BRM – June 2020 monthly update

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A WORD FROM THE MANAGER
In May Barramundi returned gross performance of +7.4%
and an Adjusted NAV return of +7.4%. This compares to our
benchmark, the ASX200 Index (70% hedged into NZ$), which
returned +4.7%.
Supportive data around sustained improvement in Covid-19
cases across Australia has led to an earlier than expected
(gradual) easing in lockdown conditions countrywide. There
have also been tentative signs globally that countries are
beginning to open up their economies from various states
of lockdown. Along with the continued significant fiscal and
monetary policy stimulus this has supported a continuation of
the equity market rally throughout May.
Most sectors in Australia benefitted. The Information
Technology (+14.5% in A$), Communication Services (+8.4%),
Materials (+8.0%) and Real Estate (+6.8%) sectors led the
market gains for the month. Driven by share price weakness
from index bellwether CSL (see below), Healthcare (-5.3%) was
the worst performing sector. Consumer Staples (-0.4%), Utilities
(+2.8%) and Industrials (+3.7%) also lagged the index.
Portfolio News
Ansell (+23.5% in A$) continues to benefit from the increased
focus on hygiene standards globally across the industrial sector
and particularly within healthcare. This continues to drive
structurally higher demand for gloves and protective equipment
made by Ansell benefitting its earnings growth.
With Covid-19 related restrictions beginning to be eased in
Australia, we have seen an early improvement in underlying data.
There have been signs of improvement in consumer spending,
in house and car sales activity as well as in an uptick in job
advertisements. It is early days and these improvements are from
depressed levels. But these positive changes have been sufficient
to buoy share prices of portfolio companies such as employment
advertiser SEEK (+15.6%), Carsales (+13.8%) and real estate
classified advertising company, REA Group (+12.9%).
Similarly, AUB Group (+17.0%) also benefitted from an
improving domestic operating environment in Australia.
Feedback across the insurance broking industry suggests that
insurance premiums continue to tick higher and insurance
broking activity remains reasonably robust.
After a strong run, CSL (-10.7%) underperformed the
broader market in May. There was no material negative news
from CSL itself in the month. CSL seemed to be affected by
an investor rotation away from companies with defensive
earnings characteristics in favour of companies with more
cyclical earnings profiles and that potentially offer more upside
from the economy opening up. In addition, a competitor to
CSL had positive trial results for a new treatment for the rare
condition Myasthenia Gravis. It is still early days in the drug
approval process and we estimate that CSL only derives a small
proportion of its overall revenue from treating patients suffering
from Myasthenia Gravis. However, should this competing drug
receive regulatory approval it could have a negative impact on
CSL’s future earnings. CSL’s plasma collections are also currently
being impacted by social distancing considerations. This is a
shorter-term issue and will be solved in time.
Technology One (-3.3%) reported a softer set of financial
results than the market was expecting. Its core earnings are
predictable. However, it has downgraded its near-term earnings
targets. Linked to this, its pace of growth is tracking below
what is required in order to achieve its stated longer-term
growth objectives. The company is not signing up as many new
customers as expected. This does not seem likely to change in
the near future. It is also taking longer than expected to convert
customers using its software on-premise into the cloud. These
factors all weighed on its share price performance.
Portfolio Changes
We added a position in Woolworths to the portfolio during
May. Woolworths is a high quality dominant supermarket
operator in Australia and has a strong presence in New Zealand.
Woolworths benefits from a broad scale advantage. Along
with a rational, duopolistic competitive structure in both
countries this is supportive of the company’s pricing power
and profitability. Under CEO Brad Banducci, Woolworths has
developed a credible track record over a number of years. It has
cemented its pre-eminent position in supermarket retailing in
Australia and New Zealand.
Given the uncertainty affiliated with the speed and breadth of
Australia and New Zealand’s post Covid-19 economic rebound,
we are attracted by Woolworth’s predictable, defensive earnings
stream. Trading at a reasonable valuation, we were pleased to
have added Woolworths to our portfolio during the month.
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Share Price Premium to NAV (using NAV to four decimal places).
MONTHLY UPDATE
June 2020
BRM NAV
$
0.67
$
0.68
Share Price
PREMIUM
1
2.0
%

as at 31 May 2020

SECTOR SPLIT
as at 31 May 2020
KEY DETAILS
as at 31 May 2020
FUND TYPE
Listed Investment Company
INVESTS IN
Growing Australian companies
LISTING DATE
26 October 2006
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 + 7%
PERFORMANCE FEE
10% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$0.58
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
207m
MARKET CAPITALISATION
$141m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
INFORMATION
TECHNOLOGY
21
%
19
%

INDUSTRIALS
16
%
COMMUNICATION
SERVICES

HEALTHCARE
27
%
3
%

FINANCIALS
CONSUMER
STAPLES
8
%
CONSUMER
DISCRETIONARY
We exited our position in Technology One during May. We like
the Technology One business and business model. It provides
mission critical software to its customers including local council
and government, and higher education organisations. Revenue
from these customers is recurring and reliable. However, as
discussed above, the company’s growth is slow relative to what
is required in order to meet management’s stated longer term
growth objectives. Linked to this, its valuation is stretched in our
view. Should management execution improve and/or valuation
adjusts to be reflective of this lower growth, we could well see
Technology One back in the portfolio in the future.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
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The Barramundi portfolio also holds cash.

