BRM - December 2025 Quarter Newsletter

Tough end to 2025, but we are optimistic
looking forward into 2026
Rounding out a difficult 2025, Barramundi’s gross performance return
was -7.6% in quarter four (Q4), and the adjusted NAV return was -7.8%,
both well behind the benchmark index which fell -0.7%. Given the poor
scorecard for Q4, why are we optimistic looking forward to 2026?
We acknowledge that it has been a tough year for our portfolio. As we’ve
written about in previous quarterlies, some of our portfolio ‘problem
children’ such as Wisetech, CSL, Domino’s and James Hardie have given
us headaches during the year. They have driven a meaningful part of the
portfolio’s poor performance over the 12 months. We recap on the active
steps we’ve taken to address these positions below.
However, in Q4, the worst share price performances were largely
delivered by technology and classified advertising businesses each of
which are performing very well operationally. They are growing their
earnings strongly. And these companies reiterated earnings guidance
in Q4. We really can’t criticise management for their Q4 share price
performance. We think their weak share prices can partly be explained by
market concerns about the impact artificial intelligence (“AI”) will have
on their businesses.
We also observe that the resources heavy Materials (+13% in Q4) and
Energy (+1%) were the best performing sectors on the ASX in Q4.
Materials returned +32% over 2025 overall, by far the best performing
sector on the market. The rally in commodity prices, and in particular gold
and lithium spoke for the sector’s performance. Investors chasing the rally
have likely sold shares in other sectors to buy into resources companies.
This amplifies the difference in relative performance.
We added high quality diversified miners BHP and Rio Tinto recently
so have gained some benefit from this rally in commodities in the last
few months. However, our investment approach does not lend itself to
investing broadly in commodity producers. BHP and Rio have narrow
moats predicated on scale and on being the lowest cost producers in their
key commodities. They meet our investment threshold. Most resource
companies lack these advantages.
Technology and classified advertising
businesses out of favour in 2025
Our technology companies including software providers Xero (-28% in
A$) and Wisetech (-24%) and data centre operator NextDC (-26%)
all fell sharply in Q4. There were some company specific wrinkles that
contributed to this performance.
In Xero’s case, the market was unenamoured with the steep US$2.5bn
price paid for the acquisition of US payments business Melio. While the
price was rich, we think the acquisition has merit and positions Xero well
to compete in the key US market.
Wisetech was negatively impacted by an ASIC investigation into share
sales by founder Richard White. This investigation could take time to
resolve. In the meantime, Wisetech has made substantial progress in
addressing its succession planning and governance challenges that were
a feature during 2025. We were impressed with the calibre of the new
Board members that we met at its recent investor day in December.
Company wrinkles aside, share price weakness across the information
technology sector on the ASX was broad based in Q4. As a group the
sector fell -26%. This indicates that AI concerns and investor aversion to
‘traditional’ software companies more generally was the predominant
theme driving their share price weakness in Q4 rather than company
specific factors.
This was most acutely observable through data centre operator NextDC
(-17% in 2025). At its financial results in early Q3, it announced that
its contracted utilisation of capacity with clients sat at 245MW as at 30
June ’25. This was 40% higher than where it was in June 2024. Growth
in contracted utilisation is a key metric the market is focused on as it
translates into revenue and profit growth in the future. By its last market
announcement on 22nd December, NextDC had lifted this by a further
68% to 412MW. This will underpin accelerated earnings growth over the
next few years.
Specific to data centres globally, the market is concerned about the
sustainability of the growth in demand for capacity (and the ability to
fund this capacity) from particularly the large AI technology firms. Our
analysis – backed up by NextDC’s contract announcements – suggests
that in Australia at least, the demand for data centre capacity far exceeds
the logistical challenges of bringing on additional supply. This mismatch
in supply & demand bodes well for NextDC’s future.
In the case of our software investments, Xero and Wisetech, the AI
concerns are different. Here the market seems concerned about whether
their software will be disintermediated by AI. We have spent a lot of time
with their management teams in recent months including at investor
days held for both companies. In both cases the companies are deeply
embedded in their customers businesses and importantly control their
customer data. This limits other third-party AI tools from accessing this
data. They are both partnering with the large AI technology companies
to augment their own AI software development which they are in the
process of rolling out to customers. In other words, while possible,
we don’t think their core value proposition for their customers will be
disrupted by ChatGPT or other AI models.
We note both Xero and Wisetech are expected to continue growing their
earnings strongly through the next few years.
