MLN – February 2018 monthly update

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Monthly Update
February 2018
MLN NAV
$
1.00
SHARE PRICE
$
0.85
DISCOUNT
14.9
%
as at 31 January 2018
A word from the Manager
Welcome to our first monthly update for 2018
The summer break saw global markets continue to shine. The
US market had its best start to the year since 1987 with the S&P
500 up 5.6%; the MSCI World Index was up 3.7%; and emerging
markets were the standout, up 6.7%.
Similarly, the Marlin portfolio had a good start to 2018,
returning 6.2% (gross) during January, compared with its global
benchmark
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which was up 2.0%.
While there wasn’t a great deal of surprising economic news,
investor confidence continued to pick-up during January as
market participants focused on the strong global economic
environment and potential benefits for consumers and
corporates from Donald Trump’s tax cuts. Wide spread
conviction that supportive economic conditions can continue
in the medium term has caused a number of otherwise bearish
investors and commentators to predict that this bull market is
entering a ‘melt-up’ stage – which could last for 6-18 months
before we see a correction.
While so much consensus around this optimistic outlook should
be enough to make any prudent investor concerned, it is hard
to deny that underlying economic and corporate fundamentals
are strong. As I write, a US data service reported that US private
companies hired 234,000 more staff in January alone, holding the
US employment rate at just 4.1%. During the month it was also
reported that economic growth in the European Union reached
2.5% in 2017, the fastest pace since 2007 and materially faster
than 2016.
Portfolio Company Developments
The most significant news for the portfolio in January was
the takeover offer for US based digital gift card distributor
Blackhawk Networks, which has been a portfolio holding since
2014. US private equity firm Silver Lake announced a takeover
offer at $45.25 per share on 12 January, a 27% jump from where
Blackhawk traded at 31 December. Blackhawk is a business in
which we see considerable long term growth prospects, and
while we are sad to see Blackhawk leave the portfolio, we believe
the premium paid is fair and can understand why management
would want to grow the business out of the public spotlight.
LKQ is the leader in the highly fragmented aftermarket auto-
part industry, with significant scale advantages to its next
closest competitors in both the US and Europe. The company
has grown quickly since its 1998 inception, both organically
and via a successful acquisition strategy. In December, LKQ
announced the acquisition of German competitor Stahlgruber.
Stahlgruber provides LKQ with a solid foothold in the large
German automotive market, adds significant scale to their
European operations, and has the potential to deliver material
synergies. We believe this is a logical acquisition for LKQ and
we continue to be impressed by managements’ disciplined
execution of its growth strategy.
Recent Results
Reporting season is now in full swing in the US, and so far it has
been a good one for the market and our portfolio.
Abbott Laboratories, a diversified healthcare company,
reported fourth quarter results that continued its recent run
of outperforming expectations. The company saw strong and
accelerating growth across all business segments, driving 7%
sales growth in the quarter (near the top-end of larger medical
device peers). Of note was the continued acceleration in
the recently acquired St Jude business, which has seen sales
growth increase from 2% to 10% in the twelve months since
the acquisition. This has addressed the concerns of some
critics who thought that Abbott had acquired a low growth
company. One of the reasons we invested in Abbott was due to
managements’ long track record of successful capital allocation
and acquisitions, and so far the St Jude acquisition appears to
be another success. Management expects this strong growth
to continue into 2018 driven by product launches in all business
segments, highlighting the breadth and depth of Abbott’s
product portfolio and innovation.
Hexcel, a manufacturer of carbon fibre composites for the
aerospace sector, reported fourth quarter results that showed
an acceleration across most business lines. Commercial
aerospace reached an inflection point as Hexcel ramps
up production on new narrow-body planes for Airbus and
Boeing, offsetting recent production declines in more legacy
1
S&P Large Mid Cap/S&P Small Cap Index (50% hedged to NZD)

Sector Split
as at 31 January 2018
Key Details
as at 31 January 2018
FUND TYPE
Listed Investment Company
INVESTS IN
Growing international companies
LISTING DATE
1 November 2007
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
FEE HURDLE
Changes in the NZ 90 Day Bank
Bill Index + 5%
PERFORMANCE FEE
15% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$0.85
SHARES ON ISSUE
119m
MARKET CAPITALISATION
$101m
GEARING
None (maximum permitted 20%
of gross asset value)
2
27
%

TECHNOLOGY
9
%
INDUSTRIALS
25
%

CONSUMER
27
%

HEALTHCARE
Geographical Split
as at 31 January 2018
22
%
WEST EUROPE
72
%
NORTH AMERICA
The Marlin portfolio also holds cash.
9
%
FINANCIALS
4
%

