BRM – November 2020 monthly update

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A WORD FROM THE MANAGER
In October Barramundi returned +4.5% (gross). This compares
to the ASX200 Index which returned +1.3% (70% hedged
into NZ$).
October was a strong month for the Australian share
market in absolute terms and relative to international equity
markets. Globally, worsening COVID-19 case numbers across
Europe and the US coupled with US election jitters weighed
on equity markets.
Domestically, the Federal Government delivered a stimulatory
budget in October. Policies included a new JobMaker credit
for hiring younger unemployed job seekers, a pull-forward of
household tax cuts back-dated to 1 July 2020, full deductibility
of investments for businesses with revenue of up to $5bn,
expansion of the first home buyer scheme as well as over $10bn
in infrastructure spending. Combined, this budget is forecast to
lead to a -$214bn fiscal deficit in FY21 (the largest on record).
Coupled with previously announced measures, UBS estimates
the Australian total fiscal stimulus response to COVID-19 now
stands at ~17% of GDP in Australia. This compares to 6%
during the 2008 financial crisis and is significantly higher than
COVID-19 related stimulus measures announced globally.
The budget went some way to alleviate concerns about a fiscal
stimulus cliff as previous measures (such as Jobkeeper) expire.
Along with improving COVID-19 outcomes and a relaxation of
lockdown restrictions in Victoria, this buoyed the equity market.
The Information Technology (+9%), Financials (+6.3%) and
Consumer Staples (+4.8%) sectors led the ASX200 Index higher
in the month, while Industrials (-3.9%), Utilities (-1.5%) and
Materials (-1.2%) lagged.
Portfolio News
Link Group (+28% in A$) received a non-binding, indicative
acquisition proposal from a private equity consortium. The
consortium initially indicated a $5.20 per share offer. This has
now been raised to $5.40 which has prompted the Board
to provide the suitors with access to due diligence. If a bid
does eventuate it will include an option for Link shareholders
to retain an indirect interest in PEXA, the Australian online
conveyancing platform in which Link has a 44% stake.
Resmed’s (+16.9%) share price rise reflected a strong first
quarter result. The company continued to benefit from COVID-
related ventilator sales. However, more importantly, underlying
sales of CPAP (Continuous Positive Airway Pressure) devices
to new patients rebounded more quickly than expected as
testing for obstructive sleep apnoea began to ramp-up again
as lockdowns eased. Mask resupply sales growth remained
healthy. The US Centre for Medicare & Medicaid Services’
decision to abandon the 2021 Competitive Bidding Round
was also good news. This had been expected to result in
lower reimbursement levels for Resmed’s US Home Medical
Equipment customers which would likely have meant pricing
pressure on Resmed.
Credit Corp (+8.2%) had no company-specific news in
the month. Credit Corp may benefit from the budget
which is focused on promoting a post-COVID recovery in
Australian growth. Household income support and a lower
unemployment rate than might previously have been expected
are potentially positive for Credit Corp’s Australian debt buying
and consumer lending operations.
ARB (+12.7%) posted strong revenue and margin growth for
the first quarter in FY21 at its AGM. After plunging in March
and April, demand for ARB’s 4x4 accessories rebounded strongly
in mid-May as economic restrictions were lifted and domestic
travel boomed across its US, European and Australian markets.
It generated record sales in June and July. Orders have continued
to grow through August and September driven by heightened
levels of domestic travel and increased fiscal stimulus.
Nanosonics (-9.3%) share price fell sharply during the month.
There was no material news from the company. Nanosonics
is likely a long-term beneficiary from the COVID-19 inspired
increased awareness about the importance of having high
disinfection standards across healthcare systems. Recently, sales
of Nanosonics’ equipment has been negatively impacted by
COVID-19 related hospital restrictions. Demand might continue
to be disrupted near term given the recent resurgence in
COVID-19 case numbers in the US and Europe. However, the
longer-term outlook remains sound.
Brambles’ (-8.6%) share price slipped in the month. Its AGM
early in the month reiterated FY21 guidance for underlying
profit growth between flat and +5% at constant FX. However,
as the month progressed, resurgent COVID-19 infection rates
and the prospect of renewed lockdowns in many parts of
Europe may have weighed on the share price. Brambles’ core
pallet operation will remain resilient but any recovery in its
ancillary businesses tied to the European auto and hospitality
sectors could be delayed.
1
Share Price Premium to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places).
MONTHLY UPDATE
November 2020
BRM NAV
$
0.73
$
0.85
Share Price
Warrant PricePREMIUM
1
$
0.11 19.6
%

