MLN – June 2023 monthly update

1
A WORD FROM THE MANAGER
Marlin’s gross performance return for May was up 4.5%,
while the adjusted NAV return was up 4.6%. This compared
with our global benchmark, S&P Large Mid Cap/S&P Small
Cap Index (50% hedged to NZD), which was down 0.3%.
In May, US equities were up +0.4%. However, markets
globally didn’t fare quite as well. Global equities were -0.9%,
European equities -2.3% and emerging market equities fell
-1.7%.
There is significant excitement about Artificial Intelligence (AI)
at the moment. The trend seems to be that those companies
who have “AI” in their name, or who mention it once or twice
in earnings announcements, or those that have a genuine
clear path to monetise the explosion of interest in generative
AI, are seeing an uplift in their stock price. As a result the
Nasdaq was +8% in May and MAGMNA (equal weighted
basket of Microsoft, Apple, Google, Meta, Nvidia and
Amazon) +14% for the month.
The US reporting season is now 95% complete, with 67% of
companies that reported beating their revenue expectations
and 78% beating their earnings expectations. The European
reporting season is also essentially finished, with 63% of
companies reporting positive revenue surprises, and 61%
upside earnings surprises.
As always, results are backward looking so guidance is
crucial. It was only late last year/earlier this year that the
market was expecting a recession and a pull-back in
corporate earnings. However, earning forecasts for the year
ahead are now being upgraded with corporates benefitting
from having cut costs, while demand remains more robust
than expected.
Portfolio News
Netflix (+20% in local currency) presented its first public
pitch to advertisers (known in the industry as an “upfront”)
following the launch of its ad supported product last year.
The presentation reiterated the strength of Netflix’s platform
and the potential revenue opportunity from the ad-supported
model. While still early days, nearly 5 million subscribers
use the ad-supported product and 25% of new subscribers
are picking the ad-supported plans. Netflix had previously
revealed that the revenue per ad-supported customer is
higher than that of both the traditional basic and standard
plans in the US – so this should drive incremental revenue.
The rollout of the password sharing crackdown at the end
of June should drive further demand for these ad-supported
plans. On the other hand, competitor Disney’s competing
streaming service saw subscriber losses for the second
consecutive quarter, losing a further 4 million in Q1.
Our large-technology names saw continued strong
performance, with Microsoft (+7%), Amazon (+14%),
Meta Platforms (+10%) and Alphabet (Google) (+14%)
during the month. While many attribute this performance to
the AI frenzy following Nvidia’s strong earnings results, we
believe it is driven more by improving fundamentals. The
company arguably most favourably exposed to AI, Microsoft
(given its ownership of Chat-GPT), was the worst performer
of these four names this month. All four companies are
seeing improvements in their underlying end-markets. Both
ecommerce and digital advertising spend is growing; and
the cost control issues that have been a headwind for the
cloud providers (Microsoft Azure and Amazon Web Services)
are now expected to ease as we progress through the year.
Improving revenue growth, coupled with a renewed focus on
cost control have seen earnings estimates inflect upwards.
Floor & Decor (-8%) had a tough month. The result itself
was in line with expectations and the company reiterated its
full year guidance. However, the market is sceptical Floor &
Decor can hit guidance, particularly in light of the fact much
larger (and more diversified) competitors like Home Depot cut
their guidance.
PayPal (-18%) also had a tough month. The drag on overall
profit margins from the rapidly growing, albeit lower margin,
Braintree (unbranded check-out vs the traditional PayPal
branded check-out button) impacted the result and guidance.
We have cut our target weighting significantly over the last 6
months. While the company’s lower share price now makes
it look attractive, there are still question marks over the lack
of clarity regarding key management changes, with the CEO
on the way out and a temporary CFO, and the magnitude of
the competitive threats from Apple Pay, SHOP Pay (Shopify),
Google Pay and Amazon’s payment options.
1
Share Price Discount 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).
MONTHLY UPDATE
June 2023
$
0.91
Share Price
MLN NAVDISCOUNT
1
$
0.92 1.0
%

as at 31 May 2023
Warrant Price
$
0.01

CONSUMER
DISCRETIONARY
2
KEY DETAILS
as at 31 May 2023
FUND TYPE
Listed Investment Company
INVESTS IN
Growing international companies
LISTING DATE
1 October 2007
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 + 5%
PERFORMANCE FEE
10% of returns in excess of
benchmark and high-water mark
HIGH WATER MARK
$1.10
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
205m
MARKET CAPITALISATION
$187m
GEARING
None (maximum permitted 20% of
gross asset value)
Portfolio Changes
During the month we reduced our positions in Paypal and
NVR and increased our allocations to Gartner, Icon and
Edwards Lifesciences.
SECTOR SPLIT
as at 31 May 2023
25
%
7
%
18
%

