MLN – March 2022 Quarterly Newsletter

1
It was a turbulent quarter for global markets as Russia’s invasion of Ukraine,
increasing inflation and the start of an interest rate hiking cycle saw declines
in most global markets. Growth sectors such as tech and consumer
discretionary have borne the brunt of this sell-off, whereas sectors such as
financials and resources were positive for the quarter. Against this challenging
backdrop, Marlin’s gross performance declined (14.1%), behind our global
benchmark which fell (6.5%).
What a difference a quarter makes. After a strong end to 2021, the start of
this year has been dominated by market declines and increased volatility as
investors grapple with a more uncertain outlook. Russia’s invasion of Ukraine
(both major commodity producers) has exacerbated existing inflationary
pressures and increased expectations for a more aggressive hike in interest
rates.
The combination of commodity inflation and rising interest rate expectations
has also driven a rotation out of growth stocks, with more cyclical sectors
such as banks and resources leading performance after years of sluggishness.
The MSCI World Growth Index declined 10% this quarter, compared with
a 1% decline in the more cyclical MSCI World Value Index. High growth
and unprofitable tech names were hit particularly hard – as seen in the ARK
Innovation ETF that invests in secular growth companies and was down 30%
for the quarter.
While economic data is holding up, there is some deterioration on the margins.
Consumer sentiment has declined as higher prices and interest rates start
to hurt what was an otherwise healthy consumer, with US unemployment
back to pre-pandemic levels and wage growth at historic highs. Corporates
are cautiously optimistic despite the headwinds from input cost inflation and
ongoing supply chain concerns, and earnings estimates for the major indices
continue to rise.
The indiscriminate swings in the market are creating pockets of investment
opportunity, as high-quality companies get sold-off alongside their more
speculative counterparts. As we discuss later, we have taken advantage of this
dynamic to add three new names to the portfolio.
Portfolio performance
While Marlin has materially outperformed its benchmark over the medium and
long-term, we do expect that there will be periods of underperformance from
time to time. That said, we are disappointed at the level of underperformance
this quarter. In addition to the wider rotation out of growth stocks, our
underperformance was driven by disappointing results from Meta Platforms
and PayPal.
Despite these challenges we still believe in the fundamentals of our
businesses, and while sentiment moves markets in the near-term, long-
term performance is driven by these fundamentals. We have revisited our
investment thesis for each of our holdings and are confident in the long-term
prospects for our portfolio companies. The portfolio should grow earnings at
a significantly faster rate than the market yet is trading at historically low levels
relative to the wider index.
PayPal (-39%) and Meta (-34%) both fell following weaker than expected
guidance. In both cases, we believe the market has overreacted to what we
see as temporary headwinds.
PayPal fell following their earnings announcement, where the company
removed their aspiration long-term target of having 750m users. As rapidly
acquiring new users is costly, the company would rather focus on driving
revenue growth by deepening engagement with their existing users. While they
are still targeting close to 10% annual user growth, this is less than investors
were looking for. The stock is now back at pre-COVID levels despite the
business generating over 40% more revenue today. We believe the company
has an organic growth profile that is still largely intact, it owns very attractive
payments assets, and is exposed to strong secular e-commerce tailwinds.
Meta (formerly Facebook) reported 20% revenue growth for Q4 (ahead
of market expectations), but their commentary on growth for this year
disappointed the market. They are seeing some headwinds in advertising
demand after changes from Apple that impact ad tracking. Users are also
spending more time on Meta’s new Reels short video product (rather than
scrolling down the timeline / using Stories) and Meta haven’t put much ad load
on this new product yet. All considered this means revenue in 2022 is likely
to grow at c.11%, compared to the 17% growth previously expected. While
the result was disappointing, they are still the dominant social media platform
with close to 3bn users globally and will continue to benefit from the structural
growth of digital advertising. We expect revenue growth to improve throughout
the second half of 2022 as some of these headwinds subside.
On the positive side of the ledger, Dollar Tree (+12%) shares were up during
the quarter as the firm reported it has completed the 25% price increase
to $1.25 in their fixed price banner, Dollar Tree, ahead of schedule and with
a positive impact on store sales. More important was the appointment of
ex-Dollar General CEO Richard Dreiling as the new Executive Chairman.
Details around any potential shift in strategy are still limited, but given Dreiling’s
phenomenal record at Dollar General, we are not surprised this is being viewed
positively by the market.
Hexcel (+13%) shares rose in the quarter as unparalleled demand for air
travel post COVID and increasing fuel prices have increased expectations for
airlines to resume their purchase of new, more fuel-efficient aircraft. As one of
the leading suppliers of carbon-fibre components for new aircraft, Hexcel is a
key beneficiary of ramping aircraft production levels.
Portfolio activity
We added three new companies to our portfolio this quarter: Netflix, Salesforce,
and Microsoft. We exited our positions in Adidas and Hilton to fund these
additions. One of the benefits of active management is the ability to take
advantage of any short-term irrationality in markets to invest in high quality
businesses that are oversold. Hilton was added to the portfolio during the
2020 COVID selloff, and its share price has since doubled as global travel has
resumed.
As we have talked about in recent months, these new additions are
competitively advantaged market leaders operating in industries with long-
growth runways. Netflix dominates the online video market. The company’s
scale in content creation and ability to spread this cost over its huge global
audience base gives it a significant cost advantage versus peers. Salesforce
and Microsoft provide essential software to enterprises and are both well-
positioned to grow their share of increasing corporate technology spend as
businesses perform digital transformations and move to the cloud.
¹
Share price premium to NAV (including warrant price on a pro-rated basis and using the net asset value per share, after expenses, fees and tax, to four decimal places).
as at 31 March 2022
1 January 2022 – 31 March 2022
MLN NAVPREMIUM
1
$
1. 0 517.7
%$
1.2 2
Share Price
QUARTERLY NEWSLETTER
Ashley Gardyne
Senior Portfolio Manager
Fisher Funds Management Ltd
19 April 2022
Warrant Price
$
0.05