as at 31 October 2020

SECTOR SPLIT
as at 31 October 2020
KEY DETAILS
as at 31 October 2020
FUND TYPE
Listed Investment Company
INVESTS IN
Growing Australian companies
LISTING DATE
26 October 2006
FINANCIAL YEAR END
30 June
TYPICAL PORTFOLIO SIZE
20-35 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
$0.66
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
210m
MARKET CAPITALISATION
$179m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
INFORMATION
TECHNOLOGY
22
%
20
%

INDUSTRIALS
18
%
COMMUNICATION
SERVICES

HEALTHCARE
24
%
4
%

FINANCIALS
CONSUMER
STAPLES
6
%
CONSUMER
DISCRETIONARY
PWR Holdings (-4.4%) had its AGM at the end of the month.
PWR supplies industry leading cooling technology to most of
the teams in top tier motor racing series globally, including F1,
Formula E and NASCAR. While a number of these competitions
were put on hold with the onset of COVID-19, most have
recommenced since July. Racing schedules have typically been
compressed into the last few months of the year to make up for
lost time. This has seen PWR’s team work long hours to meet
the specialised demands of the racing teams. But it bodes well
for PWR’s ability to book revenues that would otherwise have
been lost if racing had been completely cancelled for the 2020
calendar year.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Portfolio Changes
We reduced our weighting in ARB during the month following
a re-rating in the share price and re-deployed the proceeds into
adding to our Woolworths position. Outside of this there were
no substantive changes to positioning in the month.
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The Barramundi portfolio also holds cash.

OCTOBER’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
LINK
ADMINISTRATION
+28
%
AUDINATE
+24
%
RESMED
+17
%
WISETECH
+12%
ARB CORP
+13
%
5 LARGEST PORTFOLIO POSITIONS as at 31 October 2020
CARSALES.COM
6
%
CSL LIMITED
9
%
XERO LIMITED
6
%
WISETECH
6
%
SEEK
6
%
The remaining portfolio is made up of another 22 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
$
3.00
Oct
2017
Oct
2018
Oct
2019
Oct
2020
TOTAL SHAREHOLDER RETURN to 31 October 2020
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+15.6%+26.0%+46.2%+26.0%+17.5%
Adjusted NAV Return+3.7%+9.2%+11.8%+12.5%+12.0%
Portfolio Performance
Gross Performance Return+4.5%+10.3%+15.3%+15.9%+15.3%
Benchmark Index^+1.3%+0.6%(8.0%)+3.8%+7.3%
PERFORMANCE to 31 October 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 20 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,
Andy Coupe and 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
»On 26 August 2020 a new issue of warrants (BRMWF)
was announced.
»The warrants were issued at no cost to eligible
shareholders in the ratio of one warrant for every four
Barramundi shares held.
»The warrants were allotted to shareholders in October
2020 and the warrants listed on the NZX Main Board
from early October 2020. (Information pertaining to
the warrants was be mailed/emailed to shareholders in
September 2020).
»The Exercise Price of each warrant is $0.70, adjusted
down for dividends declared during the period up to the
announcement of the final Exercise Price
»The Exercise Date for the new warrants (BRMWF) is
29 October 2021
»The final Exercise Price will be announced and an Exercise
Form sent to warrant holders in September 2021