BRM - March 2025 Quarter Newsletter

In the March Quarter (“Q1”), Barramundi’s gross performance fell
-9.8%, and the adjusted NAV return was down -10.0%, both lagging
the -3.0% decrease in the benchmark return.
The focus of our Q1 Newsletter is to explore how we have sought
to sensibly take advantage of the significant share price volatility
experienced in the period. In summary, where companies are
performing well operationally, but share prices have fallen (related
to broader market reasons), we have added to our positions. Where
companies have performed poorly, we have been circumspect. In
some cases, we have reduced our weighting, with others we have
sold our shareholding. We have also been measured in responding
to controversy that has embroiled Wisetech, a key investment for us.
Here we have engaged with what we regard as a high-quality business
rather than following the knee-jerk market response by selling our
shares.
We think we will be well served by these activities. Despite the
disappointing start to the year, our portfolio companies are well
positioned to grow their profits over the medium term. This ultimately
will be reflected in their share price returns. We are well positioned to
reap these rewards given the portfolio positioning changes we have
made in Q1.
Significant dispersion of equity returns
across different geographies in Q1
US foreign and trade policy uncertainty drove dispersion of equity
returns across geographies and sectors. Europe sharply outperformed
the American equity market. Information Technology sectors typically
did poorly across markets.
In Australia, equities performed more in line with American indices.
Industrials (+1.5%) and Materials (-1%) buoyed by gold miners were
two of the better sectors in Q1. And as seen in the US, information
technology (-18%) was the worst performing sector and helped drag
the Australian share market lower.
Part of the return dispersion across the ASX was driven by the rising
global economic (and tariff related) uncertainty. Part of this was also
driven by company specific announcements during the semi-annual
financial reporting season in February. Companies that disappointed
market expectations, irrespective of whether it was due to temporary
or more structural reasons, saw their share prices fall sharply.
Opportunity knocks when market
wobbles collide with high performing
companies
Skittish and volatile markets such as those experienced in Q1 present
investors with opportunity.
We capitalised on this by adding to high quality positions including
online classified advertising businesses CAR Group (-12% in A$) and
SEEK (-4%) and the global leader in treating profound hearing loss,
Cochlear (-9%).
These companies are all leaders in their field, with broad economic
moats around their core divisions. The management teams are
performing strongly in this economic climate.
Cochlear received regulatory approvals in Australia and Canada for
its newest sound processor and hinted at further product releases to
come. This lays the foundation for further growth in future years.
SEEK and CAR Group demonstrated tangible progress in delivering
on key profit metrics in what has been a tricky global economic
environment. As a job advertising platform SEEK has little control over
the economy and appetite for businesses to hire employees. But SEEK
did well in what it could control, taking market share in advertising,
lifting prices, controlling costs and investing in new products. In
Australia its share of advertising placements now sits at 35%, over 4x
that of its nearest competitor.
CAR Group has expanded successfully internationally over the last
15yrs. Apart from Australia, it now counts South Korea, the US and
Brazil amongst key meaningful markets that help drive and diversify
its earnings growth. Each of these markets is structurally growing. Like
SEEK, CAR’s management team is juggling its levers of price, cost and
product investment well to provide durability to that growth runway.
We were happy buying more shares in each of these companies that
are selling for less than they were at the start of the year. We have
funded these purchases from a combination of positions that look
relatively more expensive as well as from positions we have exited (see
below).
Balanced approach as we engage with
Wisetech over governance
In responding to the 33% share price drop in software company
Wisetech’s case, the calculus is different. This is reflected in our
measured decision to remain invested but at a lower target weight
than we have been invested in historically.
Wisetech is one of the highest quality companies on the Australian
share market. Its software is solving critical challenges for large
logistics companies. It is becoming ever more important to its customer
base as it increases the number of bottlenecks that it solves for its
customers. It is the clear market leader and has decades of growth
ahead of it.
Personal controversy related to the founder (and Wisetech’s largest
shareholder) Richard White, resulted in a stoush with the Board. This
ended with four independent Board members resigning abruptly in
February. This governance turmoil saw a number of large shareholders
exit their positions. This was the primary driver of recent share price
weakness.
We are deeply unhappy with the governance turmoil. But rather
than sell our position at what we think is now a compellingly cheap
valuation, we elected to engage with the company. Alongside other
institutional shareholders who also see merit in this approach, we have
actively encouraged the company to take expeditious yet orderly steps
to refresh the Board. We also pushed for the company to embark on
a clear succession plan to ensure a smooth transition to a new CEO,
one capable of achieving Wisetech’s significant potential in the future.
