MLN - June 2024 Quarterly Newsletter

1
Decelerating economic growth narrows the global stock
market rally
Marlin ended the quarter with gross performance down -1.4% and an
Adjusted NAV return of -2.0%, compared with our global benchmark
which was down -0.5%.
We have become used to bond yield gyrations being the primary
driver of equities in the last few years. However, this quarter it was a
shift in economic growth expectations that pushed equities around.
After a much broader rally in the first quarter of 2024, driven by
accelerating global economic growth expectations, the second
quarter rally was much narrower. Key economic growth drivers shifted
from surprising positivity in April to surprising negativity today. As a
result, 2024 US GDP forecasts that had been getting lifted all year are
now being trimmed slightly. This drove underperformance of cyclical
sectors like transport and housing which are typically quite sensitive
to shifts in economic expectations. The S&P500 equal weighted index
(removing the disproportionate influence of large tech) was down 2%.
While last year we remember the Magnificent 7 (META, AMZN,
GOOGL, MSFT, NVDA, AAPL, TSLA) driving most of the stock
market gains, this quarter it has narrowed further to The Famous Four
(GOOGL, NVDA, AAPL, and TSLA). The ongoing rally in a narrow
subset of AI related stocks drove companies like NVDA, AAPL,
and perceived AI power winners like Constellation Energy. We have
exposure to the AI thematic via our “picks and shovels to the AI
boom” - the cloud providers like MSFT, GOOGL and AMZN. We also
have exposure via the biggest users of AI technology (e.g. META).
And we have exposure via ASML, which has a near monopoly on the
manufacturing equipment that makes the AI chips. But these stocks
didn’t keep pace with NVDA and AAPL in the quarter.
Portfolio update
Tencent (+24%) benefited from the improved sentiment in China.
Tencent is one of the highest quality companies in China, with
its Weixin mobile app used daily by over 1 billion people – for
communicating with friends, watching videos, or paying for dinner.
Tencent is in the early stages of monetising this large user base
through highly profitable revenue streams like advertising and financial
services.
Alphabet (+21%) delivered a strong earnings result. An unexpected
acceleration in Search revenue growth helped put AI disruption
concerns to bed for the time being. Its new AI product, Search
Generative Experience (SGE), has had positive initial results -
consumers are increasing the number of searches, which potentially
increases the revenue pie. Google Cloud, YouTube and operating
income margins all outperformed expectations. We took some profits
during the sharp outperformance.
Two of our medical device companies, Boston Scientific (+13%)
and Intuitive Surgical (+11%) are both launched new technologies
that will drive material revenues over the next few years. Boston
Scientific’s market-leading FARAPULSE device helps correct an
irregular heartbeat while minimizing the damage to nearby healthy
tissues, with an addressable market in the billions of dollars. Intuitive
Surgical announced its next-generation surgical robot, the DV5, with
significant improvements over its decade-old predecessor.
Amazon (+7%) also delivered a solid earnings report. AWS,
Amazon’s cloud computing unit, continues to reaccelerate growth as
optimisation headwinds recede, growing 17% (vs. 15% expected).
And AWS’ operating margin at 38% was well ahead of consensus at
30%; and management is confident there is more upside to overall
company operating margin. At the end of the quarter, it was reported
that Amazon plans to introduce an ultra-low-cost section on their
eCommerce platform which helped address concerns around low-
cost competition from the likes of Temu and Shein
Mastercard (-8%) was a laggard on the back of a mixed earnings
result, a softening US consumer and more recently US District
Court Judge Brodie dismissed a settlement offering by US Banks/
Mastercard/Visa to a group of retailers. This case dates to 2005 and
is related to an alleged over-charge on card swipe fees. We continue
to monitor this case.
Salesforce (-15%) reported weaker than expected earnings.
While software subscription revenue was largely as expected, the
guidance for expected key growth metrics was below expectations.
Additionally, management couldn’t calm nerves about potential
large-scale M&A it might do soon. After the stock price fall in May,
it rebounded as investors saw the move as over-done. We reduced
our weighting given the on-going headwind to sales cycles and
customers slightly shifting spend away from digital transformation and
towards AI initiatives.
Dexcom (-18%) struggled during the quarter despite reporting a solid
earnings result. The fact the company barely lifted full year revenue
and earnings guidance, coupled with some rekindled concerns about
GLP1s on the business impacted the price. We have added to our
position into this weakness.
Dollar General (-15%) and Dollar Tree (-20%) underperformed as
a tough backdrop for low-income consumers overshadowed the
tailwinds from higher-income consumers trading down and specific
store improvement initiatives. While customer traffic grew at both
stores, customers reduced their spend per visit; reduced spend on
more profitable discretionary items; and shoplifting continues to be
a headwind not just for the Dollar Stores but retailers globally. We
reduced our target weights given these ongoing headwinds are
causing the two companies to underperform versus our expectations.
Floor & Décor (-23%) was impacted by soft earnings, weakening
existing home sales (a key driver of flooring sales) and ongoing high
mortgage rates. While same-store sales growth was down -11% for
the first quarter, the market expects this was the trough. With US
¹
Share price discount 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).
as at 30 June 2024
1 April 2024 – 30 June 2024
MLN NAVDISCOUNT
1
$
1.036.0
%$
0.96
Share Price
QUARTERLY NEWSLETTER
$
0.03
Warrant Price

