MLN – December 2023 Quarterly Newsletter

1
Strong finish to a strong year for markets and for Marlin
Marlin ended the quarter with gross performance up 11.0% and an adjusted
NAV return of +10.1%, compared with our global benchmark which was up
8.3%. This brought the 2023 calendar year gross performance to +31.3%,
compared with our global benchmark which was up +19.1%.
The market entered 2023 concerned about a hard economic landing. Worse
than that, it was concerned about a slowdown in growth amidst a high and
sticky inflation environment and therefore ongoing higher interest rates. The
market has ended 2023, excited about a soft economic landing, declaring
victory on inflation and anticipating a much lower interest rate environment.
Global market backdrop
The interplay between growth, inflation and interest rates dictated equity
market performance this year. The first two quarters of the year showed a
brighter than expected economic growth outlook, fairly sharp disinflation
and stable interest rates. The September quarter was almost a complete
reversal – concerns that the robust growth was causing inflation to be a little
bit stickier than the market had expected. And the market’s interpretation of
the economic backdrop was much rosier in the final quarter.
We have continued to upgrade the quality of the portfolio. The average
quality and growth characteristics, as captured via our STEEPP framework,
has improved over the year. This helped Marlin to outperform its benchmark
amidst the regularly changing macro backdrop and sector leadership
throughout the calendar year.
Portfolio update
Gartner, the leading IT research business, was up +31% for the quarter, as
it reported a reacceleration in new business wins following several quarters
of cautious spending by technology vendor customers. Margins were
again the standout contributor, well-ahead of expectations as the company
continues to reduce its cost base post the pandemic. We had increased
the target weighting of Gartner by circa 50% (from 4% to 6%) throughout
2023 as the market was too concerned on what we saw as a temporary
slow-down.
Salesforce (+30%) had a strong quarter and reported solid earnings
at the end of November. Salesforce met revenue expectations, but the
operating profit margin was the standout in the quarter. Salesforce continues
to expand margins rapidly as the company is undergoing a period of
expense rationalisation, like other companies in the technology space.
Operating profit margins have expanded to 17.2% from 5.9% a year ago,
demonstrating very high incremental margins for the business and the ability
to protect profits when sales growth slows.
Floor & Decor (+23%) benefitted from the expectation of lower interest
rates coupled with improving real estate metrics in Q4. Floor & Decor’s
stock underperformance during Q3 gave us the opportunity to increase
our weighting in the company. We believed the market was too short term
focussed on the macro environment and missing the large growth runway
ahead of the company.
Alibaba (-18%) and Tencent (-4%) were two of our worst performers as
the Chinese stock market continued to struggle against a tough economic
backdrop. We exited Alibaba during the quarter on concerns around
increased competition. We also exited PayPal (-5%), one of our other
laggards for the quarter. These exits are discussed further below.
Portfolio activity
During the quarter we added two high quality medical equipment companies
to the portfolio, Intuitive Surgical and Dexcom. Both companies have
revolutionised the treatment and management of disease. Intuitive Surgical
is the leading manufacturer of soft-tissue surgical robotics, used to assist
surgeons to perform minimally invasive surgical procedures. Dexcom
develops, manufactures, and distributes continuous glucose monitoring
(CGM) devices for people with diabetes.
They are both leaders in their respective markets, have large addressable
markets with long runways for growth, and benefit from wide economic
moats. We took the opportunity to add them to the portfolio as both
companies sold off through the second half of this year on GLP-1 weight loss
drug concerns.
We exited Dollar General (DG) in September due to the lack of clarity over
its steady state earnings and lower confidence in management. In early
October, DG announced that former CEO Todd Vasos was returning as CEO,
after retiring a year earlier. Vasos successfully led DG for seven years as CEO
before retiring and was in senior roles at the company for several years before
becoming CEO. Quickly after his reappointment as CEO, Vasos spoke with
analysts and investors giving strong confidence around containment of the
current investment cycle, longer-term margins, and earnings power. As a
result, our two main reasons for exiting have changed for the better and we
have therefore added DG back to the portfolio at a 2% weighting.
We exited Alibaba during the quarter. Alibaba has faced several years of
increased competition from both live-streaming companies like Douyin and
Kuaishou; and low-cost ecommerce companies like Pinduoduo. Against a
tough economic backdrop, competition in the China ecommerce sector has
stepped up further recently – with Alibaba having to increase investment to
improve user engagement and ‘price competitiveness’. This not only impacts
revenue growth, but also necessitates further investment, creating uncertainty
around the company’s ability to improve margins.
We exited PayPal during the quarter due to concerns around competition
and share loss. PayPal had an early lead in ecommerce payments due to its
trusted brand, security, and being the most frictionless checkout option. This
was important in the early days of ecommerce as consumers and merchants
had less trust of one another and PayPal could bridge this gap. But these
advantages have eroded, and PayPal is facing stiff competition from multiple
players such as Apple Pay, Shop Pay, and Amazon’s Buy with Prime.
¹
Share price discount to NAV (using the net asset value per share, after expenses, fees and tax, to four decimal places).
as at 31 December 2023
1 October 2023 – 31 December 2023
MLN NAVDISCOUNT
1
$
0.940.4
%$
0.94
Share Price
QUARTERLY NEWSLETTER
Sam Dickie
Senior Portfolio Manager
Fisher Funds Management Ltd
19 January 2024

