MLN – May 2018 monthly update

1
Monthly Update
May 2018
MLN NAV
$
0.99
SHARE PRICE
$
0.84
DISCOUNT
15.2
%
as at 30 April 2018
A word from the Manager
Volatility subsided in April and markets gained, with investors
focusing on the start of a strong corporate earnings season
in the US and less on trade war headlines.
So far it has been a blockbuster earnings season in the
US, with earnings per share for the market (S&P 500) on
track to grow more than 20% on the prior year. While part
of this earnings growth has been driven by the Trump
Administration tax cuts, underlying revenue growth of 10%
for companies that have reported is solid and ahead of the
7% growth expected.
What is also evident from following recent corporate
results is a pick-up in inflationary pressures. Companies
have referenced significant wage inflation and pointed to
increasing oil and freight costs as factors impacting their
businesses. While there is some concern that these costs
could crimp corporate profit margins, at this stage strong
revenue growth is allowing companies to offset these
pressures.
For April, the Marlin portfolio was up 1.4%, behind our global
benchmark
1
which was up 2.5%.
Facebook: from likes to shares
We added Facebook to the portfolio in April. Facebook
owns four of the most dominant social networking and
messaging platforms in the world (Facebook, Instagram,
Messenger and WhatsApp) and has an unparalleled ability to
deliver an audience of over 2 billion users to advertisers.
The average US user spends over an hour a day on Facebook
and Instagram combined. I recently installed an app to track
how much time I spend on my smartphone. I was hopeful the
app would prove I didn’t spend that much time looking at my
mobile screen, but unfortunately I failed miserably – it turns
out I’m on my phone anywhere from one to two hours a day!
While our smartphone addictions may not be great news for
our employers, TV networks or even family members trying
to get our attention – our increasing mobile usage is great
for Facebook’s advertising revenue – and marketers savvy
enough to use their ad platform.
Facebook’s treasure trove of data on users means that they
not only know your age, gender and location, but they
also know your hobbies, who you are friends with, and
what you do and don’t like. This data means Facebook
can offer advertisers a level of targeting like no one else,
and when combined with Facebook’s huge reach should
allow Facebook to capture a significant share of advertising
budgets as they move online.
We have been following Facebook for some time – it is a
high quality growth company with a great business model
and a long runway for growth. However, we were waiting on
the sidelines for an attractive buying opportunity. The recent
scrutiny of Facebook following the Cambridge Analytica
data breach caused the Facebook share price to recede,
and we believe this has created an opportunity for Facebook
investors to purchase the stock at a very attractive valuation.
While we don’t take the regulatory risks facing Facebook
lightly, we believe management will do what is necessary
to restore user trust. We believe the scandal itself will
have limited impact on the number of Facebook users as
consumers’ mobile usage and social media habits are now
well entrenched. Facebook has become a primary way for
people to communicate, follow developments with friends
and family, and to build new relationships. It has also become
a store of our memories and photographs. In the modern
world, most users are now comfortable sharing some of their
data (and being shown targeted adverts) in exchange for
access to these social platforms.
In our opinion, new regulations in the sector that make it
harder to share user data (along the lines of GDPR in Europe)
are likely to simply entrench the competitive advantage of
companies like Facebook and Google who already have this
data. While it is still early days, Facebook’s first set of results
since our investment have shown strong profit growth and
increasing user numbers - with the addition of 70 million
monthly active users globally in the first quarter.
The addition of Facebook was funded through our exit of
Amazon. The decision to exit Amazon was a difficult one
as we admire Amazon, its founder Jeff Bezos, and the wide
1
S&P Large Mid Cap/S&P Small Cap Index (50% hedged to NZD)

2
Sector Split
as at 30 April 2018
Key Details
as at 30 April 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
118m
MARKET CAPITALISATION
$99m
GEARING
None (maximum permitted 20%
of gross asset value)
31
%

TECHNOLOGY
10
%
INDUSTRIALS
22
%

HEALTHCARE
23
%

CONSUMER
Geographical Split
as at 30 April 2018
20
%
WEST EUROPE
73
%
NORTH AMERICA
The Marlin portfolio also holds cash.
9
%
FINANCIALS
4
%

ASIA
3
%

ENERGY
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds
moats it is building around its retail and cloud businesses.
However, the share price has more than doubled since we
invested nearly two years ago and we believe the market is
getting ahead of itself. Specifically, investors may be overly
optimistic about the margin levels Amazon can ultimately
achieve in its retail business, particularly given future retail
growth will become increasingly dependent on loss-making
international markets and on less profitable categories (like
grocery). Amazon appears priced to perfection, with little
room for hiccups.

April’s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
CORE LABORATORIES
+14
%
UNITED PARCEL
SERVICE
+8
%
EDWARDS
LIFESCIENCES
-9
%
SIGNATURE BANK
-10
%
LKQ CORPORATION
-18
%
5 Largest Portfolio Positions as at 30 April 2018
ALPHABET
7
%
PAYPAL
5
%
MASTERCARD
5
%
FRESENIUS
MEDICAL CARE
5
%
ESSILOR
5
%
The remaining portfolio is made up of another 20 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 30 April 2018
Performance to 30 April 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%+1.2% +19.6% +9.1% +5.7%
Adjusted NAV Return+1.3% +1.2% +17.5% +11.5% +6.6%
Manager Performance
Gross Performance Return +1.4%+0.3%+20.9%+15.5%+10.3%
Benchmark Index^+2.5%(1.3%)+12.5%+13.8%+7.7%
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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
»On 16 April 2018, a new issue of warrants (MLNWC)
was announced
»The warrants were issued at no cost to eligible
shareholders and in the ratio of one warrant for
every four Marlin shares held
»Exercise Price = $0.83 per warrant, to be adjusted
down for dividends declared during the period up
to the Exercise Date
»Exercise Date = 12 April 2019
»The final Exercise Price will be announced and an
Exercise Form will be posted to warrant holders in
March 2019

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.