PenderFund

Pender Small Cap Opportunities Fund

The Fund has been capped and is now closed to all purchases.

Pender Small Cap Opportunities Fund takes a value-investing approach to building a concentrated portfolio of well-managed, small-cap businesses, with strong competitive positions, which are overlooked by the market and have the potential for significant capital appreciation.

The Fund’s goal is to maximize returns on a risk-adjusted basis. The Portfolio Manager is David Barr, Pender’s Chief Investment Officer.

  • Pender Small Cap Opportunities Fund Performance

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    Returns (%)
    February 28, 2015
    1 Mo.3 Mo.6 Mo.1 Yr.3 Yr.5 Yr.YTDSince Inception120102011201220132014
    Class A4.8918.9321.5429.3127.5025.488.5322.7722.854.6631.2932.9823.76
    Class F4.9619.2222.0430.4928.5526.608.7023.7722.806.7432.1534.3224.78
    1Since inception date for Pender Small Cap Opportunities Fund is 1 June 2009

    Growth of $10,000 since Inception (June 1, 2009)

    DateClass ABenchmark
    Inception1000010000
    Dec'091079311528
    Jun'101141611235
    Dec'101325913558
    Jun'111410413580
    Dec'111387612378
    Jun'121634412187
    Dec'121821813267
    Jun'131975713150
    Dec'132422614991
    June'142613616921
    Dec'142913816814
    Feb'153254217639
  • Pender Small Cap Opportunities Fund Holdings

    Sector Allocation(%)
    Information Technology37.09
    Healthcare10.06
    Energy5.28
    Diversified Financials3.56
    Telecommunications3.21
    Industrials2.68
    Utilities2.50
    Other Sectors1.68
    Cash33.94
    Sector Allocation(%)
    Information Technology37.09
    Healthcare10.06
    Energy5.28
    Diversified Financials3.56
    Telecommunications3.21
    Industrials2.68
    Utilities2.50
    Other Sectors1.68
    Cash33.94
    Geographic Allocation(%)
    Canada88.04
    United States11.96
    Geographic Allocation(%)
    Canada88.04
    United States11.96
    Top 10 HoldingsFund (%)
    Absolute Software Corporation5.70
    Nobilis Health Corp.4.21
    Espial Group, Inc.3.60
    QHR Corporation3.32
    Terago Inc.3.21
    RDM Corporation3.18
    Ebix Inc.3.02
    Redline Communications Group Inc.2.87
    TIO Networks Corp.2.85
    Sandvine Corporation2.61
    Total Percentage of Top 10 Holdings34.58%
    Total Net Assets of Fund$126,583,095
  • Reasons to invest in the Pender Small Cap Opportunities Fund

    Experienced Portfolio Manager
    David Barr, CFA is the Chief Investment Officer at Pender and the Portfolio Manager for the Pender Small Cap Opportunities Fund. He is a value investing specialist with over ten years of expertise, as well as experience investing in the venture and small cap technology sectors.
    He manages the fund with the goal of capital preservation, growth and low volatility relative to comparable funds.

    Finding Value – Employing a Margin of Safety
    The manager employs a value-based approach, using rigorous bottom-up analysis, to determine the intrinsic value of potential investment opportunities. He then aims to buy at a substantial discount to intrinsic value.
    This difference is the margin of safety. Should markets drop, the aim is that the carefully selected stocks in the fund have less far to fall, and capital is better protected.

    Contrarian Investing
    One way that the Manager looks for potential capital appreciation is by researching investment opportunities in out-of-favour segments of the market. Here, competition has less impact on price and he can uncover market-leading companies, trading at a discount to intrinsic value but with the potential for both strong growth and a price correction when the market recognizes the stock’s merits.

    Cash as a Strategic Asset Class
    The Manager is a firm believer in utilizing cash as a strategic asset class. With the ongoing market volatility, market dips provide opportunities to buy low. With cash on hand, the Fund can react quickly and add to existing holdings or buy new positions that reach the Manager’s discounted price target. Taking advantage of these market inefficiencies can potentially result in good returns in a short period of time.

    Identifying Catalysts
    Making investments at below a company’s intrinsic value is only half the story. The second part is ensuring the value is not trapped, and growth can be realized as return. With a background in venture capital, the Manager looks for companies that have a potential monetizing catalyst, such as a merger or a takeover. The Fund has a concentrated portfolio of 20-30 holdings of which an average of just under six per year have been acquired.

    Market Inefficiencies
    The Manager takes advantage of market inefficiencies – temporary or otherwise. Many small cap companies lack analyst coverage and are not widely followed or understood by the market. They are overlooked by bigger investment firms, which have prescribed investment cut-off levels.

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    Concentrated Portfolio
    The Fund invests in a concentrated portfolio of 20-30 well-managed businesses. We believe that it is better to invest in your top ideas than in your 100th best idea.