FINANCIALS
23
%
GEOGRAPHICAL SPLIT
as at 31 May 2023
6
%
WEST
EUROPE
79
%
NORTH
AMERICA
3
%

CASH &
DERIVATIVES
18
%
12
%

ASIA
3
%
CASH &
DERIVATIVES
Sam Dickie
Senior Portfolio Manager
Fisher Funds Management Limited
COMMUNICATION
SERVICES
HEALTH CARE
6
%

CONSUMER
STAPLES
INFORMATION
TECHNOLOGY

3
MAY’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month
NETFLIX
+20
%
ALPHABET
+14
%
AMAZON
+14
%
PAYPAL
+13
%
5 LARGEST PORTFOLIO POSITIONS as at 31 May 2023
AMAZON
10
%
ALPHABET
9
%
META PLATFORMS
8
%
ICON
7
%
SALESFORCE
6
%
The remaining portfolio is made up of another 14 stocks and cash.
PERFORMANCE to 31 May 2023
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+4.5%(1.7%)(22.6%)+6.3%+10.9%
Adjusted NAV Return+4.6%+7.2%+4.7%+4.7%+8.0%
Portfolio Performance
Gross Performance Return +4.5%+7.5%+6.0%+7.5%+10.9%
Benchmark Index^(0.3%)+1.2%+2.7%+10.1%+6.4%
^Benchmark index: S&P Large Mid Cap/S&P Small Cap Index (50% hedged 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 dividends (and other capital management initiatives) and after expenses, fees, and tax,
»adjusted NAV return – the percentage change in the adjusted NAV,
»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 Marlin Non-GAAP Financial Information Policy. A copy of the policy is available at http://marlin.co.nz/about-marlin/marlin-policies/
GARTNER
-18
%
TOTAL SHAREHOLDER RETURN to 31 May 2023
Share Price/Total Shareholder Return
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
Share Price Total Shareholder Return
Nov
2007
Nov
2011
Nov
2013
Nov
2014
Nov
2015
Nov
2008
Nov
2009
Nov
2010
Nov
2016
Nov
2020
Nov
2012
Nov
2022
Nov
2017
Nov
2018
Nov
2019

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 Marlin Global 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 Marlin Global Limited or its portfolio companies, please note that fund performance can
and will vary and that future results have no correlation with results historically achieved.
Marlin Global Limited
Private Bag 93502, Takapuna, Auckland 0740
Phone: +64 9 484 0365
Email: enquire@marlin.co.nz | www.marlin.co.nz
4
Computershare Investor Services Limited
Private Bag 92119, Auckland 1142
Phone: +64 9 488 8777
Email: enquiry@computershare.co.nz | www.computershare.com/nz
ABOUT
MARLIN GLOBAL
Marlin 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
international companies (excluding
New Zealand and Australia) through
a single, professionally managed
investment. The aim of Marlin
is to offer investors competitive
returns through capital growth and
dividends.
CAPITAL MANAGEMENT STRATEGIES
Regular Dividends
»Quarterly distribution policy introduced in August 2010
»Under this policy, 2% of average NAV is targeted to be
paid to shareholders quarterly
»Dividends paid by Marlin 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
»Marlin 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
»Marlin 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 utilised
for the dividend reinvestment plan
Warrants
»Marlin announced an issue of warrants (MLNWF)
on 18 October 2022
»Information pertaining to the warrants was
mailed/emailed to all shareholders on 25 October
2022
»The warrants were issued at no cost to eligible
shareholders in the ratio of one warrant for every
four Marlin shares held based on the record date
of 2 November 2022
»The warrants were allotted to shareholders on
3 November 2022 and listed on the NZX Main
Board from 4 November 2022
»The Exercise Price of each warrant is $0.99,
adjusted down for the aggregate amount per
Share of any cash dividends declared on the
shares with a record date during the period
commencing on the date of allotment of the
warrants and ending on the last Business Day
before the final Exercise Price is announced by
Marlin
»The Exercise Date for the warrants is
10 November 2023

MANAGEMENT
The Manager has authority delegated to
it from the Board to invest according to
the Management Agreement and other
written policies. Marlin’s portfolio is
managed by Fisher Funds Management
Limited. Sam Dickie (Senior Portfolio
Manager), Chris Waters (Senior
Investment Analyst), and Lily Zhuang
and Daniel Moser (Investment Analysts)
have prime responsibility for managing
the Marlin portfolio. Together they
have significant combined experience
and are very capable of researching
and investing in the quality global
companies that Marlin targets. Fisher
Funds is based in Takapuna, Auckland.

BOARD
The Board of Marlin comprises
independent directors Andy
Coupe (Chair), Carol Campbell,
David McClatchy and Fiona
Oliver.