BRM – November 2023 monthly update

1
A WORD FROM THE MANAGER
In October, Barramundi’s gross performance return was down -7.0%
and the adjusted NAV return was down -7.1%. This compares to the
S&P/ASX200 Index (70% hedged into NZ$) which was down -3.3%.
Macro concerns led by rising interest rates which saw a further
0.44% increase in the Australian Government 10yr bond yield to
4.93% contributed to a soft month for equity returns. Utilities
(+1.7%) and Materials (-0.8%) were the best performing sectors for
the month while Information Technology (-7.6%) and Healthcare
(-7.2%) were the worst.
In addition to these concerns, Credit Corp (-38%) also weighed on
our portfolio returns (see below). Outside of this, the trading updates
and AGM commentary of our portfolio companies in the month was
generally constructive and robust.
Portfolio News
We attended CSL’s (-7%) investor day in Sydney and met the new
CEO Paul McKenzie. Also presenting were the heads of the Behring
(plasma), Seqirus (flu vaccines) and Vifor (iron deficiency and
nephrology) businesses. Encouragingly each of them expects their
divisions to outpace market growth. This expected outperformance
will be led by the current portfolio of products. CSL will look to
expand the range of conditions that its products are used to treat
as well as within geographies. Growth will also be supplemented by
new product launches. CSL has a good balance between products in
early to late-stage medical trials, with a number of product launches
expected in the next year.
Resmed (-8%) reported a solid Q1 FY24 result, largely in-line with
market expectations. Revenue was 16% higher and underlying
after tax profit increased 9% versus a year ago. Gross margin, a
recent source of disappointment for the market, also showed signs
of stabilisation and is expected to improve over the course of FY24.
Conjecture about the impact that GLP-1 obesity drugs may have
on Resmed’s future growth continued to weigh on its share price.
Resmed’s own modelling, under what it believes are relatively harsh
assumptions, suggests that by 2050 its total addressable market
globally might be about 15% smaller than would otherwise be the
case. Under these assumptions, global penetration of CPAP treatment
by this time would still be very low (<10%). Thus, Resmed would still
have a very large and long growth runway ahead of it even if GLP-1
adoption is high. We remain of the view that the impact of GLP-1s
will likely be less than is inferred by the drop in Resmed’s share price.
Brambles (-8%) also reported solid Q1 FY24 revenue growth of
15%, with all regions (Americas, EMEA, Asia-Pacific) around this
pace. Growth was driven by price increases from contract rollovers
over the last year. The company has been able to recover higher
operating and capital costs on contract renewals. Q1 volumes were
broadly flat. Like-for-like volume growth is being restrained by softer
macroeconomic conditions and customers releasing pallets now that
they have greater confidence that their supply chains are functioning
normally. With more pallets available to them, Brambles is again
chasing the conversion of new customers from whitewood to pooled
pallets. Success on this front should be more evident in the second
half of the year. Brambles left its full year earnings guidance pointing
to healthy profit growth unchanged.
We attended PWR’s (-11%) AGM in October. PWR uses its AGM
each year as an opportunity to showcase its management team and
new product developments to attendees. Talking to members of
PWR’s management team from its Australian, US and UK offices it
once again emphasised the company’s strong performance culture
centred around its tagline “Engineering an unfair advantage”. It
continues to build on its strong track record of developing talent
internally. Over the last few years, it has strengthened the leadership
team working alongside CEO and founder, Kees Weel. PWR also
announced that it would be moving into a significantly larger new
purpose-built facility in July 2025 after outgrowing its current facility
in Brisbane.
Credit Corp’s share price fell -38% over October. This A$500m
fall in equity value was sparked by a A$64m pretax ($45m post
tax) impairment in the carrying value of its US Purchased Debt
Ledger (“PDL”) assets. This impairment relates primarily to US PDLs
acquired in 2022, when macroeconomic conditions were better.
Since then, debt collection conditions have deteriorated, leading to
the impairment. Credit Corp continues to purchase good volumes
of PDLs in the US, but at lower prices, reflective of the softer
collection conditions. As such, while the impairment is disappointing,
we think management has taken prudent steps to adapt to the
tougher economic environment and retains good medium term
growth prospects in the US market. The company noted at its AGM
in October that both the Australian and NZ PDL division and its
Consumer Lending business are trading in line with expectations.
Accordingly, we have topped up our position in Credit Corp back to
its target weight.
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).
MONTHLY UPDATE
November 2023
$
0.69
Share Price
as at 31 October 2023
PREMIUM
1
5.9
%

BRM NAV
$
0.66
$
0.02
Warrant Price

SECTOR SPLIT
as at 31 October 2023
KEY DETAILS
as at 31 October 2023
FUND TYPE
Listed Investment Company
INVESTS IN
Growing Australian companies
LISTING DATE
26 October 2006
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 + 7%
PERFORMANCE FEE
10% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$0.71
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
278m
MARKET CAPITALISATION
$192m
GEARING
None (maximum permitted 20%
of gross asset value)
3
%
18
%
19
%

