MLN – July 2018 monthly update

1
Monthly Update
July 2018
MLN NAV
$
1.02
SHARE PRICE
$
0.86
DISCOUNT
1
14.1
%
as at 30 June 2018
A word from the Manager
After a strong start to June, global equity markets retreated
late in the month and closed broadly flat as trade fears
re-emerged. The sell-off in late June was driven by an
escalation in the US/China trade conflict, with Trump asking
his administration to identify a list of a further $200 billion of
Chinese goods to target with tariffs. Coupled with Trump’s
tariff news, car manufacturer Daimler released a profit warning
citing the expectation of higher tariffs on the Mercedes-Benz
SUVs it exports from the US to China. Harley-Davidson also
announced plans to shift more production overseas to avoid
European Union tariffs on its iconic motorcycles. While the
Marlin portfolio has limited exposure to areas that would
be the most vulnerable in a trade war, such as autos and
industrial capital goods, these developments highlight the
disruption a full-blown trade war could cause.
In addition to escalating trade war tensions, China’s share
market entered bear market territory in June, and by the end
of the month was down over 20% from the highs of January.
The weakness in the Chinese market has been driven by trade
concerns, but also evidence that tighter credit conditions
are starting to slow growth. In this choppy environment
defensive sectors including utilities and consumer staples
outperformed, while industrial and technology companies
underperformed. The Marlin portfolio rose 2.7% on a gross
performance basis.
Research trip to the United States
One of the benefits of managing global equities from New
Zealand is that we are a step removed from day-to-day market
noise. US and European markets are closed during New
Zealand office hours so we aren’t glued to our Bloomberg
screens. We also get fewer interruptions and visits from share
brokers, which means we can spend more time focusing on
the fundamentals of the businesses Marlin holds and those
which Marlin may hold in the future. We think this environment
is conducive to clearer thinking and more rational decision
making, less influenced by market chatter and sentiment.
That said, because the quality of management is a critical
factor in our decision making, we do travel overseas regularly
to meet the management teams of the companies we invest
in and to research new investment leads. Our Senior
Investment Analysts Harry and Chris recently returned
from two weeks in the US doing just this. On their travels
through Boston, New York, Los Angeles and Washington
they met with management of around 40 companies
including five of the existing portfolio companies and a
number of companies on our watch list. We came away
from these meetings feeling positive about the prospects
of the portfolio companies, and were able to get further
insights into management plans and share our views on
their strategy.
These meetings and the conferences we attended also
gave us further insight into what is happening on the
ground in various segments of the US economy. The
sentiment of the companies we met was generally upbeat.
Companies continue to invest heavily in IT and digital
strategies which is positive for portfolio companies such
as Cognizant, Descartes and Alphabet. Retailers are
more upbeat than a year ago, with low unemployment, tax
cuts and increasing wages for many Americans pushing
consumer confidence to near record highs. Portfolio
holding, TJX Companies, the off-price retailer, is seeing
this in its stores and its share price continued to climb
during June (+5%) following its strong results last month.
During our trip we also sat down with Doug Baker, CEO of
hygiene solutions company Ecolab, to discuss the growth
opportunities ahead and the actions the company is
taking to stay ahead of competitors. Doug is a particularly
impressive CEO, has been with the company for almost 30
years and in our opinion, it is hard to find a better operator.
Doug is a significant shareholder himself and during his
time as CEO has delivered 12% annual growth in earnings
per share, an increasing dividend and significant value for
shareholders. The company partners with global restaurant
chains, hospitals and manufacturers, providing them with
cleaning systems at a low price, but then earning healthy
margins on the highly recurring revenue generated from
selling the detergent and chemicals needed to operate
the machines. Despite its products often appearing more
expensive than competitors, the company’s innovative
1
Share Price Discount to NAV (including warrant price on a pro-rated basis)
WARRANT PRICE
$
0.06

2
Sector Split
as at 30 June 2018
Key Details
as at 30 June 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
$0.83
SHARES ON ISSUE
119m
MARKET CAPITALISATION
$103m
GEARING
None (maximum permitted 20%
of gross asset value)
33
%

TECHNOLOGY
9
%
INDUSTRIALS
22
%

CONSUMER
23
%

HEALTHCARE
Geographical Split
as at 30 June 2018
18
%
WEST EUROPE
75
%
NORTH AMERICA
8
%
FINANCIALS
5
%

ASIA
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Limited
systems often clean with less water, energy and human
labour – making the overall process cheaper for customers.
This innovation combined with a large direct sales force
has allowed them to continually take share from smaller
competitors.
We also met with the CEO of LKQ Corp, Dominick Zarcone,
to discuss the company’s growth aspirations in Europe. LKQ is
the largest provider of recycled and aftermarket car parts for
collision repairs in the US and mechanical repairs in Europe.
LKQ had significant success in the US over the last 15 years
consolidating the market for collision repair parts, and is now
looking to replicate this success in Europe (albeit largely in
parts used for mechanical repairs). Both markets are highly
fragmented with LKQ’s scale providing procurement and
distribution advantages, and significantly higher fulfilment
rates, which attracts customers and drives further market
share gains. We expect the company to continue to grow
organically and through acquisitions, while also investing in
productivity solutions (like their new automated distribution
facility in the UK) which should increase profit margins.
The Marlin portfolio also holds cash.
2
%

ENERGY
The Marlin portfolio also holds cash.

June’s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
DESCARTES
+11
%
HEXCEL
-6
%
ALIBABA
-6
%
UNITED PARCEL
SERVICES
-9
%
PANDORA
-11
%
5 Largest Portfolio Positions as at 30 June 2018
ALPHABET
7
%
PAYPAL
6
%
TJX COMPANIES
5
%
ALIBABA
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
$
2.00
Total Shareholder Return to 30 June 2018
Performance to 30 June 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Corporate Performance
Total Shareholder Return+1.5%+6.6%+21.5%+9.7%+6.2%
Adjusted NAV Return+2.5%+6.3%+23.3%+10.3%+7.0%
Manager Performance
Gross Performance Return +2.7%+7.3%+26.6%+14.2%+10.7%
Benchmark Index^+1.3%+5.5%+17.1%+10.3%+7.9%
3
^Benchmark index: World Small Cap Gross Index until 30 October 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, 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 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.