MLN - December 2024 Quarterly Newsletter

1
Stock market returns concentrated in the US, again
Marlin ended the quarter with gross performance of +6.7% and an
adjusted NAV return of +5.9%, compared with our global benchmark
which was up +4.7%.
Global stock markets were largely flat for the quarter, with the US
(+4%) significantly outperforming Europe (-3%) and global emerging
markets (-7%). This caps off another strong year for global equities,
having now rebounded approximately 55% from their late 2022 lows.
US markets reacted strongly to the re-election of Donald Trump as
US President in November. This was due to potential stimulatory
moves such as tax cuts, removing regulatory roadblocks to
investment, and tariffs to be imposed on foreign goods. This sparked
renewed retail investor exuberance - for example, profitless tech (think
cryptocurrency, Coinbase, ARKK etc.) was up around 35% and Tesla
was up around 55% due to Elon Musk’s association with Trump.
Portfolio update
Amazon (+18%), our largest position, was one of the best performers
for the quarter (and in fact one of the best performers for the past
couple of years). Earlier in the year, the critical AWS business grew
revenues faster than expected as customers reaccelerated their
spend after a year of measured customer spend post pandemic.
Later in the year, both the AWS business and the ecommerce
business reported much higher than expected profit margins. AWS
recorded its highest ever quarterly operating profit margin of 38%,
the result of measured spending and revenue growth reaccelerating.
Amazon’s ecommerce margins continue to improve post the large
investment made into its logistics infrastructure. While North American
ecommerce margins were better than expected in the quarter,
Amazon’s international ecommerce margin was the star as more of its
international markets mature.
Netflix (+26%) has been a top performer for several quarters.
Competitors like Disney entered the global streaming market a
few years back with lower prices to capture market share, but this
strategy led to significant losses. Consequently, they have been
raising prices faster than Netflix. This, plus Netflix’s superior content,
crackdown on account sharing, and introduction of a cheaper ad-
supported tier have all contributed to its market share gains.
Alphabet (+14%) had a volatile year due to competitive and
regulatory pressures but ended up as one of the top performers
for both the quarter and the year. Initially seen as an “AI laggard”
with underwhelming AI product launches, concerns arose about
Generative AI search competition (e.g. ChatGPT) impacting its core
model. However, Google Search growth reaccelerated throughout
2024, and Alphabet’s scale and data access keep it well-positioned
in AI. The US Department of Justice released proposed solutions for
the anti-trust case against Alphabet, with final decisions expected
in August 2025. Alphabet is appealing the initial judgment and will
likely appeal the remedies as well. Despite being viewed primarily
as a search business, Alphabet’s YouTube, Cloud, and other
similar businesses like Waymo
2
and Quantum Computing are all
experiencing growth.
Dexcom (+16%) and Edwards (+12%) rebounded this quarter after
previous setbacks. Dexcom made significant strides in correcting
its execution errors, enhancing sales force performance, and
reconnecting with key customers. Meanwhile, Edwards reported
positive outcomes from several key clinical trials, which are expected
to broaden its patient base.
Icon (-27%) and Danaher (-17%) are experiencing a slower than
expected recovery in biotech R&D spending after several strong
years post-COVID. Although biotech funding has improved this year,
it has not yet translated into revenue as customers remain hesitant
to start new drug development projects. Icon is also facing near-
term pressure from large pharma customers like Pfizer, which have
made larger-than-expected cuts to their clinical research programs
to reduce costs. While Icon continues to gain market share within
its large pharma customer base, this has not been enough to offset
these headwinds, leading to reduced revenue growth expectations
for 2024 and 2025. We believe these challenges are likely temporary,
and industry growth will reaccelerate next year as biotech companies
continue to invest in innovative new treatments. We added to our
position in Danaher, but due to the dual headwinds for Icon (biotech
and large pharma), we reduced our position before and after the Icon
results, as the timing of the recovery remains uncertain.
Floor & Décor (-20%) had a weak quarter, capping off a volatile year.
Existing home sales, the primary driver of flooring demand, remain
near multi-decade lows, and mortgage rates rose sharply again this
quarter, further dampening demand. Despite these challenges, Floor
& Decor continues to gain market share from competitors and open
new stores. We have continued to add to our position during periods
of significant stock price weakness.
ASML (-17%) also had a weak quarter following an unexpected
reduction in its 2025 guidance due to several near-term headwinds.
ASML manufactures lithography machines used to produce
semiconductor chips for various applications, including mobiles,
PCs, cars, and AI chips. While demand for AI remained strong,
other markets are recovering more slowly, causing chip makers
to delay spending on semiconductor-making machinery. Two of
ASML’s largest customers, Samsung and Intel, have postponed
the completion of large chip manufacturing facilities due to weak
demand and competition from TSMC. We recognize that ASML is a
cyclical business and expect these headwinds to be temporary, with
long-term demand for ASML’s advanced lithography tools remaining
strong. Consequently, we added to our position during the weakness
earlier in the quarter.
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).
2
Waymo is a US software company. It was formerly known as the Google self-driving car project.
as at 31 December 2024
1 October 2024 – 31 December 2024
MLN NAVDISCOUNT
1
$
1.026.8
%$
0.95
Share Price
QUARTERLY NEWSLETTER
$
0.02
Warrant Price