PERFORMANCE
as at 31 December 2023
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 Marlin Global 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 Marlin Global 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.
Marlin Global Limited
Private Bag 93502, Takapuna, Auckland 0740, New Zealand
Phone: +64 9 484 0365
Email: enquire@marlin.co.nz | www.marlin.co.nz
Headquarters Company
%
Holding
China
Tencent Holdings4.0%
Ireland
Icon5.6%
United Kingdom
Greggs Plc4.4%
United States
Alphabet6.5%
Amazon.Com8.3%
Boston Scientific4.4%
Danaher Corporation4.5%

Dollar General2.1%
Dollar Tree2.3%

Dexcom Inc2.1%
Edwards Lifesciences Corp.6.4%
Floor & Décor Holdings5.4%
Gartner Inc5.3%
Intuitive Surgical Inc2.0%
Mastercard5.4%
Meta Platforms Inc6.0%
Microsoft6.4%
MSCI Inc3.0%
Netflix3.0%
salesforce.com5.5%
UnitedHealth Group Inc3.6%
Equity Total96.2%
New Zealand dollar cash1.2%
Total foreign cash0.5%
Cash Total1.7%
Forward Foreign Exchange2.1%

TOTAL100.0%
PORTFOLIO HOLDINGS
SUMMARY
as at 31 December 2023
COMPANY NEWS
If you would like to receive future
newsletters electronically please email us
at enquire@marlin.co.nz
Dividend Paid 15 December 2023
A dividend of 1.83 cents per share was paid to Marlin
shareholders on 15 December 2023, under the quarterly
distribution policy. Interest in Marlin’s dividend reinvestment plan
(DRP) remains high with 39% of shareholders participating in the
plan. Shares issued to DRP participants are at a 3% discount to
market price. If you would like to participate in the DRP, please
contact our share registrar, Computershare on 09 488 8777.
3 Months
3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+3.1%(3.3%)+12.4%
Adjusted NAV Return +10.1%+2.6%+12.2%
Portfolio Performance
Gross Performance Return+11.0%+4.5%+15.2%
Benchmark Index¹+8.3%+7.2%+11.1%
1
Benchmark index : S&P Large Mid Cap/S&P Small Cap Index (hedged 50% 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 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 Marlin Non-GAAP Financial Information Policy. A copy of the policy is available at
marlin.co.nz/about-marlin/marlin-policies.
SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO DURING THE
QUARTER IN LOCAL CURRENCY
DOLLAR TREE
+33
%
GARTNER
+31
%
SALESFORCE
+30
%
NETFLIX
+29
%
FLOOR &
DÉCOR
+23
%
FOREIGN TAX COMPLIANCE ACT (FATCA) AND COMMON
REPORTING STANDARD (CRS)
As a result of the New Zealand Government agreeing to participate in the exchange of information with other jurisdictions under the
Foreign Tax Compliance Act (FATCA) and Common Reporting Standard (CRS), Financial Institutions are required to undertake due dili-
gence to determine the account holders’ jurisdiction of tax residence. If shareholders have not previously self-certified, they will receive
a Tax Residency Self-Certification form from Computershare depending on when they first purchased their securities. Please ensure
you complete and return this important document if you have not already done so. For more information please visit the IRD website:
ird.govt.nz/international-tax/exchange-of-information/crs/registration-and-reporting or contact Computershare if you are unsure of
whether you have completed your form.