PERFORMANCE
as at 30 June 2024
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
Icon4.5%
United Kingdom
Greggs Plc4.1%
United States
Alphabet5.9%
Amazon.Com9.3%
ASML Holding2.5%
Boston Scientific3.9%

Danaher Corporation4.1%
Dexcom Inc4.9%

Dollar General2.1%
Dollar Tree2.0%
Edwards Lifesciences Corp.4.5%
Floor & Décor Holdings5.6%
Gartner Inc4.4%
Intuitive Surgical Inc4.0%
Mastercard5.2%
Meta Platforms Inc5.4%
Microsoft7.1%
MSCI Inc2.4%
Netflix2.5%
salesforce.com4.2%
UnitedHealth Group Inc4.0%
Equity Total96.6%
New Zealand dollar cash0.5%
Total foreign cash2.7%
Cash Total3.2%
Forward Foreign Exchange0.2%

TOTAL100.0%
PORTFOLIO HOLDINGS
SUMMARY
as at 30 June 2024
COMPANY NEWS
If you would like to receive future
newsletters electronically please email us
at enquire@marlin.co.nz
Dividend Paid 27 June 2024
A dividend of 2.08 cents per share was paid to Marlin
shareholders on 27 June 2024, 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(1.2%)(9.8%)+10.9%
Adjusted NAV Return (2.0%)+0.4%+10.6%
Portfolio Performance
Gross Performance Return(1.4%)+2.4%+13.6%
Benchmark Index¹(0.5%)+5.0%+9.8%
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
TENCENT
+24
%
ALPHABET
+21
%
DEXCOM
-18
%
DOLLAR TREE
-20
%
FLOOR &
DÉCOR
-23
%
Sam Dickie
Senior Portfolio Manager
Fisher Funds Management Ltd
12 July 2024
30-year mortgage rates still hovering around 7%, homeowners don’t
want to move house and trigger a refinance to the higher mortgage
rate. This has meant existing home sales continue to remain near
GFC lows.
Portfolio activity
In May we added ASML to our portfolio. ASML is the leading
manufacturer of lithography machines used to produce
semiconductor chips. ASML has 100% market share in the cutting-
edge lithography machines that are used to manufacture the most
advanced semiconductor chips such as those used in smartphones
and laptops. Advances in areas such as AI and autonomous driving
will require increasing amounts of these advanced semiconductor
chips, which will drive ongoing demand for ASML’s advanced
lithography machines. While the AI spotlight is currently on companies
like Nvidia or AMD that are generating AI revenues today, ASML’s AI
revenue is currently minimal, but this long-term structural demand
for increased computing power will underpin ASML’s revenue growth
over the medium-to-longer term.