PERFORMANCE
as at 31 December 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 Holdings3.2%
France
Hermes International2.9%
Ireland
Icon4.7%
United Kingdom
Greggs Plc3.2%
United States
Alphabet5.5%
Amazon.Com7.9%
ASML Holding NV5.9%
Boston Scientific4.0%

Danaher Corporation5.1%
Dexcom Inc4.1%

Edwards Lifesciences Corp.3.0%
Floor & Décor Holdings5.3%
Gartner Inc3.9%
Intuitive Surgical Inc3.7%
Mastercard6.3%
Meta Platforms Inc4.0%
Microsoft7.3%
MSCI Inc3.6%
Netflix3.5%
Nvidia Corp1.6%
salesforce.com2.5%
UnitedHealth Group Inc3.7%
Zoetis Inc2.9%
Equity Total97.8%
New Zealand dollar cash0.6%
Total foreign cash3.6%
Cash Total4.2%
Forward Foreign Exchange(2.0%)

TOTAL100.0%
PORTFOLIO HOLDINGS
SUMMARY
as at 31 December 2024
COMPANY NEWS
If you would like to receive future
newsletters electronically please email us
at enquire@marlin.co.nz
Dividend Paid 20 December 2024
A dividend of 1.98 cents per share was paid to Marlin
shareholders on 20 December 2024, under the quarterly
distribution policy. Interest in Marlin’s dividend reinvestment plan
(DRP) remains high with 38% 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+5.5%(7.3%)+7.5%
Adjusted NAV Return +5.9%+1.1%+9.5%
Portfolio Performance
Gross Performance Return+6.7%+3.3%+12.5%
Benchmark Index¹+4.7%+7.1%+10.3%
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
NETFLIX
+26
%
SALESFORCE
+22
%
AMAZON
+18
%
FLOOR & DÉCOR
-20
%
ICON
-27
%
Sam Dickie
Senior Portfolio Manager
Fisher Funds Management Ltd
15 January 2025
Portfolio activity
We added Zoetis to the portfolio during the quarter.
Zoetis, a leader in animal health, was previously part of our portfolio
but was exited in August 2020 due to valuation concerns and our
thesis playing out. The company owns many leading brands of drugs
for cats, dogs, and livestock. Since its spin-off from Pfizer in 2013,
Zoetis has consistently gained market share. With a strong pipeline of
innovative new drugs, we expect this trend to continue.
Recently, Zoetis has underperformed other quality-growth stocks due
to concerns about a slowdown in vet visits. We took this opportunity
to add it back to the portfolio.