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Share Price
$0.79
as at 26/09/2017
Latest NAV
$0.9247
as at 19/09/2017

Portfolio Holdings

The following is a brief introduction to each of your portfolio companies, with a description of why we believe they deserve a position in the Marlin portfolio.

Portfolio Holdings Summary as at 31 August 2017

What does it do?

Abbott Laboratories is a global healthcare company with leading market positions in medical devices, infant formula, adult nutrition, diagnostics and branded generic drugs.

Why do we own it?

Abbott Laboratories is well placed with market leading positions in a number of growing end markets driven by an aging population and emerging market growth. Abbott Laboratories has a long track record of profitable investment into fast growing healthcare segments and we expect them to continue to reinvest in the business to strengthen its competitive position and drive continued growth over the long term.

What does it do?

Adidas is the largest European and second largest global sportswear manufacturer.

Why do we own it?

Adidas is one of the world's leading brands and has a strong track record of growth and shareholder return. After going through a difficult period due to factors that are largely outside the company's control, management have turned the business around and are now growing revenues and earnings rapidly. They have started to take market shares in the lucrative US market, and we see many years of strong growth ahead.

What does it do?

Alibaba is the largest e-commerce player in China with an overall online shopping market share of over 70%.

Why do we own it?

Alibaba is the online marketplace leader in China and is over five times larger than its nearest competitor. It has sustainable competitive advantages through its extensive network and scale. Alibaba is also a major beneficiary of strong online shopping growth in China due to continued urbanisation, increasing incomes and a poor physical retail infrastructure in many Chinese cities. Alibaba is expected to grow in excess of 25% per annum over the next few years.

What does it do?

Alphabet is the holding company which owns the world's leading internet search provider, Google. Google is the world's most visited website and the largest global advertising platform by advertising revenue.

Why do we own it?

Alphabet has wide moats arising from its dominant position in online search, significant intellectual property and a strong brand. We believe Alphabet is well-positioned to grow strongly as global advertising budgets gradually shift away from television to digital formats.

What does it do?

Amazon.com is the world’s largest internet based retailer. It also operates a cloud computing business, Amazon Web Services, which offers data storage and analytical services.

Why do we own it?

Amazon.com sits at the crossroads of two very powerful megatrends – growth in e-commerce and the increasing adoption of public cloud architecture for data storage and analytics. It is the market leader in both these areas with significant scale and network advantages. E-commerce and public cloud have long growth runways and Amazon.com is in a prime position to monetise these opportunities.

What does it do?

Blackhawk is the leading prepaid gift card network offering gift cards from leading consumer brands (e.g. iTunes, Amazon) with a strong dominance in the supermarket distribution channel. It is the market leader in this growing niche market with only one other significant competitor.

Why do we own it?

Blackhawk has a strong competitive advantage through its extensive distribution network supported by a strong value proposition for all participants in the value chain. It has a strong growth outlook over the medium term through increasing penetration in the US and expansion into international markets. Blackhawk has a strong track record of delivering revenue and earnings growth and earns very high returns on capital invested.

What does it do?

Based in Italy, Brembo is a global leader in high performance braking systems. The majority of sales come from high-end cars (customers include Ferrari, Audi, Porsche and Mercedes-Benz) and motorcycles (customers include Ducati and Harley Davidson).

Why do we own it?

As the global leader in its industry, with a strong technology advantage arising from its sole involvement in braking systems for Formula 1, it is well positioned to continue increasing global market share.

What does it do?

Cerner is the world’s largest healthcare information technology provider with a range of solutions for all the software needs of healthcare organisations including electronic medical records, practice management and billing systems, as well as applications in the area of population health management (data analytics which predicts medical care requirements for patient populations).

Why do we own it?

Cerner’s software is critical to its clients operations. Switching costs are high and switching tendencies are very low. It has superior technology that has allowed it to continuously win market share as the industry consolidates. Cerner has a strong track record and attractive growth outlook as a result of increasing IT requirements in the healthcare sector.

What does it do?

Cognizant is a leading IT services company providing information technology, consulting and business services to a range of mainly larger global companies.

Why do we own it?

Cognizant is a wide moat company that is deeply ingrained with its customers as a partner in IT and wider business strategy. Cognizant has invested heavily to position itself to capture the significant move of IT towards digital (social, media, analytics and cloud) which should underpin long term growth. Furthermore, Cognizant has a strong management team and a great track record of growth and innovation.

What does it do?

