BRM - September 2025 Quarter Newsletter

In the September Quarter (“Q3”) Barramundi’s gross performance was
+2.0%, and the adjusted NAV return was +1.4%, compared to the
+6.4% return of the ASX200 benchmark index.
The semi-annual financial reporting season for ASX companies in August
drove a wide dispersion of returns across ASX listed companies in Q3.
This was one of the most volatile reporting seasons we can remember
in a long while. Notably, this volatility was also prevalent in share price
moves of large, blue-chip listed companies including portfolio holdings
Brambles, CSL and SEEK (see below).
Management communication rather than the actual financial ‘numbers’
also amplified how the market reacted to earnings announcements. Poor
communication from the likes of CSL, although painful in the short term,
does provide long-term focused investors with opportunity as well.
A lot of our work around results season has consequently involved
meeting with management teams after the results to assess where the
market has overreacted and where its reaction has been justified.
This has informed the changes we have made to our positions during Q3.
The virtue of being patient as an investor –
when management teams are executing well
SEEK (+20% in Q3 in A$) and Brambles (+7%) both reported results in
line with or slightly ahead of expectations. Yet their share prices rocketed
on the announcements, rising over 10% each on the day of the result.
Positioning by institutional investors explains some of this move.
Both companies have long polarised investors for a variety of reasons.
SEEK, partly because in relentlessly investing in initiatives (including a
multi-year large technology overhaul) that will deliver growth in the
longer-term, its profit growth in recent years has been anaemic. In
Brambles’ case, the market has questioned at times whether its business
model is ripe for disruption (by plastic pallets for example). And more
generally investors have questioned whether shareholders would see a
decent return on money Brambles has spent on productivity initiatives
and technology enhancements.
To their credit, both companies have been clear and steadfast in their
growth strategies, emphasising long term value creation over the optics
of delivering earnings or free cash flow growth in the short term. The
financial results in August backed up their contention that shareholders
will eventually reap the rewards of these growth strategies.
Despite a torpid employment market, SEEK guided to FY26 revenue
growth exceeding cost growth (i.e. profit growth is rising faster than
revenue). Brambles has been steadily rewarded over the last few financial
reporting seasons for consistency of delivery against clear management
objectives. Importantly, in this result, it noted that investments made
in ‘serialisation’ trials (where pallets are uniquely identified) is yielding
positive results. Serialisation may be rolled out across their larger markets,
providing benefits to customers and Brambles alike. This would expand
what is already a wide economic moat around the business.
On the other side of the performance ledger, Wisetech (-17%), CSL
(-16%) and Xero (-12%), each of which is a large position in the
portfolio, weighed meaningfully on our portfolio performance in Q3.
In each case, we think these companies are focused on long term
shareholder value creation.
Although polarising for the market, each company demonstrated
progress in driving towards long term earnings growth and value
creation.
We think these management teams are generally doing the right things
(as SEEK and Brambles have done over the last few years). We think
we will likewise be rewarded in time as shareholders for this. We have
consequently taken advantage of the share price falls and added to our
positions.
Wisetech’s core software revenue growth guidance for FY26 was solid at
14%-21%, but lower than the market’s expectation. Part of this is related
to timing. Wisetech is rolling out new products which will only begin
translating into meaningful revenue at the back end of the financial year.
It is also changing the way it prices its software products. Longer term
we think this will be helpful in accelerating adoption of its products by
customers.
CSL’s result was modestly disappointing. Although its profit margin
continues to rise over time, the pace of improvement has been slower
than the market expected. The company is also re-organising its business
structure and consolidating its research and development (“R&D”)
functions. This likely delivers cost savings. Some of these savings may
be reinvested in acquiring products in blood patient management that
are already in development and show promise. The idea is to then
commercialise these products using CSL’s global network (leveraging CSL’s
scale).
This makes sense to us and likely accelerates new product development
compared to only undertaking research in-house. However, management
muddied these messages with poor communication that accompanied
the result. This left investors unclear on the growth strategy and longer-
term growth prospects. Management has spent the last few weeks
ironing out its messaging – but a communication credibility gap still
remains. Importantly for us, CSL is confident it can grow revenue mid-
to-high single digit (in %) per year in the medium term. The investment
thesis remains intact.
Xero’s share price was weak in spite of delivering plenty of good news
at its flagship technology and innovation conference for customers in
Brisbane in Q3 which we attended. Hot on the heels of releasing over
300 product features in the past 12 months, Chief Product Officer Diya
Jolly stole the spotlight, unveiling an additional 30 new launches targeted
for the ANZ audience. These features aim to automate workflows, deliver
actionable insights, and reflect extensive feedback from accountants and
small business customers. Over time, Xero aspires to automate 90% of
manual accounting tasks while reinforcing its role as a trusted partner.
