to an
all-time record high of +21.1 from an already-strong +13.9 the previous month. New
private real capital expenditure for the third quarter grew an annualised 2.3% over the
past year – the first positive annual increase since 2012.
Consumers on the other hand are more circumspect. Retail sales for the recently
released September month were flat versus August 2017 and up 1.4% on an annual
basis – the weakest annual growth rate since June 2013. Employment growth for
October was also weaker than forecast as was the wage price index which was only up
0.5% for the quarter.
Overall we expect a slight upwards inflection in growth going into 2018 led by resurgent
business spending.
Portfolio news
November was a fairly quiet month for the Barramundi portfolio companies. Online car
selling platform Carsales.com bought out the balance of its South Korean joint venture
SK Encar. This was a strategically important move for Carsales as it gives the company
more exposure to the rapidly growing South Korean online car market. It also means
Carsales has full control of the business and can pivot the Encar business model towards
pay per lead which we believe will result in material earnings upside.
Credit Corp, renowned for upgrading profit guidance, is staying true to its reputation.
Over the month the company increased profit guidance for the 2018 year citing
productivity improvements in the US and the acquisition of a consumer lending book.
Credit Corp has spent a number of years building its US capability during a tepid debt
purchasing environment – the result of regulatory uncertainty. We now expect the US
operation to boost growth over the next two or three years and we believe Credit Corp
has a positive medium term outlook.
People
update
During the period
Fisher Funds’ Senior
Portfolio Manager
Manuel Greenland
resigned. Manuel was
with Fisher Funds’ for
five years, three of which
he was responsible
for managing the
Barramundi portfolio.
Manuel was a valued
member of the Fisher
Funds’ investment
team and navigated
Barramundi through a
challenging Australian
equities environment.
We wish him all the
best for his future.
In the interim, the
Barramundi portfolio
is being overseen by
Frank Jasper, Fisher
Funds’ Chief Investment
Officer working with
Terry Tolich, Senior
Investment Analyst,
and Delano Gallagher,
Investment Analyst. A
comprehensive search
for Manuel’s replacement
is underway.

In a classic case of be careful of what you wish for the ‘big four’
banks sent a letter to Australian Treasurer Scott Morrison urging
him to “ensure a properly constituted inquiry into the financial
services sector is established to put an end to the uncertainty
and restore trust, respect and confidence”. Several hours later,
Prime Minister Malcolm Turnbull ordered a Royal Commission
into alleged “misconduct in the banking, superannuation and
financial services industry”. Oops. While another significant
regulatory inquiry is hardly a positive outcome for the Australian
banking sector, we don’t believe the downside risk from this
development is material. That said, with more regulatory
oversight, a weakening housing market and tepid credit growth,
we are happy with our lower than market exposure to the banks.
Wisetech upgraded revenue guidance at its AGM which was
held in November. Wisetech has been a standout performer
for the Barramundi portfolio this year and is benefiting from
the ecommerce tailwind. Ecommerce benefits the company
given the increased focus of its customers on the speed,
accuracy, efficiency and transparency of parcel shipments.
Wisetech is also benefiting from recent strong growth in air
and sea freight volumes which are driven by the improved
global economy. Higher volumes by Wisetech’s customers
should translate into higher revenue given the company’s
transaction based model.
The key portfolio change over the month was the decision
to exit private health insurer Medibank. In mid-October
the Australian Government announced its reform package
to make private health insurance “simpler and more
affordable”. After reviewing this we formed the view that the
reform package was unlikely to materially encourage younger
people to participate in health insurance and that, allied with
major step-up in age-related costs for the healthcare system
in the next 10 years, there remains a fundamental problem of
private health insurance sustainability.
This is our last monthly update for 2017 and we look
forward to updating you again in February next year. We
hope you have a wonderful summer holiday break.
Frank Jasper | Chief Investment Officer
Sector Split
as at 30 November 2017
Key Details
as at 30 November 2017
FUND TYPE
Listed Investment Company
INVESTS IN
Growing Australian companies
LISTING DATE
26 October 2006
FINANCIAL YEAR END
30 June
TYPICAL PORTFOLIO SIZE
25-35 stocks
INVESTMENT CRITERIA
Long-term growth
PERFORMANCE
OBJECTIVE
Long-term growth of capital and
dividends
TAX STATUS
Portfolio Investment Entity (PIE)
MANAGER
Fisher Funds Management
Limited
MANAGEMENT
FEE RATE
1.25% of gross asset value
(reduced by 0.10% for every 1% of
underperformance relative to the
change in the NZ 90 Day Bank Bill
Index with a floor of 0.75%)
PERFORMANCE
BENCHMARK
Changes in the NZ 90 Day Bank
Bill Index + 7%
PERFORMANCE
FEE HURDLE
15% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$0.57
SHARES ON ISSUE
163m
MARKET CAPITALISATION
$98m
GEARING
None (maximum permitted 20%
of gross asset value)
2
November’s Biggest Movers in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
CREDIT CORP
+14
%
NEXTDC
+13
%
GATEWAY LIFESTYLE
GROUP
+10
%
ARB CORPORATION
+9
%
NANOSONICS
-15
%
11
%

FINANCIALS
20
%
14
%
CONSUMER
DISCRETIONARY
18
%

INDUSTRIALS
INFORMATION
TECHNOLOGY
27
%
HEALTHCARE
3
%
REAL ESTATE
The Barramundi portfolio also holds cash.