PERFORMANCE
as at 31 March 2022
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 Group5.8%
Tencent Holdings5.6%
Ireland
Icon5.1%
United Kingdom
Greggs Plc2.9%
United States
Alphabet7.1%
Amazon.Com5.8%
Boston Scientific4.4%
Dollar General3.9%

Dollar Tree4.1%
Edwards Lifesciences Corp.2.2%

First Republic Bank San
Francisco
2.9%
Floor & Décor Holdings4.6%
Gartner Inc4.1%
Hexcel Corporation3.1%
Mastercard3.8%
Meta Platforms Inc8.9%
Microsoft3.2%
Netflix2.5%
NVR Inc2.7%
PayPal Holdings7.2%
salesforce.com3.2%
Signature Bank4.3%
StoneCo0.9%
Equity Total98.3%
New Zealand dollar cash0.3%
Total foreign cash0.3%
Cash Total0.6%
Forward Foreign Exchange1.1%

TOTAL100.0%
PORTFOLIO HOLDINGS
SUMMARY
as at 31 March 2022
COMPANY NEWS
If you would like to receive future
newsletters electronically please email us
at enquire@marlin.co.nz
Dividend Paid 25 March 2022
A dividend of 2.49 cents per share was paid to Marlin
shareholders on 25 March 2022, 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(17.6%)+26.1%+21.1%
Adjusted NAV Return (14.7%)+13.9%+14.4%
Portfolio Performance
Gross Performance Return(14.1%)+17.7%+18.3%
Benchmark Index¹(6.5%)+13.6%+10.2%
1
Benchmark index : S&P Large Mid Cap/S&P Small Cap Index (hedged 50% to NZD)
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
PAYPAL
-39
%
FLOOR AND
DECOR
-38
%
META
PLATFORMS
-34
%
STONECO
-31
%
GREGGS
-25
%
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.