BRM – February 2022 monthly update

1
A WORD FROM THE MANAGER
In January, Barramundi’s gross performance return was down
(11.2%) and the adjusted NAV was down (11.0%). This compares
to the ASX200 Index (70% hedged into NZ$) which was down
(6.1%).
January was a tough month for the Australian share market and a
particularly tough month for our portfolio.
Inflation concerns and a hawkish change of tack by central banks
has resulted in interest rates rising sharply across the globe. In
Australia the 10yr Government bond rate rose from 1.67% to
1.90% during the month. In December the annualised inflation
rate for Australia was 3.5%. Although not as high as New Zealand
(5.9%) or the USA (7.0%), it is still significantly higher than the
0.9% inflation rate a year ago.
This environment has precipitated the underperformance of the
fast growing technology sector in Australia which fell -18.4% in
the month as well as the healthcare sector, which fell -12.1%.
Conversely, the energy sector led the ASX higher, rising 7.9%
in the month on the back of rising energy prices (which itself
feeds into the inflation jitters). The utilities (+2.6%) and materials
(+0.8%) sectors also both outperformed in the month.
Our investment process is focussed on investing in high quality
and growing businesses with durable competitive advantages.
As we have alluded to before, we tend to find more investment
opportunities that fit our process in the technology and healthcare
sectors than in the materials, energy and utility sectors (where we
currently have no portfolio exposure).
Our relative positioning is largely responsible for our
underperformance during January. Share market volatility is
discomforting. However, it nevertheless also presents us with
opportunity. Below we discuss how we’ve been positioning our
portfolio in light of this stock market retracement.
We think our portfolio companies remain well positioned to grow
their earnings in their respective industries over the longer-term.
Portfolio News
Our companies in the financials sector held up relatively well
during the month. In fact Credit Corp rose +1.2% (in A$). The
Australian banks, ANZ (-3.6%), Westpac (-4.9%) and National
Australia Bank (-5.9%) also outperformed for us. Financials are
deemed to benefit from rising interest rates because it alleviates
the interest margin compression the banks have experienced
for a number of years. However, we note that the competitive
environment and complexity in banks funding structures may
temper the extent to which banks benefit from this.
On the other side of the ledger the share prices of our tech
holdings fell sharply. Fineos (-23.0%) gave a market update late
in January. While it didn’t announce any new contract wins, it
continues to execute on its strategy. Fineos also completed the
implementation of its software for a number of new customers
won in preceding periods. Wisetech (-22.7%) and Xero (-20.2%)
also fell sharply although there was no news on either company.
All three of these companies have long growth runways in front
of them and plenty of scope to grow their profitability through
time.
In its quarterly trading update ResMed (-10.8%) reported
revenue that was 13% higher than a year ago in constant
currency. This was boosted by the absence of chief competitor
Philips from the market due to a major product recall which is
set to last through 2022. Excluding the indicated recall benefit,
underlying revenue growth was still a solid 8%. COVID driven
supply chain constraints ate into Resmed’s margin which led
to a 5% lift in earnings. We view this as acceptable given the
prevailing environment.
Ansell (-15.1%) downgraded its FY 2022 earnings guidance
in January. The downgrade itself was not unexpected but its
magnitude was an unpleasant surprise. The mid-point of new
guidance is 27% below that previously provided and 30% down
on fiscal 2021. Ansell’s first half result (due shortly) is expected to
show an 8% lift in revenue but a 23% plunge in EBIT.
Several factors have driven this outcome. The waning of
COVID-related demand for exam/single use gloves has been
more rapid than expected, compressing margins as Ansell sells-
through higher cost inventory from outsourced suppliers. Sales
performances from all other segments have been solid. Profit
margins have been further impacted by COVID-related factory
shutdowns early in the half (now starting to reoccur) and higher
labour and freight costs. Price rises are being implemented to
recover cost increases. Finally, a US Customs action against an
outsourced provider of exam/single use gloves will impact Ansell’s
ability to sell this product in the US in the second half.
There is uncertainty over the duration of these negative factors.
However they do seem to be transitory. Consequently, it does not
seem that Ansell’s long term earnings prospects are materially
lower than we have previously expected.
1
Share Price Premium to NAV (using NAV to four decimal places).
MONTHLY UPDATE
February 2022
BRM NAV
$
0.76
$
0.81
Share Price
PREMIUM
1
6.7
%

as at 31 January 2022

SECTOR SPLIT
as at 31 January 2022
KEY DETAILS
as at 31 January 2022
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
$0.79
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
265m
MARKET CAPITALISATION
$215m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
20
%
23
%

