MLN – November 2018 monthly update

1
Monthly Update
November 2018
MLN NAV
$
0.96
SHARE PRICE
$
0.92
DISCOUNT
1
1.8
%
as at 31 October 2018
A word from the Manager
Market Overview
Global markets headed south in October in what was one of
the biggest monthly declines for equities since the financial
crisis. In the US, the 7% fall in the S&P 500 Index made it the
worst month since September 2011. While the exact drivers
of the sell-off are widely debated, rising inflation and interest
rates, combined with the escalating trade war, have caused
investors to question if economic growth and corporate profits
may have peaked for this cycle. These growth concerns were
reflected in steeper declines for growth sensitive sectors
during the month, with the Industrial (-11%), Consumer
Discretionary (-11%) and Technology (-8%) sectors of the S&P
500 declining more than the broader market.
In contrast to the weak market, initial results from earnings
season during the month showed that most listed US
companies are growing strongly.
The Marlin portfolio fell 8.5% in October, compared with our
global benchmark which fell 7.8%.
Portfolio Changes
While it is still difficult to find bargains in the current market,
this recent volatility did create some opportunities. Tencent
Holdings is a company we have followed for quite some
time, but in our opinion it has often been fully valued. Recent
weakness in the Chinese market and technology stocks more
broadly finally gave us the opportunity to add Tencent to the
portfolio at what we believe is an attractive price.
Tencent is China’s largest online gaming company and leading
social network, with leading positions also in digital payments,
music & video streaming, and cloud computing. Tencent’s
WeChat is the largest social media and messaging platform in
China, with over a billion users on the platform and average
usage of over an hour per day. WeChat provides much broader
functionality than Western social media platforms. In addition
to providing a Facebook equivalent newsfeed, WeChat
also allows users to read the news, shop online, check bank
balances, pay utility bills, watch videos and make in-store &
online payments. Tencent also has a dominant position in the
Chinese online gaming market, with over 55% market share.
It distributes a mix of its own titles and licenced third party
content and has built up a number of strategic partnerships
with global gaming companies (including EPIC, the publisher
of hit game Fortnite). Its online gaming and social media
businesses are highly cash generative and this cash flow
is being reinvested in new growth areas including Tencent
Video (the leading online video service with circa.500m users),
Tencent Music (the leading music streaming platform) and
Tencent Pay (a leading payment platform alongside Alibaba’s
AliPay). WeChat also serves as an extremely valuable platform
to market and distribute these newer products, allowing them
to gain new customers and scale these businesses quickly.
We see many years of growth ahead for Tencent, in both its
core and adjacent businesses.
Portfolio Company Developments
Third quarter reporting season is underway and there have
been a number of notable results.
PayPal was one of the top contributors to performance in
October. Its recent results showed that the rate of new user
acquisition has accelerated, with the addition of 9.1 million
new users to its payments platform during the quarter. This
helped drive 25% growth in transaction volumes and 26%
growth in PayPal’s earnings per share. PayPal has also started
to show progress monetising Venmo, its popular peer-to-peer
payment service.
Ecolab, the cleaning supplies company, reported underlying
sales growth of 7%, which was a significant pick-up from last
year’s levels and included a 2% boost from higher prices.
Ecolab’s innovative products have historically allowed it to
price its product above competitors, and these results show
that Ecolab have been able to pass on increasing input costs
to customers and drive double-digit earnings growth.
After a tough start to the year when they reduced growth
guidance, Expedia’s execution has improved and its most
recent results showcased better than expected bookings
growth and margins. Hotel bookings grew 11% and its
vacation rental business HomeAway continues to deliver
outsized growth, with 24% bookings growth during the
quarter. The better than expected results saw management
increase its earnings growth guidance for the year to 10%-
12% (up from 7-10%).
1
Share Price Discount to NAV (including warrant price on a pro-rated basis)
WARRANT PRICE
$
0.08

2
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Limited
Dialysis care provider, Fresenius, delivered disappointing
results during October and was the biggest detractor from
performance. Revenue growth in the third quarter of 3% on
a constant currency basis was weaker than expected. This
was partly due to fewer patients coming through higher
paying commercial insurance channels, and a higher mix
of patients from lower priced government programmes.
While these results are disappointing, Fresenius services a
kidney dialysis market that we expect to grow steadily and
profitably over the long term.
Video game company, Electronic Arts, also reported
some disappointing results in October. While total revenue
and full game downloads grew strongly, its increasingly
important Live Services division grew only 6%. Live Services
Sector Split
as at 31 October 2018
Key Details
as at 31 October 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
$110m
GEARING
None (maximum permitted 20%
of gross asset value)
22
%

TECHNOLOGY
10
%
INDUSTRIALS
17
%
COMMUNICATION
SERVICES
19
%
CONSUMER
DISCRETIONARY
Geographical Split
as at 31 October 2018
14
%
WEST EUROPE
75
%
NORTH AMERICA
9
%
FINANCIALS
9
%

ASIA
The Marlin portfolio also holds cash.
2
%

ENERGY
The Marlin portfolio also holds cash.
19
%

HEALTHCARE
includes in-game purchases like its FIFA Ultimate Team
card packs and growth was weaker than the 10-15% we
would have liked. That said, FIFA is a strong franchise and
while monetisation in any given quarter can be lumpy, we
see considerable long term potential for growth in the
number of players and in-game spend.

October’s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
CORE LABORATORIES
-25
%
ELECTRONIC ARTS
-23
%
FRESENIUS MEDICAL
-23
%
EDWARDS
LIFESCIENCES
-14
%
5 Largest Portfolio Positions as at 31 October 2018
ALPHABET
7
%
PAYPAL
6
%
ALIBABA
6
%
MASTERCARD
5
%
TJX COMAPNIES
4
%
The remaining portfolio is made up of another 21 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 31 October 2018
Performance to 31 October 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Company Performance
Total Shareholder Return(2.6%)+5.6%+25.5%+13.2%+6.9%
Adjusted NAV Return(8.6%)(4.7%)+6.3%+8.8%+6.4%
Portfolio Performance
Gross Performance Return (8.5%)(4.6%)+8.5%+12.4%+10.0%
Benchmark Index^(7.8%)(5.6%)+1.0%+9.2%+7.2%
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
-13
%

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 2019
»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.