1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Corporate Performance
Total Shareholder Return+2.4%+4.7%+4.3%+6.9%+2.8%
Adjusted NAV Return+1.9%+9.2%+17.0%+10.2%+3.9%
Manager Performance
Gross Performance Return+2.2%+10.2%+20.0%+13.8%+7.2%
Benchmark Index^+1.3%+5.8%+17.3%+11.6%+2.8%
Performance
to 30 November 2017
3
Total Shareholder Return
to 30 November 2017
Oct
2006
Oct
2007
Oct
2008
Oct
2009
Oct
2010
Oct
2011
Oct
2012
Oct
2013
Oct
2015
Oct
2016
Oct
2014
Share Price/Total Shareholder Return
$
1.00
$
1.20
$
0.8 0
$
0.60
$
0.40
Share PriceTotal Shareholder Return
$
1.60
$
0.20
$
0.00
$
1.40
Oct
2017
The remaining portfolio is made up of another 22 stocks and cash.
5 Largest Portfolio Positions
as at 30 November 2017
CSL LIMITED
7
%
CARSALES.COM
7
%
SEEK
7
%
COMMONWEALTH
BANK OF AUSTRALIA
5
%
NATIONAL
AUSTRALIA BANK
5
%
^Benchmark Index: S&P/ASX Small Ords Industrial Gross Index until 30 September 2015 & S&P/ASX 200 Index (hedged 70% to NZD)
Non-GAAP Financial Information
Barramundi uses non-GAAP measures, including adjusted net asset value, gross performance return and total shareholder return. The rationale for using such non-GAAP measures is as follows:
»adjusted net asset value – the underlying value of the investment portfolio adjusted for capital allocation decisions,
»gross performance return – the Manager’s portfolio performance in terms of stock selection and hedging of currency movements, and
»total shareholder return – the return to an investor who reinvests their dividends, and if in the money, exercises their warrants at warrant maturity date for additional shares.
All references to adjusted net asset value, gross performance return and total shareholder return in this monthly update are to such non-GAAP measures. The calculations applied to non-GAAP measures are
described in the Barramundi Non-GAAP Financial Information Policy. A copy of the policy is available at http://barramundi.co.nz/about-barramundi/barramundi-policies/

Disclaimer: The information in this update has been prepared as at the date noted on the front page. The information has been prepared as a general summary of the matters covered only, and it is by
necessity brief. The information and opinions are based upon sources which are believed to be reliable, but Barramundi Limited and its officers and directors make no representation as to its accuracy
or completeness. The update is not intended to constitute professional or investment advice and should not be relied upon in making any investment decisions. Professional financial advice from
an authorised financial adviser should be taken before making an investment. To the extent that the update contains data relating to the historical performance of Barramundi Limited or its portfolio
companies, please note that fund performance can and will vary and that future results may have no correlation with results historically achieved.
Barramundi Limited
Private Bag 93502, Takapuna, Auckland 0740
Phone: +64 9 489 7074 | Fax: +64 9 489 7139
Email: enquire@barramundi.co.nz | www.barramundi.co.nz
4
Computershare Investor Services Limited
Private Bag 92119, Auckland 1142
Phone: +64 9 488 8777 | Fax: +64 9 488 8787
Email: enquiry@computershare.co.nz | www.computershare.com/nz
About Barramundi
Barramundi is an investment
company listed on the New
Zealand Stock Exchange. The
company gives shareholders
an opportunity to invest
in a diversified portfolio of
between 25 and 35 quality
growing Australian companies
through a single, professionally
managed investment. The aim of
Barramundi is to offer investors
competitive returns through
capital growth and dividends.
Capital Management Strategies
Regular Dividends
»Quarterly distribution policy introduced in
August 2009
»Under this policy, 2% of average NAV is targeted
to be paid to shareholders quarterly
»Dividends paid by Barramundi may include
dividends received, interest income, investment
gains and/or return of capital
»Shareholders who prefer to have increased
capital rather than a regular income stream have
the opportunity to participate in the company’s
dividend reinvestment plan (DRP)
»Shares issued to DRP participants are at a 3%
discount to market price
»Barramundi became a portfolio investment entity
on 1 October 2007. As a result, dividends paid to
New Zealand tax resident shareholders have not
been subject to further tax
Share Buyback Programme
»Barramundi has a buyback programme in place
allowing it (if it elects to do so) to acquire up to 7.4m of
its shares on market in the year to 31 October 2018
»Shares bought back by the company are held as
treasury stock
» Shares held as treasury stock are available to be
re-issued for the dividend reinvestment plan and to pay
performance fees
Warrants
»On 24 November 2017, Barramundi warrant holders
had the right to convert their warrants into ordinary
Barramundi shares, at an exercise price of $0.58 per
warrant. On the same day, Barramundi shares were
trading on-market at $0.60, a 3.4% premium to the
exercise price.
»14,832,269 warrants out of a possible 36,471,368
warrants (41%) were converted into Barramundi
ordinary shares.
»The new shares were allotted to warrant holders on
28 November 2017. All new shares have the same rights
as current Barramundi shares, including participating in
the company’s quarterly dividend policy.
Management
Barramundi’s portfolio is managed
by Fisher Funds Management
Limited. Frank Jasper (Chief
Investment Officer), Terry Tolich
(Senior Investment Analyst) and
Delano Gallagher (Investment
Analyst) have prime responsibility
for managing the Barramundi
portfolio. Together they have
significant combined experience
and are very capable of
researching and investing in the
quality Australian companies that
Barramundi targets. Fisher Funds
is based in Takapuna, Auckland.
Board
The Manager has authority
delegated to it from the
Board to invest according to
the Management Agreement
and other written policies.
The Board of Barramundi
comprises independent
directors Alistair Ryan (Chair),
Carol Campbell and Andy
Coupe; and non-independent
director Carmel Fisher.