ASIA
2
%

ENERGY
Ashley Gardyne
Senior Portfolio Manager,
Marlin
wide-body programs. For 2018 management expects further
acceleration in commercial aerospace growth, and a recovery
in both the business jet and wind turbine segments after
weaker performance in 2017. Longer term, Hexcel continues to
invest in new technologies to keep driving further penetration
of advanced composite materials in existing applications like
aerospace and wind turbines but also newer areas such as
automotive.
Portfolio Changes
Meet our charming new investment, Pandora!
While known mainly for its signature charm bracelets, Danish
company Pandora has transformed itself into one of the
leading jewellery brands globally, both in terms of brand
recognition and sales. New categories such as rings and
earrings now make up around 25% of Pandora’s sales and
Pandora hopes to increase this to 50% in the next 5 years as
the company looks to capture a greater share of the attractive
affordable luxury jewellery segment.
Pandora operates a fully integrated business model from
production, wholesale and distribution through to retail. Its
two manufacturing facilities in Thailand employ over 11,000
people and produced 120m pieces of jewellery in 2017 – a
scale unmatched by competitors. This allows Pandora to
provide hard to match quality jewellery at low cost, while still
maintaining industry leading margins. This vertical integration
also provides Pandora with the ability to bring products
to market quickly. With a modern consumer that craves
newness, this should allow for greater innovation and ability
to get the right products in front of customers.
Growth for Pandora is underpinned by continued store
expansion, its online strategy, and an increasing preference
by consumers for branded jewellery – where Pandora is a
market leader.

January ‘s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
BLACKHAWK NETWORK
+27
%
AMAZON
+24
%
ALIBABA
+18
%
PAYPAL
+16
%
SARINE
+14
%
5 Largest Portfolio Positions as at 31 January 2018
ALPHABET
7
%
PAYPAL
6
%
MASTERCARD
5
%
ESSILOR
5
%
EXPEDIA
4
%
The remaining portfolio is made up of another 21 stocks and cash.
Nov
2007
Nov
2008
Nov
2009
Nov
2010
Nov
2011
Nov
2012
Nov
2014
Nov
2013
Share Price/Total Shareholder Return
Share PriceTotal Shareholder Return
Nov
2015
$
1.00
$
1.20
$
0.8 0
$
0.60
$
0.40
$
1.80
$
0.20
$
0.00
$
1.40
Nov
2016
$
1.60
Nov
2017
Total Shareholder Return to 31 January 2018
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Performance to 31 January 2018
^Benchmark index: World Small Cap Gross Index until 30 September 2015 & S&P Large Mid Cap/S&P Small Cap Index (50% hedged to NZD) from 1 October 2015
Non-GAAP Financial Information
Marlin 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 Marlin Non-GAAP Financial Information Policy. A copy of the policy is available at http://marlin.co.nz/about-marlin/marlin-policies/
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Corporate Performance
Total Shareholder Return+0.0% +6.1% +16.3% +10.3% +5.7%
Adjusted NAV Return+5.2% +4.4% +31.2% +10.8% +6.6%
Manager Performance
Gross Performance Return +6.5%+6.1%+38.2%+15.5%+10.5%
Benchmark Index^+2.0%+3.4%+24.4%+15.2%+8.0%
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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 Marlin Global 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 Marlin Global 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.
Marlin Global Limited
Private Bag 93502, Takapuna, Auckland 0740
Phone: +64 9 484 0365 | Fax: +64 9 489 7139
Email: enquire@marlin.co.nz | www.marlin.co.nz
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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
Marlin Global
Marlin 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
international companies (excluding
New Zealand and Australia)
through a single, professionally
managed investment. The aim
of Marlin is to offer investors
competitive returns through capital
growth and dividends.
Capital Management Strategies
Regular Dividends
»Quarterly distribution policy introduced in
August 2010
»Under this policy, 2% of average NAV is targeted
to be paid to shareholders quarterly
»Dividends paid by Marlin 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
»Marlin 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
»Marlin has a buyback programme in place allowing
it (if it elects to do so) to acquire up to 5.9m 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
Warrants
»Warrants put Marlin in a better position to grow
further, improve liquidity, operate efficiently
and pursue other capital structure initiatives as
appropriate
»A warrant is the right, not the obligation, to
purchase an ordinary share in Marlin at a fixed price
on a fixed date
»There are currently no warrants on issue

Management
Marlin’s portfolio is managed
by Fisher Funds Management
Limited. Ashley Gardyne (Senior
Portfolio Manager), Chris
Waters and Harry Smith (Senior
Investment Analysts) have prime
responsibility for managing
the Marlin portfolio. Together
they have significant combined
experience and are very capable
of researching and investing in
the quality global companies that
Marlin 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 Marlin
comprises independent
directors Alistair Ryan (Chair),
Carol Campbell and Andy
Coupe; and non-independent
director Carmel Fisher.