    Why Small Cap Companies?
    We believe that:

    • Small cap companies, with strong competitive positions are able to build intrinsic value faster, and may even outpace the economy.
    • Due to their size, smaller companies have shown an ability to respond quickly to change.
    • Once the market recognizes the intrinsic value of a business, there is an upward correction in the market value.
  • Pender Small Cap Opportunities Fund Investment Strategy

    The Pender Small Cap Opportunities Fund aims to maximize returns on a risk-adjusted basis. It uses a strategy of investing in a concentrated portfolio of well-managed businesses, with strong competitive positions, which are overlooked by the market and have the potential for significant capital appreciation.

    The Fund takes a value-investing approach to building a concentrated portfolio of well-managed, small-cap businesses, with strong competitive positions, which are overlooked by the market and have the potential for significant capital appreciation.

    The Fund seeks to take advantage of the inefficiencies of the small cap sector of the market. After rigorous fundamental analysis, it carefully selects from a pool of promising companies that go unnoticed. This impacts their valuation so that when their growth potential is recognized by the market, their value undergoes a long overdue upward correction.

  • David BarrChief Investment Officer

    • David Barr David Barr

      Mr. Barr is the Chief Investment Officer for PenderFund Capital Management, setting the direction for Pender’s overall value-based investment strategy. He is also the Portfolio Manager for the Pender Small Cap Opportunities Fund and the Pender Value Fund.

      Mr. Barr has over 15 years of investment experience. From 2000 he worked in private equity, which gives him a unique background to investing capital. At the end of 2007 he became a partner at PenderFund Capital Management and was appointed Chief Investment Officer with the objective of launching Pender’s mutual fund business. He is Portfolio Manager of the Pender Small Cap Opportunities Fund, launched in June 2009, and the Pender Value Fund, launched in July 2013.

      Read full biography

      Mr. Barr holds a Bachelor of Science degree from the University of British Columbia and an MBA from the Schulich School of Business. He earned his Chartered Financial Analyst (CFA) designation in 2003 and is an active member of the Vancouver chapter. He is a past President of CFA Vancouver having also served on its Board of Directors for four years.

      Mr. Barr is a regular guest on BNN’s Business Day program and has been interviewed for his opinions on small cap and value investing by the Financial Post and the Globe & Mail and other financial services media. In December 2012 Mr. Barr was recognised as one of British Columbia’s “Top Forty Under 40” business leaders by Business in Vancouver. The Pender Small Cap Opportunities Fund has been awarded a FundGrade® A+ rating by Fundata for the last two years.

      Value Investing

      Mr. Barr is an advocate of value investing, a strategy to estimate the intrinsic value of a company before looking to invest in that company with a “margin of safety” or a discount to intrinsic value. Mr. Barr believes that investing in a company well below intrinsic value decreases the risk and sets it up for generating long term performance.

      This forms the basis of Pender’s overall investment strategy, and he successfully applies it to managing the Pender Small Cap Opportunities Fund and the Pender Value Fund which aim to preserve and grow clients’ capital.

      Contrarian

      In order to execute on his value investing strategy Mr. Barr is a true contrarian. To meet his stringent value investing criteria, he looks for value in unpopular places with a view to reducing risk and finding prices that include a margin-of-safety. He refuses to follow the crowds and is driven to find quality at a discount.

    • Pender Small Cap Opportunities Fund – Manager’s Commentary – Q4

      Our Fund ended the year with an excellent quarter. It was up 15.05%1 compared to 0.30% for the benchmark2. Again, the performance of the Fund was largely driven by the performance of key holdings including Nobilis Health (TSX: NHC), CRH Medical (TSX: CRH) and Absolute Software (ABT), with the assistance of one announced takeover in the quarter, NexGen Financial (TSX: NFX).  Also assisting our relative performance was our underweight position in Energy which had a fairly violent downturn in the quarter.  For the year, the Fund was up 23.76% compared to 12.55% for the benchmark.  Since inception3 the Fund has had an annualized return of 21.71%1, compared to 9.81% for the benchmark. 1 Refers to Class A units in the Fund. 2 S&P/TSX Capped Composite Total Return Index. 3 Inception is June 2009. Hat Trick! As a marginal hockey player there haven’t been too many hat tricks in a long career of men’s league hockey.  Occasionally the Fund experiences a “Hat Trick” of sorts with three significant value creation events. 1.    In October, NexGen Financial announced it was being sold to Natixis Global Asset Management, a global investment management firm, for $7.25 per share, a 125% premium to our purchase price. Then in December we had back-to-back ... Continue Reading

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in net asset value and assumes reinvestment of all distributions and are net of all management and administrative fees, but do not take into account sales, redemption or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.