Marlin Global delivered a 3.0% gross performance return in August, beating its benchmark as software holdings rebounded sharply. The Fisher Funds-managed portfolio is also preparing to exit some investments and add businesses in three sectors.
- 3.0% gross performance return versus 2.5% benchmark gain
- Adjusted NAV rose 2.8% in August
- Salesforce gained 40% and Tyler Technologies 20%
- Tencent fell 5% amid surging AI investment
- Portfolio exits and new additions expected next month
August Performance Beats Global Benchmark
Marlin Global Limited (NZX:MLN) put in a stronger August as its portfolio benefited from a sharp recovery in software shares. The listed investment company reported a 3.0% gross performance return, ahead of the 2.5% gain from its S&P Large Mid Cap/S&P Small Cap benchmark, which is 50% hedged to NZD.
Adjusted NAV rose 2.8% during the month, while shareholder total return was 1.7%. The gap reflects the difference between portfolio performance and the market price experience: Marlin’s shares closed August at $0.72 against an NAV of $0.84, representing a 14.8% discount, while its warrants traded at $0.01.
Software Rebound Drives Portfolio Gains
Software was the standout sector in August, rising 14% as investors reassessed the risk that artificial intelligence could make enterprise software redundant. Salesforce was Marlin’s largest contributor, climbing 40%, while Tyler Technologies added 20% after reporting record bookings growth of 21% and announcing share repurchases equivalent to 5% of its shares this year.
Microsoft also gained 9%. Marlin’s manager said Salesforce’s result helped ease concerns about AI disruption, pointing to revenue in line with expectations, resilient customer retention, rising seat numbers and faster bookings. The update also cited the launch of Claudeforce with Anthropic as evidence that AI companies may work through enterprise software platforms rather than simply displace them.
AI Spending Keeps Nvidia and Tencent in Focus
The portfolio’s AI exposure produced a more complicated picture elsewhere. Nvidia rose 10% in local currency after reporting quarterly revenue of almost US$100 billion and forecasting roughly US$700 billion of revenue for the next fiscal year, compared with a market forecast nearer US$570 billion. Yet Marlin noted that higher borrowing costs and customer financing arrangements are prompting questions about how long the current AI infrastructure buildout can continue.
Tencent fell 5% despite revenue growth of 11%, as capital expenditure rose 60% quarter on quarter to an annualised RMB200 billion. Operating profit grew 19% excluding new AI products, but only 9% including them, highlighting the market’s concern that elevated AI spending could weigh on profitability before returns become clear. TSMC, another smaller AI exposure, gained 3% but remained constrained by those wider investment concerns.
Portfolio Review Points to Further Changes
Marlin said its latest portfolio review, alongside second-quarter earnings, had identified a small number of positions where the outlook had deteriorated or the investment thesis was less attractive than available alternatives. The company expects to exit those holdings and add several new businesses in consumer, financial services and industrials.
The names have not yet been disclosed. That leaves the next newsletter as the more consequential update for investors: it should reveal whether the changes amount to a modest reshuffle or a meaningful shift from Marlin’s current portfolio, which is concentrated in North America and led by information technology, consumer discretionary and healthcare.
Discount Remains a Separate Shareholder Issue
Marlin’s monthly result was favourable, but the longer record remains uneven. Adjusted NAV return was negative 3.8% over one year and negative 0.6% on an annualised five-year basis, while the benchmark returned 21.2% and 11.0% respectively over those periods. The 14.8% share price discount therefore remains an important part of the investment case, separate from how the underlying holdings perform in any single month.
The portfolio changes may offer a fresh test of the manager’s stock-selection process, but the immediate question is whether the forthcoming additions and exits improve the longer-term record without increasing exposure to the same AI spending and interest-rate risks already affecting several holdings.
Bottom Line?
August delivered useful short-term outperformance, but the next portfolio update will matter more than the monthly scorecard because the proposed exits and additions remain unnamed.
Questions in the middle?
- Which holdings will Marlin exit, and what specifically changed in each investment thesis?
- Will the new consumer, financial services and industrial positions alter the portfolio’s technology concentration?
- Can stronger monthly NAV performance narrow the 14.8% share price discount over time?