MLN – June 2018 monthly update

1
Monthly Update
June 2018
MLN NAV
$
1.01
SHARE PRICE
$
0.87
DISCOUNT
1
13.0
%
as at 31 May 2018
A word from the Manager
Global equity markets were mixed in May. The US S&P500
Index was up 2.2% boosted by the tech sector, while the
European Stoxx 600 Index fell due to political turbulence,
and emerging markets continued to retreat as the US dollar
strengthened. The Marlin portfolio lifted 2.9% on a gross
performance basis.
Marlin’s performance was driven by a number of Marlin’s
large technology holdings, but also from solid first
quarter financial results from Icon Plc, MasterCard and
TJX Companies – which helped offset a poor result from
Pandora.
Payments technology company PayPal was up 10% during
May, with its investor day shedding more light on its long
term strategy (which we discuss in more detail below).
Alibaba was up 11%, driven by financial results that showed
core commerce revenue growth of 62% on the prior year.
Recent portfolio addition Facebook was up 12% during the
month as it continued to rebound from recent privacy and
regulatory concerns.
PayPal’s widening moat
PayPal is worth discussing in more detail this month given
they recently held their annual investor day, which shed
further light on its evolving business model and future
growth aspirations.
We have always believed that PayPal has a strong
competitive advantage, which has helped it fend off new
entrants to the payment space like ApplePay. PayPal has a 15
year lead over many potential competitors, over 18 million
loyal online merchants that accept PayPal, and over 200
million users that rely on PayPal for online payment. This hard
to replicate network, user trust and first mover advantage
helps provide PayPal with a protective moat.
Our interest in PayPal’s investor day was to look for clues on
how PayPal is trying to protect this moat. Our takeaway was
that PayPal’s recent partnerships with a number of banks and
large technology companies like Google and Facebook are
strengthening its competitive advantage.
Large US banks like the Bank of America, Wells Fargo
and Chase are seeing an increasing volume of customer
transaction volume move online. To ensure they are still
participating and earning fees on these online transactions,
they are partnering with PayPal to ensure it is their credit
cards linked into the PayPal wallet. The rush by banks to
get their cards at the top of users’ PayPal wallets has led
to banks providing incentives (like a $150 credit by Wells
Fargo or 5% cash back on Chase cards) to customers that
set up a PayPal account and link it to their credit card. This
has resulted in a significant jump in user growth for PayPal.
The partnerships with Facebook and other technology
companies are also important as they signal that these
companies do not want the complexity of building their
own payments business. They would rather leverage
PayPal’s infrastructure to move more quickly and allow for
digital payments in products like Facebook Messenger and
Instagram. These partners are increasingly seeing PayPal as
platform to leverage, rather than a competitor.
Networks like PayPal often get stronger with scale. The
more users PayPal has, the more that online merchants
will want to adopt it as a payment option for customers
to use. And the more merchants that accept PayPal, the
more users will see benefit in having a PayPal wallet.
Overall we see these recent partnerships as extending
PayPal’s competitive advantage, and supporting
strong growth as they gain new users and benefit from
ecommerce growth. PayPal is targeting revenue growth of
17-18% and earnings per share growth in excess of 20%
per annum over the medium term, which we believe may
prove to be conservative.
Pandora’s mystery box
The biggest detractor from performance this month
was branded jewellery retailer, Pandora, with its share
price falling 27% in May. Pandora’s results were dragged
down by a slow-down in some of its mature markets
and increasing ‘grey channel’ activity into China - where
a number of Pandora’s wholesale clients began selling
1
Share Price Discount to NAV (including warrant price on a pro-rated basis)
2
S&P Large Mid Cap/S&P Small Cap Index (50% hedged to NZD)
WARRANT PRICE
$
0.05

2
Sector Split
as at 31 May 2018
Key Details
as at 31 May 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
$103m
GEARING
None (maximum permitted 20%
of gross asset value)
33
%

TECHNOLOGY
10
%
INDUSTRIALS
22
%

HEALTHCARE
22
%

CONSUMER
Geographical Split
as at 31 May 2018
18
%
WEST EUROPE
75
%
NORTH AMERICA
The Marlin portfolio also holds cash.
9
%
FINANCIALS
5
%

ASIA
2
%

ENERGY
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Limited
product directly into China, undercutting Pandora’s own
stores. The China news spooked the market, given China
has been one of Pandora’s highest growth regions in recent
years. The company has a number of tools at its disposal
to clamp down on the grey channel and minimise this
headwind, however these initiatives may take a number of
quarters to take effect.
When we added Pandora to the portfolio, we saw a strong
brand with a renewed focus on innovative product launches
and a direct to consumer strategy to accelerate growth.
Our recent discussions with Pandora franchisees in the US
indicate that the new product launches are gaining traction,
and they are looking forward to further product launches in
the coming months to drive a pickup in sales.
While Pandora’s recent results are disappointing, we
anticipate that these new product launches and a clamp
down on the China grey channel will drive an acceleration
in growth as the year progresses.
The Marlin portfolio also holds cash.

May’s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
FACEBOOK
+12
%
ALIBABA
+11
%
PAYPAL
+10
%
ICON
+10
%
PANDORA
-27
%
5 Largest Portfolio Positions as at 31 May 2018
ALPHABET
7
%
PAYPAL
6
%
MASTERCARD
5
%
TJX COMPANIES
5
%
ALIBABA
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
$
2.00
Total Shareholder Return to 31 May 2018
Performance to 31 May 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Corporate Performance
Total Shareholder Return+3.6% +3.5% +19.3% +8.7% +6.0%
Adjusted NAV Return+2.4% +4.7% +18.6% +10.4% +6.8%
Manager Performance
Gross Performance Return +2.9%+4.4%+21.7%+14.3%+10.5%
Benchmark Index^+1.7%+3.0%+14.9%+11.3%+7.8%
3
^Benchmark index: World Small Cap Gross Index until 30 October2015 & 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, adjusted NAV return, 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 after fees and tax,
»adjusted NAV return – the net return to an investor after fees and tax,
»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, adjusted NAV return, 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/

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
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
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 May 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 May 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.