INDUSTRIALS
18
%
COMMUNICATION
SERVICES

HEALTH CARE
26
%
3
%

FINANCIALS
CONSUMER
STAPLES
5
%
CONSUMER
DISCRETIONARY
Portfolio Changes
We remain optimistic in the long-term prospects of our tech,
healthcare and classified advertising businesses many of which
experienced sharp share price falls during the month. Their
valuations are looking more attractive after this retracement.
In contrast, our financials companies, having performed relatively
better, remain closer to fair value. They also intrinsically have less
scope to grow earnings when compared to a number of our tech/
online and healthcare companies.
We have consequently sought to take advantage of this
dispersion in returns by reducing our weighting in the banks and
Sonic Healthcare. And we have topped up the likes of SEEK,
REA Group, Next DC, Xero and Domino’s.
We have been measured in how we’ve re-deployed this capital,
given that higher interest rates and share price volatility may
continue for some time.
We have followed Cochlear closely for a number of years. In
January, Cochlear’s share price ended up trading 30% lower than
its 2021 peak price. We were delighted to grasp this opportunity
to add Cochlear to our portfolio.
Cochlear is the global leader in the severe and profound hearing-
impaired device market. Note that conventional hearing aids
amplify sound for people with minor-moderate hearing difficulty.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
In contrast, Cochlear Implants help people who literally cannot
hear.
Cochlear is solving a significant, unmet addressable need
that is expected to continue to underpin long term growth
of the business. Testing for severe hearing loss at birth is well
established in developed markets. But testing is still nascent in
developing markets. This offers Cochlear opportunity to grow.
Also, it is estimated that less than 3% of adults that would
benefit from a Cochlear Implant have received one. An increasing
number of studies also suggest that severe hearing loss in adults
exacerbates the onset of dementia and other illnesses. So the
adult market is another large untapped opportunity for Cochlear.
Cochlear is the market leader for implants with a 60-70% global
market share. Cochlear operates to the highest standards,
and has the lowest product recall rate in the market. It has a
long-term focussed culture of excellence. It spends 12-16% of
revenues on research and development each year, looking for
the next advancement in helping people hear again. This too will
contribute to its future growth longer-term.
2
The Barramundi portfolio also holds cash.
INFORMATION
TECHNOLOGY

JANUARY’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
FINEOS
-23
%
WISETECH
-23
%
XERO
-20
%
SONIC HEALTHCARE
-19%
NANOSONICS
- 19
%
5 LARGEST PORTFOLIO POSITIONS as at 31 January 2022
CARSALES.COM
6
%
CSL LIMITED
9
%
WISETECH
6
%
SEEK
5
%
CBA
5
%
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
$
3.50
Oct
2017
Oct
2018
Oct
2019
Oct
2020
Oct
2021
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(17.3%)(12.3%)(7.3%)+24.1%+16.3%
Adjusted NAV Return(11.0%)(8.9%)+9.0%+18.3%+14.6%
Portfolio Performance
Gross Performance Return(11.2%)(9.1%)+10.7%+21.4%+17.7%
Benchmark Index^(6.1%)(3.5%)+10.0%+10.3%+9.1%
PERFORMANCE to 31 January 2022
^Benchmark Index: 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/
3
TOTAL SHAREHOLDER RETURN to 31 January 2022

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 a 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
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 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
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
MANAGEMENT
The Manager has authority delegated
to it from the Board to invest according
to the Management Agreement and
other written policies. Barramundi’s
portfolio is managed by Fisher Funds
Management Limited. Robbie Urquhart
(Senior Portfolio Manager), Terry Tolich
and Delano Gallagher (Senior Investment
Analysts) 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 Board of Barramundi
comprises independent
directors Alistair Ryan (Chair),
Carol Campbell, Andy Coupe
and David McClatchy.
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 Barramundi warrants on issue