Core Laboratories is a US based oil services company specialising in enhanced oil production and oil reservoir management with an ultimate goal of maximising the efficiency of hydrocarbon recovery by oil companies.

Why do we own it?

Core Laboratories is a rare wide moat company in the energy sector given its unique and difficult to replicate library of oilfield data that is used by their clients to increase the extraction and return from their oilfields. Core Laboratories offers a strong value proposition to their clients, allowing them to generate high returns through improved production efficiency at relatively low cost. The company has a track record of generating strong cash flow and returning this to their shareholder base.

What does it do?

Descartes is a logistics software business.

Why do we own it?

Descartes business moat is centred on its Global Logistics Network (GLN). The GLN connects supply chain participants, in real time, giving visibility and control of movement of goods across increasingly regulated and complex global supply chains.

What does it do?

eBay is the world's largest online marketplace that brings merchants and consumers together through online websites and mobile applications. eBay has over 160 million active users.

Why do we own it?

eBay has an enviable track record of value creation, generates strong cashflow and through new initiatives in data analysis and improving features on their website, is expected to accelerate revenue growth and grow earnings at double digit rates over the next three to five years.

What does it do?

Ecolab is market leader in providing cleaning and sanitising solutions for the foodservice, hospitality and healthcare industries. It also provides chemicals and technologies to the water treatment and oil production industries.

Why do we own it?

Ecolab offers a strong value proposition for its vast client base with their product innovations resulting in reduced energy and water usage, lower labour costs and reduced downtime. Ecolab is a high quality company that invests significantly more than its competitors into developing innovative products and this has resulted in continued market share gains. Ecolab has an excellent record of stable growth and strong growth prospects.

What does it do?

Edwards Lifesciences is the global market leader in the treatment of heart valve disease, which impacts millions of people worldwide and carries a poor prognosis if left untreated. Edward’s main product allows for the treatment of this disease without the need for risky open heart surgery.

Why do we own it?

Edwards Lifesciences continues to lead the industry in innovation, investing in the development of new products which both improve medical outcomes for patients and help doctors treat a wider range of previously untreated patients using a lower risk approach. With a dominant market share and continued investment in research and development, Edwards Lifesciences is well positioned for long term growth.

What does it do?

Essilor is the leading global manufacturer of corrective lenses, selling to optometrists and other eyewear retailers. More recently, Essilor has expanded into branded sunglasses and online retail, where it owns a number of leading eyewear ecommerce sites.

Why do we own it?

Essilor is the market leader and continues to drive innovation in corrective lenses. They are well positioned to take advantage of the structurally growing prescription eyewear market, driven by an aging population and increased adoption in emerging markets. Essilor’s proposed merger with Luxottica, the largest manufacturer and retailer of frames and sunglasses, will create a dominant industry player from manufacturing through to retail.

What does it do?

Expedia is the largest online travel agent in the US and is ranked in the top two in most markets globally. Expedia aims to provide the latest technology and the widest selection of top vacation destinations, cheap tickets, hotel deals, car rentals, cruise deals and in-destination activities.

Why do we own it?

Expedia has a strong long-term growth outlook coming from a combination of travel industry growth and an increasing tendency to book travel online. Additionally, the online travel agency industry has consolidated to two main players who now have considerable size and hotel network advantages, which act as a highly effective barrier to new entrants. We expect Expedia to grow earnings at mid-teen rates over the next few years.

What does it do?

Fresenius is a market leader in the global dialysis industry, and is the only vertically integrated player – providing both products and services to the dialysis market.

Why do we own it?

Fresenius has strong growth prospects globally as kidney disease becomes more prevalent in an aging population. Fresenius’ depth of knowledge and data around dialysis should allow them to improve patient outcomes while reducing the overall cost of treatment for this growing global dialysis population.

What does it do?

Hexcel is the leading supplier of advanced composite materials (like carbon fibre) for aerospace and other uses including wind turbines and automobiles. Advanced composites are generally lighter and stronger than traditional materials such as aluminum, which has seen the composite content of aircraft and other industrial applications increase significantly over time.

Why do we own it?

The aerospace composite industry has high barriers to entry due to scale, the close integration of processes with its aerospace manufacturer clients, and the lengthy qualification processes required to be able to supply Airbus and Boeing’s aircraft programmes. Only a few manufacturers are qualified to supply composite parts and materials to these aerospace customers.

What does it do?

Known as a contract research organisation (CRO), Icon provides specialised services in clinical trial management for pharmaceutical and biotechnology companies.

Why do we own it?