In a-like vein all three classified advertising companies, REA (-21%) –
housing; SEEK (-19%) – employment; and CAR Group (-16%) – vehicles;
have been affected by similar market AI concerns in Q4. These companies
also control the key data required by customers using their websites. They
have strong brand presence in their respective markets. And like Xero and
Wisetech, they have embraced AI by building their own AI functionality in
augmenting the best that ChatGPT or other large AI models can provide
to enhance their customer’s experience.
All three companies have also reiterated earnings guidance or outlook
commentary recently.
Investors and the market will remain focused for some time on AI and
how it might disrupt businesses across many different industries. This will
likely bring volatility to share prices in the near term as these concerns
wax and wane.
AI and the impact it could have on all our portfolio companies will remain
a key focus area for our research agenda again in 2026.
What of our problem children from 2025?
As noted above, Wisetech has made good strides addressing its
governance and succession challenges. It is in our view one of the most
exciting companies on the ASX and we have retained it as a key position
in our portfolio. We think it will deliver well for shareholders in time.
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 October 2025 – 31 December 2025
$
0.6 7
Share Price
as at 31 December 2025
QUARTERLY NEWSLETTER
PREMIUM
1
$
0.6 36.3
%
BRM NAVWarrant Price
$
0.0 1

Having lost faith in our investment theses, we exited both Domino’s and
James Hardie during the year.
As discussed in the Q3 update, CSL is taking sensible steps to manage
the efficiency of its capital allocation and capitalise on its scale advantage
over peers. That said, CSL’s management team have a credibility gap with
the market which will take time to close.
Although cheap, we reduced our position size into year end. We re-
deployed the proceeds across some of our other companies which are
similarly screening cheaply, but where management are performing well.
Our Industrial & Resources companies
finished the year strongly
Construction materials company Maas Group (+23%) was our best
performing company in Q4. In December it announced a significant
A$200m electrical contract with AI company Firmus which is establishing
a meaningful data centre facility in Tasmania. Maas is working hard
to deliver high voltage electrical infrastructure to its client within 12
months. This puts Maas in a good position to win a further A$1bn of
electrification work that Firmus is expected to require over the next few
years.
PERFORMANCE
as at 31 December 2025
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(2.4%)+7.6%+1.7%
Adjusted NAV Return (7.8%)+8.4%+5.2%
Portfolio Performance
Gross Performance Return(7.6%)+10.8%+7.3%
Benchmark Index¹(0.7%)+12.7%+10.8%
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
Ansell3.1%
ANZ Banking Group4.6%
AUB Group4.4%
Audinate Group0.9%
BHP Group Limited4.6%
Brambles4.7%
CAR Group5.4%
Cochlear Limited3.0%
Commonwealth Bank2.0%
Credit Corp3.7%
CSL6.3%
Fineos Corporation Holdings4.0%
Maas Group Holdings Limited5.3%
Macquarie Group5.9%
National Australia Bank4.0%
NEXTDC2.5%
oOh! Media2.6%
PWR Holdings3.7%
REA Group2.4%
Reece Ltd1.4%
ResMed4.6%
Rio Tinto Limited2.6%
SEEK5.0%
WiseTech Global7.1%
Xero Limited5.9%
Equity Total99.7%
Australian cash0.6%
New Zealand cash0.6%
Total cash1.2%
Forward foreign exchange contracts -0.9%
Total 100.0%
PORTFOLIO HOLDINGS
SUMMARY
as at 31 December 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
MAAS GROUP
+23
%
REA GROUP
-21
%
WISETECH
GLOBAL
-24
%
NEXTDC
-26
%
XERO
-28
%
After a volatile Q3, it was pleasing to see plumbing supplies company
Reece (+20%) rebound as its recent trading update pointed to improving
underlying trends in its Australian division. The board has also been
aggressively deploying capital into buying back shares at what we agree
are depressed levels. Having already undertaken a A$365m buyback
in Q3, the board supplemented this with a further A$85m on-market
buyback in Q4. This speaks to good alignment between the board and
shareholders.
As touched on earlier, recent additions to the portfolio Rio Tinto (+11%)
and BHP (+5%) benefitted from the commodity rally into year end.
Lastly, gloves manufacturer Ansell’s (+10%) share price finished the year
strongly as the market gained more comfort in Ansell’s ability to pass on
tariff related costs to its US customer base. Helped by favourable currency
exchange rates, Ansell increased its full year profit guidance by 3%
during Q4.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
15 January 2026