MLN – August 2018 monthly update

1
Monthly Update
August 2018
MLN NAV
$
1.03
SHARE PRICE
$
0.89
DISCOUNT
1
11.3
%
as at 31 July 2018
A word from the Manager
Market Overview
Global markets continued their strong run in July despite
some jitters in the technology sector towards the end of the
month. The MSCI World Index climbed 3.1%, supported by
the US S&P 500 Index (+3.6%) which was lifted by a solid
start to US earnings season. European markets also gained
significant ground (Stoxx 600 Index +3.1%) and emerging
markets posted modest gains (MSCI Emerging Markets
Index +1.2%).
The change in fortunes of the US technology sector during
the month was a focal point. The tech heavy Nasdaq 100
Index (home to Apple, Amazon and Microsoft) started the
month strongly, gaining almost 6% and hitting a new all-
time high at one point during July. However, disappointing
earnings results late in the month from a handful of large-
cap tech companies like Netflix and Facebook caused
the market to sell off and the Nasdaq to close the month
up just 2.2%. This late weakness in tech stocks, combined
with strong US economic growth data (4.1% GDP growth
reported), what appeared to be a temporary truce in the
ongoing trade war, and increasing interest rates created a
favourable environment for cyclical stocks. This caused US
industrial companies (+7%) and banks (+5%) to outperform
tech stocks (+2%) by the widest margin since President
Trump was elected in 2016.
Portfolio Developments
Reporting season was a mixed bag for the Marlin portfolio in
July, with solid results from Alphabet, Expedia and United
Parcel Service unable to offset disappointing results from
eBay, Facebook and Signature Bank.
On the positive side of the ledger, Alphabet (+9%) reported
23% revenue growth in the second quarter, calling out
strong mobile search growth, YouTube and an inflection as
its cloud computing business. It was also pleasing to see
limited impact on advertising so far from new European data
protection regulations (GDPR).
Expedia (+11%) posted a quarterly earnings result that
surpassed market expectations as the company was able to
leverage very healthy revenue growth of 11% into underlying
earnings growth of 18%. The market had been concerned
recently about Expedia’s dependence on expensive digital
advertising channels for customer acquisition, but this result
helped allay these fears by showing strong bookings growth
despite pulling back on marketing spend.
United Parcel Service (+13%) grew earnings 23% versus
the prior year, aided by 10% revenue growth and the
recently enacted US tax cuts. The strong economy is clearly
benefiting United Parcel Service’s delivery volumes and the
company is actively exploring ways to increase automation
and add capacity so it can continue to capitalise on growing
e-commerce parcel volumes.
On the negative side of the ledger, eBay’s (-8%) quarterly
result was slightly disappointing, with revenue growth of
9% coming in lower than expectations. In our opinion the
big picture has not changed. We believe eBay should still
grow earnings by over 10% per annum, with potential upside
by better monetising advertising space on its website and
capturing a greater share of customer wallets by in-sourcing
payment services from PayPal.
Signature Bank’s (-14%) share price fell in July as its results
showed that recent rate hikes by the US Federal Reserve are
compressing its net interest margin (the spread between
what is receives on loans and pays on deposits). While a
strong economic environment has allowed it to grow its loan
book by 12% over the last year, increasing funding costs
restricted growth in its net interest income to 4.5%. While the
result is disappointing, we are pleased with both the growth
and credit quality of Signature Bank’s loan book, which we
believe will ultimately allow for stronger earnings growth as
the Federal Reserve tightening cycle slows.
Facebook (-11%) received a lot of publicity late in July.
The significant fall in the company’s share price came
after announcing it would need to hire more staff and
1
Share Price Discount to NAV (including warrant price on a pro-rated basis)
WARRANT PRICE
$
0.08

2
Sector Split
as at 31 July 2018
Key Details
as at 31 July 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
$1.02
SHARES ON ISSUE
119m
MARKET CAPITALISATION
$106m
GEARING
None (maximum permitted 20%
of gross asset value)
33
%

TECHNOLOGY
10
%
INDUSTRIALS
22
%

CONSUMER
22
%

HEALTHCARE
Geographical Split
as at 31 July 2018
18
%
WEST EUROPE
73
%
NORTH AMERICA
8
%
FINANCIALS
5
%

ASIA
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Limited
increase spending on security, data protection and content
moderation. These investments are aimed at reducing the
spread of fake news, eliminating election interference, and
also providing users with tools to control how personal
data is used for advertising. The scale of these investments
caught the market by surprise and management’s margin
targets are lower than we would have liked. That said, if these
investments ultimately increase trust and engagement by
Facebook’s community of 2.5 billion users, then this spending
will help the company maximise the long-term value of its
various platforms (Facebook, Instagram, Messenger and
WhatsApp). It is important to put the disappointing guidance
in context: Facebook announced advertising revenues that
grew over 40%, global user growth of 11%, and a 31% growth
in earnings. Facebook owns two of the largest media assets in
the world (Facebook and Instagram), to which advertisers are
allocating an increasing share of their advertising budgets.
Despite the slowdown in growth, Facebook is still expected
to generate more than 20% per annum growth in revenue
and earnings over the next few years.
The Marlin portfolio also holds cash.
2
%

ENERGY
The Marlin portfolio also holds cash.

July’s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
UNITED PARCEL
SERVICE
+13
%
EXPEDIA
+11
%
CORE LABORATORIES
-11
%
FACEBOOK
-11
%
SIGNATURE BANK
-14
%
5 Largest Portfolio Positions as at 31 July 2018
ALPHABET
8
%
TJX COMPANIES
6
%
PAYPAL
5
%
ESSILOR
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 July 2018
Performance to 31 July 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Corporate Performance
Total Shareholder Return+4.0%+10.8%+24.8%+9.6%+6.6%
Adjusted NAV Return+0.8%+5.7%+22.7%+8.8%+7.0%
Manager Performance
Gross Performance Return +1.1%+6.9%+25.9%+12.7%+10.7%
Benchmark Index^+1.8%+4.9%+18.2%+10.1%+8.0%
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.