MLN – June 2021 Quarterly Newsletter

1
Boring proves beautiful in global markets, with large
technology companies driving performance in Q2
Global markets outperformed our domestic market in the second quarter,
with travel snapping back and a strong economic recovery taking hold in
the US and Europe. This cyclical upswing and strong corporate earnings
growth propelled global markets to new highs. Marlin had another strong
quarter, with gross performance of +11.1% and an Adjusted NAV return
of +10.5%, which outperforming our global benchmark, which gained
6.7%.
The second quarter was a busy one for Marlin. We exited three small
portfolio holdings to make way for a new company, NVR Inc, which
we discuss below. Earnings season also delivered good news for our
technology holdings, which helped drive our market outperformance.
The economic recovery in the US and UK (and increasingly Europe) has
been helped by their world-leading vaccine rollout programmes. In the
US, 93% of those aged 65+ have received at least one vaccine dose, as
have 60% of 18–64 year-olds. Success with vaccines, combined with
government stimulus measures, have spurred consumers into action –
driving strong consumption growth. Consumer spending has returned to
pre-COVID levels and even domestic travel is closing in on previous highs.
The US stock market led global markets higher and returned 8.2% for the
quarter. European markets gained 5.4%, while emerging markets climbed
4.6%.
Performance aided by strong earnings growth from our
large cap technology holdings
Performance was helped in part by our large holdings in Alphabet and
Facebook, which both reported good earnings results and saw their share
prices surge in the quarter.
This contrasts to the prior two quarters, when large cap technology
stocks generally performed poorly, lagging cyclical companies that soared
due to enthusiasm around the economic reopening.
Alphabet (+18%) saw its profits soar in the first quarter. Its core search
and advertising products continued to benefit from pandemic-related
shifts in consumer behaviour, which saw more people seek goods and
services online. Revenue rose 34% to $55.3 billion, boosted in part
by YouTube, which saw its revenue grow nearly 50% from a year ago.
Google’s Cloud unit grew revenue 56% year-on-year, faster than its two
larger competitors, Amazon Web Services and Microsoft Azure. Its Cloud
division also materially reduced its losses as its recent investments started
to bear fruit, and its Cloud business gains scale.
Facebook (+18%) reported even better earnings, smashing revenue
estimates by more than 10% and earnings per share estimates by more
than 40%. Its advertising sales grew a remarkable 46% to $25.4 billion,
and by limiting expense growth to 25% this led to operating income nearly
doubling to $11.4 billion. We still see a lot of growth ahead for Facebook
as it expands its commerce and payments initiatives in Instagram,
Facebook and WhatsApp.
Other portfolio holdings also supported portfolio gains
Gartner (+33%), a company we added in the depths of the COVID sell-
off last year, reported strong earnings across all three segments (research,
consulting and events). The company’s corporate IT research is proving
increasingly valuable in a world where digitisation trends are accelerating.
These trends and Gartner’s strong execution led it to raise its full year
earnings guidance by over 20%, which still excludes the upside from
the resumption of in-person conferences later this year. Our conviction
continues to build in the company and we have recently increased our
holding. We ultimately believe Gartner can continue to grow rapidly in IT
research, while expanding into other business verticals like marketing,
finance and HR.
Edwards Lifesciences (+24%), the heart valve manufacturer, was
another standout performer in the quarter. As with other medical device
players, the strong vaccination roll-out in developed markets has driven
optimism for a second half recovery in surgical procedures. Edwards
Lifesciences reported better than expected first quarter revenues and we
expect momentum to continue to build throughout the year as patients
get comfortable returning to hospital for treatment.
Dollar Tree (-13%), the US discount retailer, was the biggest detractor
from performance in the quarter. The company reported earnings that
came in below market expectations as freight costs were a greater
headwind than expected. We view freight as a transitory issue and remain
optimistic around the company’s future. Its Dollar Tree banner, which
until recently only sold items for $1, has introduced $3 and $5 items.
This should increase sales per store and could materially improve profit
margins. The turnaround at its Family Dollar banner also continues to
progress well with store renovations and the introduction of combo Dollar
Tree and Family Dollar stores providing a meaningful sales uplift.
A leading US homebuilder added to the portfolio
NVR Inc is the 4th largest homebuilder in the US and they have an
exemplarily track record of profitable growth. NVR has a unique business
model that we believe provides it with a material advantage over less
efficient competitors.
Unlike most homebuilders, which are also land developers, NVR focuses
solely on homebuilding, using options to control land, which gives them
the right but not the obligation to buy lots on a just-in-time basis. NVR
also differentiates itself from peers by pre-fabricating frames, roofs and
staircases in one of its eight manufacturing facilities in an effort to save
time and cost. Most of NVR competitors still do most building on site.
NVR’s asset-light model, central pre-fabrication and local economies of
scale allow NVR to generate higher returns on invested capital than peers,
and therefore grow steadily without having to reinvest as much money.
With only circa 2% market share in a highly fragmented industry, we see
the potential for years of market share gains and growth for NVR.
NVR’s CEO, Paul Saville, has been with the company for over 20 years
and steered the ship through the GFC. He has plenty of skin in the game,
with over US$500m worth of shares the company.
¹
Share price premium to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places)
as at 30 June 2021
1 April 2021 – 30 June 2021
MLN NAVPREMIUM
1
$
1. 2 829.6
%$
1.6 0
Share Price
QUARTERLY NEWSLETTER
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Ltd
15 July 2021
Warrant Price
$
0.26