MAY’S BIGGEST MOVERS in Australian Dollar Terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
ANSELL
+24
%
AUB GROUP
+17
%
SEEK
+16
%
REA GROUP
+13%
CARSALES.COM
+14
%
5 LARGEST PORTFOLIO POSITIONS as at 31 May 2020
SEEK
7
%
CARSALES.COM
7
%
CSL LIMITED
7
%
COMMONWEALTH
BANK
7
%
XERO LIMITED
6
%
The remaining portfolio is made up of another 20 stocks and cash.
Oct
2006
Oct
2007
Oct
2008
Oct
2009
Oct
2010
Oct
2011
Oct
2012
Oct
2013
Oct
2015
Oct
2016
Oct
2014
Share Price/Total Shareholder Return
Share PriceTotal Shareholder Return
$
0.00
$
0.50
$
1.00
$
1.50
$
2.00
$
2.50
Oct
2017
Oct
2018
Oct
2019
TOTAL SHAREHOLDER RETURN to 31 May 2020
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+11.5%+5.9%+20.1%+13.9%+9.3%
Adjusted NAV Return+7.4%(1.8%)+7.4%+11.5%+8.1%
Portfolio Performance
Gross Performance Return+7.4%(1.6%)+10.3%+14.5%+11.3%
Benchmark Index^+4.7%(8.7%)(6.0%)+4.9%+6.1%
PERFORMANCE TO 31 MAY 2020
^Benchmark Index: S&P/ASX Small Ords Industrial Gross Index until 31 January 2015 & S&P/ASX 200 Index (hedged 70% to NZD)
Non–GAAP Financial Information
Barramundi 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 expenses, fees and tax,
»adjusted NAV return – the return to an investor after expenses, fees and tax,
»gross performance return – the Manager’s portfolio performance in terms of stock selection and currency hedging before expenses, fees and tax, and
»total shareholder return – the return combines the share price performance, the warrant price performance, the net value of converting any warrants into shares, and the dividends paid to shareholders. It assumes
all dividends are reinvested in the company’s dividend reinvestment plan, and that shareholders exercise their warrants, (if they were in the money), at warrant expiry date
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 Barramundi Non–GAAP Financial Information Policy. A copy of the policy is available at http://barramundi.co.nz/about-barramundi/barramundi-policies/
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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 Barramundi 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 Barramundi 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.
Barramundi Limited
Private Bag 93502, Takapuna, Auckland 0740
Phone: +64 9 489 7074 | Fax: +64 9 489 7139
Email: enquire@barramundi.co.nz | www.barramundi.co.nz
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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 BARRAMUNDI
Barramundi 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 Australian companies
through a single, professionally
managed investment. The aim of
Barramundi is to offer investors
competitive returns through capital
growth and dividends.
CAPITAL MANAGEMENT STRATEGIES
Regular Dividends
»Quarterly distribution policy introduced in
August 2009
»Under this policy, 2% of average NAV is targeted
to be paid to shareholders quarterly
»Dividends paid by Barramundi 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
»Barramundi 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
MANAGEMENT
Barramundi’s portfolio is managed
by Fisher Funds Management
Limited. Robbie Urquhart
(Senior Portfolio Manager),
Terry Tolich (Senior Investment
Analyst) and Delano Gallagher
(Investment Analyst) have prime
responsibility for managing the
Barramundi portfolio. Together
they have significant combined
experience and are very capable
of researching and investing in the
quality Australian companies that
Barramundi 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 Barramundi comprises
independent directors Alistair
Ryan (Chair), Carol Campbell,
and Andy Coupe; and non-
independent director Carmel
Fisher.
Share Buyback Programme
»Barramundi has a buyback programme in place allowing
it (if it elects to do so) to acquire its shares on market
»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
»Warrants put Barramundi in a better position to grow
further, operate efficiently and pursue other capital
structure initiatives as appropriate
»A warrant is the right, not the obligation, to purchase
an ordinary share in Barramundi at a fixed price on a
fixed date
»There are currently no warrants on issue