As part of the event, Xero also hosted the investor community for a
series of fireside chats with its executive leadership team. In addition to
being reassured by the cadence of product development, we were also
again impressed by the energy, depth and quality of the executive team
across the board. Management also stood by its near- and medium-term
financial targets.
The virtue of acting decisively – when a
management team is not executing well
In contrast to these examples, we have also drawn a different key
reflection from Q3. Through our shareholding in Domino’s we have seen
the benefit of being more decisive in acting on a position (reducing or
exiting) when management’s performance wanes.
This is easier said than done.
Our investment process is centred on evaluating a range of factors in
companies, management credibility and performance being a key factor.
However, investment decision-making is complicated by a number of
things. One being that as long-term investors we do not want to ‘duck
at shadows’ and market over-reaction to short term headwinds in a
company.
1
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).
1 July 2025 – 30 September 2025
$
0.7 0
Share Price
as at 30 September 2025
QUARTERLY NEWSLETTER
PREMIUM
1
$
0.7 00.3
%
BRM NAVWarrant Price
$
0.0 4

Another being that the market is forward looking. Where management
take miss-steps, this can be priced quickly by the market (i.e. the share
price falls). As long-term investors with a patient outlook, this can prove
to be a buying opportunity if one has confidence that the miss-steps are
an aberration, not a trend.
In a case like Domino’s, a challenge we faced was that the poor
performance was largely isolated to a few geographies (in their case,
the pizza stores they had in Japan and France respectively). A number of
other core geographies have been performing well for them (Australia,
Germany and the Benelux region among them).
In addition to that, in focussing on the valuation (another investment
factor we consider), Domino’s has screened cheaply. Biding our time while
management righted the ship in these problematic geographies seemed
like the most sensible course of action.
Indeed, lack of progress in improving its performance in Japan and France
saw the Domino’s Board (led by chair and Domino’s largest shareholder,
Jack Cowin) take action – which we liked. They replaced the CEO in late
2024 with Mark van Dyck. Mr van Dyck was tasked with overhauling the
management team and in improving operational efficiency across the
company. He also took the hard decision in Japan to shrink the network
by closing down uneconomic stores. This reversed the rapid expansion
PERFORMANCE
as at 30 September 2025
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+4.1%+8.9%+8.7%
Adjusted NAV Return +1.4%+12.6%+10.0%
Portfolio Performance
Gross Performance Return+2.0%+15.6%+12.5%
Benchmark Index¹+6.4%+15.6%+13.7%
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
Ansell2.4%
ANZ Banking Group2.9%
AUB Group4.1%
Audinate Group1.1%
Brambles5.2%
CAR Group4.8%
Cochlear Limited2.9%
Commonwealth Bank1.8%
Credit Corp3.6%
CSL7.9%
Domino's Pizza0.3%
Fineos Corporation Holdings3.6%
Johns Lyng Group4.3%
Maas Group Holdings Limited3.8%
Macquarie Group5.5%
National Australia Bank3.7%
NEXTDC2.5%
oOh! Media2.2%
PWR Holdings3.0%
REA Group2.1%
Reece1.0%
ResMed4.7%
SEEK5.2%
Wise Tech Global6.9%
Xero Limited6.0%
Equity Total91.5%
Australian cash10.0%
New Zealand cash0.4%
Total cash10.4%
Forward foreign exchange contracts -1.9%
Total 100.0%
PORTFOLIO HOLDINGS
SUMMARY
as at 30 September 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
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us at enquire@barramundi.co.nz
SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO DURING THE
QUARTER IN AUSTRALIAN DOLLARS
JOHNS LYNG
+25
%
FINEOS CORP
+21
%
SEEK
+20
%
DOMINO’S
-29
%
AUDINATE
-36
%
of Domino’s store network that took place during the COVID pandemic
years which in retrospect was a poor decision.
Mr van Dyck began implementing these steps, albeit not seemingly at
the pace and scale that the Board was happy with. He resigned as CEO
in Q3, and on top of that, we have seen a continuation of lacklustre
performance in the financial results that were delivered in August.
We have been reducing our weighting in Domino’s over time given these
headwinds (as we wrote about in the Q2 investment update). However,
the leadership team continues to be in flux and a new CEO now needs to
be found. Japan and France continue to struggle. The remedies required
for Domino’s to return to durable earnings growth are, in our view, likely
to take a long time.
So, in Q3 we took the decision to exit our small position in Domino’s
entirely.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
15 October 2025