PERFORMANCE
as at 30 June 2021
Disclaimer: The information in this newsletter 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 newsletter is not intended to constitute
professional or investment advice and should not be relied upon in making any investment decisions. Professional financial advice from a financial adviser should be taken before making an investment. To the extent that the newsletter
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, New Zealand
Phone: +64 9 484 0365 | Fax: +64 9 489 7139
Email: enquire@marlin.co.nz | www.marlin.co.nz
Headquarters Company
%
Holding
China
Alibaba Group7.3%
Tencent Holdings5.4%
Germany
Adidas3.9%
Ireland
Icon4.3%
United Kingdom
Greggs Plc3.0%
United States
Alphabet6.9%
Amazon.Com4.2%

Boston Scientific Co3.4%
Dollar General4.9%

Dollar Tree4.3%
Edwards Lifesciences Corp.4.0%
Facebook10.6%
First Republic Bank San
Francisco
3.1%
Floor & Décor Holdings4.0%
Gartner Inc5.1%
Hexcel Corporation3.0%
Hilton Worldwide Holdings1.4%
Mastercard4.8%
NVR Inc3.2%
PayPal Holdings4.8%
Signature Bank5.8%
StoneCo1.4%
Equity Total98.8%
New Zealand dollar cash1.8%
Total foreign cash0.3%
Cash Total2.1%
Forward Foreign Exchange(0.9%)

TOTAL100.0%
PORTFOLIO HOLDINGS
SUMMARY
as at 30 June 2021
COMPANY NEWS
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at enquire@marlin.co.nz
Dividend Paid 25 June 2021
A dividend of 2.37 cents per share was paid to Marlin
shareholders on 25 June 2021, under the quarterly distribution
policy. Interest in Marlin’s dividend reinvestment plan (DRP)
remains high with 40% of shareholders participating in the plan.
Shares issued to DRP participants are at a 3% discount to
market price. If you would like to participate in the DRP, please
contact our share registrar, Computershare on 09 488 8777.
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+30.1%+38.3%+28.5%
Adjusted NAV Return +10.5%+20.4%+20.2%
Portfolio Performance
Gross Performance Return+11.1%+24.6%+24.6%
Benchmark Index¹+6.7%+12.1%+14.5%
1
Benchmark index: World Small Cap Gross Index until 30 September 2015 & S&P Large Mid Cap/S&P Small
Cap Index (hedged 50% 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 expenses, fees and tax,
»adjusted NAV return – the net 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 newsletter 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/
SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO DURING THE
QUARTER IN LOCAL CURRENCY
GARTNER INC
+33
%
EDWARDS
LIFESCIENCES
CORP
+24
%
PAYPAL
HOLDINGS
+20
%
ADIDAS
+19
%
ALPHABET INC
+18
%
FOREIGN TAX COMPLIANCE ACT (FATCA) AND COMMON
REPORTING STANDARD (CRS)
As a result of the New Zealand Government agreeing to participate in the exchange of information with other jurisdictions under the
Foreign Tax Compliance Act (FATCA) and Common Reporting Standard (CRS), Financial Institutions are required to undertake due
diligence to determine the account holders’ jurisdiction of tax residence. All shareholders will have received a Tax Residency Self-
Certification form from Computershare depending on when they first purchased their securities. Please ensure you complete and return
this important document if you have not already done so. For more information please visit the IRD website: https://www.ird.govt.nz/
international-tax/exchange-of-information/crs/registration-and-reporting or contact Computershare if you are unsure of whether you
have completed your form.