MLN – October 2018 monthly update

1
Monthly Update
October 2018
MLN NAV
$
1.05
SHARE PRICE
$
0.94
DISCOUNT
1
7.8
%
as at 30 September 2018
A word from the Manager
Market Overview
September marked the 10-year anniversary of the collapse
of Lehman Brothers and the extreme market volatility that
followed. This September provided a stark contrast, with
low volatility and both the S&P 500 (+0.4%) and Dow Jones
Industrial Average (+1.9%) in the US hitting all-time highs
during the month. Equity markets also took little notice of
developments that had caused more concern earlier this
year, including escalating US-China trade tensions, and rising
interest rates. European markets (+0.2%) also gained, while
emerging markets (-1.4%) continued to retreat.
In a reversal of recent fortunes technology shares sold off and
underperformed the broader market, with the tech-heavy
Nasdaq Composite (-0.8%) lagging the other US indices.
This dragged slightly on Marlin’s performance, with some of
our core technology holdings like Alphabet, Facebook and
PayPal lagging the market.
September also saw a jump in oil prices (+7%), higher US
interest rates, tighter labour markets and US inflation at
the Federal Reserve’s 2% target level - all confirming global
inflationary pressures continue to build.
The Marlin portfolio fell 0.2% in September, compared with
our global benchmark which fell 0.5%.
Portfolio Developments
Edwards Lifesciences (+21%) and Abbott Labs (+10%) were
top performers this month, following Abbott’s announcement
of positive results from the trial of its MitraClip device that
is used to treat patients with mitral regurgitation, a form
of heart failure. The results were better than anticipated,
showing significant improvements in hospitalisation rates
and mortality. This was obviously positive news for Abbott,
but more importantly this trial shows that treating mitral
regurgitation in heart failure patients results in patients living
longer, staying out of the hospital and feeling better. Until
these results, that question remained unanswered. Given
that Edwards also has a number of medical devices under
development for treating these heart failure patients, the
stock also reacted positively to this news.
Electronic Arts (EA), was also a strong performer, gaining
7% after adding it to the portfolio during the month. EA
is one of the world’s leading video game publishers, with
hit franchises including FIFA, Madden and Battlefield.
The company operates in an industry that we believe is
positioned for sustainable revenue growth and margin
expansion. The gaming industry is transitioning from a hit
driven revenue model, based on game units sold, to more
of a recurring revenue model, where customers not only
pay the up-front cost of a game, but also spend money on
in-game items, which may be cosmetic or improve game
play. The result of this transition is that EA is able to better
monetise games, with these new digital revenue streams
also having higher profit margins.
Logistics software provider Descartes reported solid
second quarter results, with revenue growing 17%
and earnings growing 15% compared to last year. The
integration of the 2017 acquisition of MacroPoint is also
going well, and Descartes are seeing increasing interest
from customers that want to use MacroPoint’s real-time
tracking capabilities to help fill unused backhaul capacity.
Two detractors from performance in September were
Alibaba and LKQ. While there was limited company-
specific news for aftermarket car parts distributor LKQ
(-8%), its share price was dragged down with the broader
auto sector, which has come under pressure from the
ongoing US-China trade war.
Chinese e-commerce platform Alibaba (-7%) fell in
September, dragged down with Chinese technology stocks
more broadly, but also by the announcement of Jack Ma’s
retirement from the role of Executive Chairman. While Jack
Ma hasn’t been as active in the business in recent years
(it is run by CEO Daniel Zhang), the announcement came
earlier than investors had anticipated. Alibaba also held its
annual investor day during September. The presentations
showed continued strong growth in Tmall and Taobao
users, and the ongoing popularity of Tmall for foreign
brands looking to sell to Chinese consumers. Alibaba also
1
Share Price Discount to NAV (including warrant price on a pro-rated basis)
WARRANT PRICE
$
0.10

2
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Limited
shed more light on a number of its rapidly growing
adjacent businesses, including AliPay in digital
payments business, Aliyun in Cloud infrastructure,
and Ele.me, its rapidly growing food delivery unit. In
Alibaba we continue to see a dominant and growing
e-commerce business, with significant adjacent growth
opportunities that should support earnings growth for
many years to come.
Sector Split
as at 30 September 2018
Key Details
as at 30 September 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
$1.00
SHARES ON ISSUE
120m
MARKET CAPITALISATION
$113m
GEARING
None (maximum permitted 20%
of gross asset value)
22
%

HEALTHCARE
10
%
INDUSTRIALS
14
%
COMMUNICATION
SERVICES
22
%

TECHNOLOGY
Geographical Split
as at 30 September 2018
16
%
WEST EUROPE
77
%
NORTH AMERICA
8
%
FINANCIALS
5
%

ASIA
The Marlin portfolio also holds cash.
2
%

ENERGY
The Marlin portfolio also holds cash.
20
%

CONSUMER

September’s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
EDWARDS
LIFESCIENCES
+21
%
ABBOTT
LABORATORIES
+10
%
ELECTRONIC ARTS
+7
%
ALIBABA
-7
%
5 Largest Portfolio Positions as at 30 September 2018
ALPHABET
8
%
PAYPAL
6
%
TJX COMPANIES
5
%
ALIBABA
5
%
FRESENIUS
MEDICAL CARE
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
$
0.50
$
0.00
$
1.50
Nov
2016
Nov
2017
$
2.50
$
2.00
Total Shareholder Return to 30 September 2018
Performance to 30 September 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Company Performance
Total Shareholder Return+0.5%+12.7%+35.5%+14.6%+7.2%
Adjusted NAV Return(0.4%)+5.0%+21.7%+12.7+7.3%
Portfolio Performance
Gross Performance Return (0.2%)+5.4%+24.7%+16.7%+11.0%
Benchmark Index^(0.5%)+4.3%+15.1%+13.6%+8.1%
3
^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, 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 currency hedging before fees and tax, 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/
LKQ CORPORATION
-8
%

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.