The increasing complexity and regulatory requirements of clinical trial management are forcing pharmaceutical and biotechnology companies all over the world to seek the help of specialist CROs such as Icon. Icon’s global footprint and broad strengths in clinical management make it one of only a few companies qualified to provide these services. Growth is being driven by this increased shift to outsourcing, the increase in drugs being tested and larger trials required by regulatory bodies such as the FDA.

What does it do?

LKQ is the largest distributor of alternative replacement parts and components used to repair cars and trucks in the US and Europe.

Why do we own it?

The value proposition is strong, as these alternative parts cost 20%-50% less than new parts and have been growing in popularity with auto repair shops and insurers. LKQ is the only nationwide distributor of these parts in the US and is growing its footprint in Europe. We believe LKQ can grow strongly over the next few years with minimum impact from the economic cycle.

What does it do?

MasterCard is the second largest payment network in the world, operating in 210 countries and supporting more than 2 billion cards across its network.

Why do we own it?

MasterCard's growth outlook is underpinned by the secular shift to electronic payments and away from cash, particularly in emerging markets where MasterCard has significant presence. These structural growth drivers combined with increasing margins and high cash flow generation (allowing for substantial share buybacks) supports a strong growth outlook over the medium to long term.

What does it do?

Nike is the world's largest sportswear company, designing, manufacturing and selling high quality footwear, apparel and sporting equipment.

Why do we own it?

Nike's competitive advantage comes from both its iconic brands and scale – with scale allowing Nike to invest more in marketing than its peers while maintaining higher margins and profitability. Nike's focus on product innovation, including in the area of fitness monitoring, continues to provide good growth prospects.

What does it do?

PayPal is a global leader in online payments.

Why do we own it?

We are attracted to PayPal due to its broad based and sustainable competitive advantages and strong growth prospects. PayPal has technology, scale and global network advantages which give it a considerable advantage over its competitors. Furthermore, PayPal benefits from continued growth in e-commerce.

What does it do?

Sarine Technologies is the worldwide market leader in equipment and tools for the diamond industry. Sarine’s products are used to grade, cut and optimise the value of diamonds.

Why do we own it?

Sarine’s products are the leading edge of technology, allowing more efficient planning and cutting of diamonds. This offers a strong value proposition to the diamond manufacturing industry. Its business model is geared towards more recurring income and it has also developed new products that allow it increased exposure to the highly profitable retail part of the value chain.

What does it do?

Signature Bank is a specialist regional bank, lending largely to wealthy families and private businesses in and around New York. They have a sticky deposit base that comes from managing transactional business accounts for businesses like law firms, accounting firms, and property management companies, a long track record of profitable growth and a very strong history of credit control.

Why do we own it?

Signature Bank has an uncomplicated relationship driven business model and industry profitability. Its ability to attract and retain senior bankers from other firms through an attractive profit sharing compensation model has allowed them to grow loans and deposits at over 20% pa over the last 10 years. It is still a small bank in a very large market and we see many more years of growth ahead.


What does it do?

United Parcel Service (UPS) is the world’s largest package delivery company and operates in over 220 countries and territories with its fleet of 100,000 ground vehicles and 530 aircraft.

Why do we own it?

The market dynamics of the global freight industry are compelling, with high barriers to entry given the need for a large international network and delivery route density to be competitive. Despite the size of its business, we believe UPS is well-positioned for robust growth, supported by the growth in e-commerce activity and increasing cross-border trade volumes in Asia and Europe.

What does it do?

William Demant is a leading manufacturer and retailer of hearing aids. The company has grown from a small private business to the second largest player in the global hearing aid market, with close to 25% market share and operations in more than 30 countries.

Why do we own it?

There are only a handful of players in the hearing devices market and high barriers to entry allow for attractive profit margins for exiting operators. An aging population and improved hearing aid technology (which has improved sound quality and made hearing aids less visible) is driving steady organic growth in the industry. William Demant is also consolidating the retail audiology market, allowing them to increasingly capture the retail profit margin on each hearing aid they sell, in addition to the manufacturing margin. As a result of this strong organic growth and margin expansion potential we believe the company can deliver double-digit earnings growth over the medium to long term.

What does it do?

Zoetis a leader in the animal health space (both livestock and companion animal) – an industry with attractive attributes.

Why do we own it?

Zoetis has a wide moat built around intellectual property, brand and a large direct sales force giving it access to key decision makers (including veterinarians) and end-users. The growth runway is underpinned by a couple of secular growth drivers – increased global protein requirements and increased pet ownership and ‘humanisation’ of pets.