If the company delivers on these steps alongside the clearly articulated
software product development plan, we think shareholders will do very
well in time.
It is early days in this governance reset. But we have been satisfied
with the company’s efforts thus far in responding to this engagement.
This includes announcing the appointment of two new directors to
the Board in late March. If the company continues to improve its
governance structure, our position sizing could be reviewed again in
time.
1
¹ Share price premium to NAV (using the net asset value per share, after expenses, fees and tax, to four decimal places).
1 January 2025 – 31 March 2025
$
0.6 6
Share Price
as at 31 March 2025
QUARTERLY NEWSLETTER
BRM NAVPREMIUM
1
$
0.6 51.5
%

Exercising caution where an investment
thesis has been dented
In a handful of cases, we saw the market react sharply to financial
updates from our companies where management execution lay at
the core of the poor financial results. Insurance construction /support
services company Johns Lyng (-42%), pizza franchise operator
Dominos (-11%) and supermarket operator Woolworths (-2%) all fit
into this category.
As we mentioned in our commentary last month, we like the
scale moat afforded to Woolworths by virtue of being the largest
supermarket operator in Australia. However, management has
consistently underperformed its key competitors in both Australia and
New Zealand for almost two years and so we have sold and exited our
position.
In Johns Lyng’s case, poor execution within its Australian business saw
a key insurance customer re-allocate work to Johns Lyng’s competitors.
This put a deep dent in its profitability which was further exacerbated
by benign weather (hence fewer insurance claims were made). We’re
confident that inclement weather will return, leading to property
damage and a rise in future insurance claims. However, we are less
PERFORMANCE
as at 31 March 2025
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(2.1%)(0.7%)+15.7%
Adjusted NAV Return (10.0%)+4.3%+13.8%
Portfolio Performance
Gross Performance Return(9.8%)+6.5%+16.2%
Benchmark Index¹(3.0%)+6.4%+14.2%
1
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 percentage change in the adjusted NAV value,
»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 Barramundi Non-GAAP Financial Information Policy. A copy of the
policy is available at
barramundi.co.nz/about-barramundi/barramundi-policies.
Company% Holdings
Ansell2.1%
ANZ Banking Group2.7%
AUB Group5.6%
Audinate Group1.5%
Brambles5.4%
CAR Group4.9%
Cochlear Limited3.3%
Commonwealth Bank1.9%
Credit Corp3.7%
CSL10.8%
Domino's Pizza2.2%
Fineos Corporation Holdings2.8%
James Hardies Industries Plc2.7%
Johns Lyng Group2.3%
Maas Group Holdings Limited2.2%
Macquarie Group5.1%
National Australia Bank3.3%
NEXTDC2.8%
oOh! Media3.8%
PWR Holdings1.8%
REA Group2.0%
ResMed4.9%
SEEK6.2%
WiseTech Global5.9%
Xero Limited5.3%
Equity Total95.2%
Australian cash1.6%
New Zealand cash2.6%
Total cash4.2%
Forward foreign exchange contracts 0.6%
Total 100.0%
PORTFOLIO HOLDINGS
SUMMARY
as at 31 March 2025
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 Barramundi 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 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 93 502, Takapuna, Auckland 0740, New Zealand
Phone: +64 9 489 7074
Email: enquire@barramundi.co.nz | www.barramundi.co.nz
If you would like to receive future
newsletters electronically please email
us at enquire@barramundi.co.nz
SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO DURING THE
QUARTER IN AUSTRALIAN DOLLARS
JOHNS LYNG
-42
%
WISETECH
-33
%
NEXTDC
-25
%
MAAS GROUP
-24
%
JAMES HARDIE
-23
%
enamoured with how easily an insurer was able to take work away
from Johns Lyng. This suggests its moat may be narrower than we
first thought. It is an issue we’re working through with management
(including monitoring whether Johns Lyng is able to recoup that lost
share – something management remain confident in doing). As such,
we have not added to our position.
Domino’s fits into a similar category. Dominos replaced its CEO in late
2024. The new CEO has taken some significant steps to remedy poor
decisions made in particularly Japan under the prior CEO’s tenure.
These steps, which include shutting down a raft of unprofitable stores
across the Domino’s network, seem sensible. However, we are looking
for more evidence of management execution and an improvement in
overall operations before we are prepared to add to shares that at face
value look relatively cheap.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
14 April 2025