CONSUMER
DISCRETIONARY
18
%
COMMUNICATION
SERVICES

HEALTH CARE
24
%
2
%
2
%

FINANCIALS
CASH &
DERIVATIVES
CONSUMER
STAPLES
6
%
Portfolio Changes
During the month we took advantage of a sharp fall in PEXA’s
(+5% since we invested) share price to add it to our portfolio. PEXA
operates the only e-conveyancing property exchange in Australia.
Close to 100% of Australian property refinancing and 90%+ of sale
and purchase transactions are processed through the electronic PEXA
Exchange. It has a deep network-effect moat, with 9,800+ practioner
firms, 160+ financial institutions (including all the major Australian
banks), the Land Title Offices and the Reserve Bank of Australia
interacting on PEXA Exchange to effect electronic settlement and
lodgement of property transactions.
Replicating PEXA’s digital e-conveyancing platform across new
geographies represents a significant growth opportunity. PEXA has
expanded into the UK and processed its first remortgage on its UK
Exchange in 2022. PEXA announced a small acquisition in the UK
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
in October, but the affiliated trading update underwhelmed the
market with its pace of expansion in the UK, leading to a fall in the
share price. We viewed this as an attractive entry point for patient
investors.
We also sold our Westpac (+2%) shares in the month, to help fund
the addition of PEXA to the portfolio.
2
7
%
INDUSTRIALS
MATERIALS
INFORMATION
TECHNOLOGY
1
%
REAL ESTATE

OCTOBER’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
CREDIT CORP
GROUP
-38
%
FINEOS CORP
HOLDINGS
-17
%
NANOSONICS
-12
%
WISETECH GLOBAL
-11
%
PWR HOLDINGS
-11
%
5 LARGEST PORTFOLIO POSITIONS as at 31 October 2023
CARSALES.COM
6
%
CSL LIMITED
10
%
CARSALES.COM
5
%
SEEK
5
%
AUB GROUP
5
%
The remaining portfolio is made up of another 21 stocks and cash.
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(3.3%)(2.7%)+5.9%+2.3%+12.7%
Adjusted NAV Return(7.1%)(10.4%)+3.7%+6.1%+10.5%
Portfolio Performance
Gross Performance Return(7.0%)(9.9%)+6.6%+8.4%+13.2%
Benchmark Index^(3.3%)(6.8%)+3.5%+9.6%+7.6%
PERFORMANCE to 31 October 2023
3
TOTAL SHAREHOLDER RETURN to 31 October 2023
^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 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 Barramundi Non–GAAP Financial Information Policy. A copy of the policy is available at barramundi.co.nz/about-barramundi/barramundi-policies.
Share Price/Total Shareholder Return
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
Oct
2006
Oct
2007
Oct
2011
Oct
2013
Oct
2014
Oct
2015
Oct
2008
Oct
2009
Oct
2010
Oct
2016
Oct
2020
Oct
2012
Oct
2022
Share Price Total Shareholder Return
Oct
2017
Oct
2018
Oct
2019
Oct
2021
Oct
2023

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 Barramundi 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 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 93502, Takapuna, Auckland 0740
Phone: +64 9 489 7074
Email: enquire@barramundi.co.nz | www.barramundi.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 BARRAMUNDI
Barramundi 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 Australian companies
through a single, professionally
managed investment. The aim of
Barramundi is to offer investors
competitive returns through capital
growth and dividends.
CAPITAL MANAGEMENT STRATEGIES
Regular Dividends
»Quarterly distribution policy introduced in
August 2009
»Under this policy, 2% of average NAV is targeted to be
paid to shareholders quarterly
»Dividends paid by Barramundi 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
»Barramundi 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
»Barramundi 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
MANAGEMENT
The Manager has authority delegated
to it from the Board to invest according
to the Management Agreement and
other written policies. Barramundi’s
portfolio is managed by Fisher Funds
Management Limited. Robbie Urquhart
(Senior Portfolio Manager), Terry Tolich
and Delano Gallagher (Senior Investment
Analysts) have prime responsibility for
managing the Barramundi portfolio.
Together they have significant combined
experience and are very capable of
researching and investing in the quality
Australian companies that Barramundi
targets. Fisher Funds is based in
Takapuna, Auckland.
BOARD
The Board of Barramundi
comprises independent
directors Andy Coupe (Chair),
Carol Campbell, David
McClatchy and Fiona Oliver.
Warrants
»Barramundi announced an issue of warrants (BRMWH)
on 9 October 2023
»Information pertaining to the warrants was mailed/
emailed to all shareholders on Tuesday 17 October 2023
»The warrants were issued at no cost to eligible
shareholders in the ratio of one warrant for every four
Barramundi shares held, based on the record date of
25 October 2023
»The warrants were allotted to shareholders on 26
October 2023 and listed on the NZX Main Board from
27 October 2023
»The Exercise Price of each warrant is $0.69, 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
Barramundi
»The Exercise Date for the warrants is 25 October 2024