MLN – February 2019 monthly update

1
Monthly Update
February 2019
MLN NAV
$
0.93
SHARE PRICE
$
0.85
DISCOUNT
1
7.5
%
as at 31 January 2019
A word from the Manager
Market Environment and Portfolio
Performance
Global equity markets rebounded strongly in January after a
very difficult end to 2018. The US S&P 500 Index rallied 7.9%
in January, making it the best start to a year in more than 30
years. A change of tack by the US Federal Reserve helped push
markets higher, with the Fed’s ‘wait and see’ approach to further
interest rate increases helping alleviate concerns that rate hikes
would damage the economy.
January is a busy month in the market, with many listed
companies reporting 2018 financial results. Reporting
season is getting extra scrutiny this quarter as investors and
commentators attempt to assess the extent that recent
economic weakness and the trade war are impacting corporate
profits. Results across the market have so far been slightly better
than expected, with an average earnings growth rate of 13%
for companies that have reported. That said, there have been a
number of weak results from cyclical companies like Caterpillar,
that reinforce question marks around the strength of certain
parts of the economy.
Earnings season got off to a positive start for the Marlin
portfolio, with strong results from Alibaba, Facebook and
Signature Bank helping drive outperformance. Marlin delivered
gross performance of 9.5% in January, 3.0% ahead of our global
benchmark which gained 6.5% for the month.
Over the last two years the Marlin portfolio has delivered gross
performance of 17.5% per annum compared with our global
benchmark which has gained 9.1% per annum.
China Research Trip
China was the worst performing major share market in 2018 and
I travelled to China in January to get a better sense of the state
of the economy and to research potential investment ideas.
Attempts by the Chinese government to rebalance its economic
model away from debt-fuelled infrastructure spending and
towards consumption and the private sector has seen a gradual
slowdown in growth. This transition was never going to be
smooth, however the economic slowdown it is causing and the
China-US trade war is causing significant concern. As a result,
it appears that the Chinese government is going to roll back
some of the recent reforms and try to stimulate the economy.
As an example, the central government is pushing local
governments to restart previously halted infrastructure projects
and is encouraging banks to expand lending to businesses. On
top of this, the central bank is also loosening monetary policy.
While this is likely to slow down the reform process, these
measures are important if the government wants to maintain a
growth rate above 6%.
While economic growth has slowed and China’s longer
term economic transition is unlikely to be plain sailing,
the weakness in China’s share market has presented some
attractive investment opportunities in China. My recent trip to
China provided further evidence of the strength of Alibaba
and Tencent’s business models and the long-term growth
opportunities they have in e-commerce, digital payments,
online advertising and cloud computing. As mentioned in
our last quarterly update, we used the market weakness in
China to add Tencent to our portfolio. We also added to our
existing holding in Alibaba late last year. We believe both of
these businesses are positioned to deliver solid growth - even
in a subdued economic environment. We manage our China
risk by being highly selective about our investments and by
constraining China to a relatively small part of the portfolio.
Tencent and Alibaba currently account for approximately 10%
of the Marlin portfolio.
Portfolio Company Results
With all of the scrutiny of Facebook at the moment, its financial
results get a lot of coverage. Our Facebook investment thesis
assumes that despite recent privacy issues, users will continue
to use Facebook and Instagram regularly and advertisers
will increasingly move advertising dollars to these platforms.
Facebook’s fourth quarter results supported this view, with
advertising revenues jumping 30% and the company adding
new users in every major region, including its more mature
markets in the US and Europe. We still believe Facebook has
years of growth ahead as they increasingly monetise Instagram
and as its new ‘stories’ format gains traction with advertisers.
The market responded favourably to Facebook’s results and the
stock was up 27% during the month.
1
Share Price Discount to NAV (including warrant price on a pro-rated basis)
WARRANT PRICE
$
0.04

2
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Limited
Signature Bank gained 24% in January following strong results
and a change in the Federal Reserve’s stance on interest
rates. In 2018 Signature Bank grew its loan and deposit books
significantly, maintained high credit quality, and added eight
new banking teams to position the bank for continued growth.
We believe management have done a good job running the
business in a challenging interest rate environment over the
last two years. The potential for expansion in Signature Bank’s
net interest margin is finally in sight, with it looking unlikely that
the Fed will hike interest rates materially in 2019.
Alibaba posted strong results for the December quarter,
with its core ecommerce revenues growing 27%. The solid
results came despite signs of a slowing economy and weaker
consumer spending in China. The core business also saw it
profit margins increase from already high levels. The company
continues to reinvest a portion of these profits into new growth
areas including food delivery, cloud computing, logistics, online
video streaming, and in new regions including Indonesia and
India. We like companies that are able to continually reinvest
capital back into the business at high rates of return and
Sector Split
as at 31 January 2019
Key Details
as at 31 January 2019
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
$0.97
SHARES ON ISSUE
121m
MARKET CAPITALISATION
$103m
GEARING
None (maximum permitted 20%
of gross asset value)
24
%
CONSUMER
DISCRETIONARY
10
%
INDUSTRIALS
14
%

HEALTHCARE
22
%
INFORMATION
TECHNOLOGY
Geographical Split
as at 31 January 2019
13
%
WEST EUROPE
75
%
NORTH AMERICA
9
%
FINANCIALS
10
%

ASIA
2
%

ENERGY
The Marlin portfolio also holds cash.
16
%
COMMUNICATION
SERVICES
believe that Alibaba sits in this category. Despite the potential
for these investments to drag on overall profit margins in the
near-term, the market appears to be warming to Alibaba’s
growth strategy and the stock was up 23% during the month.
PayPal announced fourth quarter results that came in
marginally below market expectations and detracted from
Marlin’s performance in January. While we were pleased with
PayPal’s operational results, with 25% growth in payment
volumes and 17% growth in active customer accounts,
revenues for the quarter came in slightly below expectations
and PayPal’s share price fell on the results. PayPal continues
to take market share in online payments and its peer-to-peer
payment app, Venmo, continues to grow rapidly and provide
long term optionality. Despite underperforming the market,
PayPal’s share price still gained 6% in January.

January’s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
FACEBOOK
+27
%
SIGNATURE BANK
+24
%
ALIBABA GROUP
+23
%
EBAY INC
+20
%
5 Largest Portfolio Positions as at 31 January 2019
ALPHABET
8
%
ALIBABA
6
%
PAYPAL
6
%
MASTERCARD
5
%
TJX COMPANIES INC
5
%
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
Nov
2018
Total Shareholder Return to 31 January 2019
Performance to 31 January 2019
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Company Performance
Total Shareholder Return+2.4%(6.1%)+11.1%+11.7%+6.2%
Adjusted NAV Return+8.7%(0.4%)+1.4%+10.0%+6.2%
Portfolio Performance
Gross Performance Return +9.5%+1.0%+3.2%+14.0%+9.8%
Benchmark Index^+6.5%(2.0%)(4.3%)+10.7%+6.9%
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/
HEXCEL CORP
+18
%

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.