MLN – March 2019 monthly update

1
Monthly Update
March 2019
MLN NAV
$
0.98
SHARE PRICE
$
0.86
DISCOUNT
1
10.3
%
as at 28 February 2019
A word from the Manager
Market Environment and Portfolio
Performance
Equity markets have had quite a ride over the last six
months. After dramatic falls at the end of last year, global
equity markets continued to rebound in February after a
record setting bounce in January. The US S&P 500 Index
rallied 3% in February and is now up 11% for the year and
18% from its pre-Christmas lows.
After despondently selling shares in December and
pushing the S&P 500 nearly 20% lower at one point, many
investors have now deemed it wise to start buying at
current levels. Concerns at the end of last year (slowing
global economic growth and Federal Reserve rate hikes)
caused many investors to see elevated risks and their
selling pushed markets lower. Just two months later many
of these same investors now see reduced risks, (with
the Fed taking a break on rate hikes) and their buying is
pushing markets higher.
While I won’t offer any views on what the market may do
over the next month, quarter or year (you can flip a coin
as well as I can), what the above behaviour hopefully
illustrates is that it is usually damaging to sell when you
see risks in every direction, and to buy only when the coast
looks clear. Investors that have done that recently may
well wish they spent the summer at the beach rather than
trading their portfolios.
As discussed in our quarterly newsletter, we used the
weakness at the end of last year to increase our holdings
in some of our favourite businesses (PayPal, Alphabet,
MasterCard, TJX Companies and Alibaba). With the
market now having rebounded and been given the ‘all
clear’ by investors, we think that it is appropriate to
become slightly more cautious. Some of the new ideas we
are currently researching are more defensive in nature and
we will discuss this more over the coming months.
In February, Marlin delivered gross performance of +5.1%,
+0.7% ahead of our global benchmark which gained +4.3%
for the month. The adjusted NAV return was +4.9%.
Over the last two years the Marlin portfolio has delivered
gross annualised performance of +20.5%, compared with our
global benchmark which has recorded a two-year annualised
gain of +9.6%. The two year annualised adjusted NAV
performance was +16.4%.
Portfolio Company Developments
Logistics software provider, Descartes, recently announced
the acquisition of Visual Compliance for $250 million,
adding to its growing customs and regulatory compliance
offering. Descartes has a long history of making bolt-on
acquisitions and adding new capabilities to its Global
Logistic Network (GLN). Descartes’ GLN software helps
businesses globally (like Home Depot) to connect to freight
providers and facilitate the global movement of goods. This
includes everything from booking freight moves and tracking
shipments, to digitally filing customs documents with the
relevant authority as shipments arrive in port. Acquisitions
like Visual Compliance add more capabilities to Descartes’
offering and in our opinion strengthen the company’s moat
and long-term growth prospects. As Descartes’ solution set
is much broader than just customs and trade compliance,
the acquisition will also allow Descartes to sell its broader
software offering to Visual Compliance customers.
We decided to exit long time portfolio holding eBay from
the portfolio in February. Despite some poor recent financial
results, we have been somewhat lucky recently with eBay and
its share price having gained over 30% this year on news that
activist investors Elliott Management and Starboard Value
have taken stakes in the company. These activist investors are
pushing for eBay to sell its ticketing business (Stubhub) and
its collection of online classified websites (including Gumtree)
and refocus its efforts on growing its core ecommerce
marketplace.
Of course, luck is not a good investment strategy. We
maintained our investment in eBay last year as we believed
the company was making some credible steps to reaccelerate
its e-commerce growth and acquire new users. Its initiatives
in payments and advertising also added new and promising
high margin revenue streams. That said, its recent financial
1
Share Price Discount to NAV (including warrant price on a pro-rated basis)
WARRANT PRICE
$
0.06

2
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Limited
results have shown that growth is slowing despite these
efforts (in a strong e-commerce market) and this had caused
us to question our investment in eBay. The intervention by
Elliott Management was therefore timely and has allowed
us to exit our holding at what we think is a fair price.
This cloud did have a silver lining however. While eBay
certainly hasn’t been one of our best investments, it did
provide us with our investment in PayPal (which used to
be part of eBay), which has been a major contributor to
portfolio performance in recent years.
Portfolio Company Results
Fourth-quarter reporting season continued in February and
while we were disappointed with eBay’s results, most of our
portfolio companies delivered pleasing updates.
Animal healthcare company, Zoetis, reported 7% revenue
growth and 21% earnings growth driven by strength in
its companion animal business. Its dermatology products
for cats and dogs delivered strong growth and the recent
Sector Split
as at 28 February 2019
Key Details
as at 28 February 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
$104m
GEARING
None (maximum permitted 20%
of gross asset value)
23
%
INFORMATION
TECHNOLOGY
11
%
INDUSTRIALS
15
%

HEALTHCARE
21
%
CONSUMER
DISCRETIONARY
Geographical Split
as at 28 February 2019
13
%
WEST EUROPE
73
%
NORTH AMERICA
10
%
FINANCIALS
10
%

ASIA
2
%

ENERGY
The Marlin portfolio also holds cash.15
%
COMMUNICATION
SERVICES
acquisition of Abaxis (diagnostic tools for vets) is being
integrated on schedule and initial results are promising.
Off-price retailer, TJX Companies, delivered impressive
fourth-quarter results. Same store sales growth of 6%
would be the envy of many retailers and on top of this they
continue to roll-out new stores. Management provided
upbeat guidance for 2019 and reaffirmed its long-term
target of having 6,100 stores – which compares to its current
footprint of 4,306 stores and provides visibility to another
decade of solid growth.
The Marlin portfolio also holds cash.

February’s Biggest Movers in local currency terms
Typically the Marlin portfolio will be invested 90% or more in equities.
DESCARTES SYSTEMS
+11
%
PAYPAL
+10
%
ZOETIS
+9
%
EBAY INC
+9
%
5 Largest Portfolio Positions as at 28 February 2019
ALPHABET
8
%
ALIBABA
7
%
PAYPAL
7
%
MASTERCARD
5
%
TJX COMPANIES INC
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
Nov
2018
Total Shareholder Return to 28 February 2019
Performance to 28 February 2019
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Company Performance
Total Shareholder Return+1.7%(0.6%)+11.7%+12.3%+6.3%
Adjusted NAV Return+4.9%+5.9%+7.5%+13.7%+6.6%
Portfolio Performance
Gross Performance Return +5.1%+6.7%+9.7%+17.9%+10.2%
Benchmark Index^+4.3%+3.4%+2.5%+12.8%+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/
ALIBABA GROUP
+9
%

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, Andy Coupe
and Carmel Fisher.