Pender Small Cap Opportunities Fund

The Fund has been capped and is now closed to all purchases. Its sister fund, the Pender Value Fund, shares many of the same characteristics and is open to new purchases.

LIPPER_2015AWARD_VERT_CANADA (2)The award-winning Pender Small Cap Opportunities Fund is an opportunistic, concentrated portfolio. The Fund is focussed on undervalued small and microcap companies predominantly in Canada. The Manager is focused on businesses with strong underlying economics and often seeks out special situations, and has a track record of identifying catalysts, where market-leading companies have been acquired. After deep fundamental analysis these businesses are purchased at a discount to our estimate of intrinsic value.

  • Pender Small Cap Opportunities Fund Performance

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    Returns (%)
    January 31, 2016
    1 Mo.3 Mo.6 Mo.1 Yr.3 Yr.5 Yr.YTDSince Inception1201020112012201320142015
    Class A-4.5-1.7-7.6-1.617.917.9-4.518.222.94.731.333.023.86.6
    Class F-4.4-1.4-7.1-0.119.319.3-4.419.322.86.732.234.324.88.2
    1Since inception date for Pender Small Cap Opportunities Fund is 1 June 2009

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

    DateClass A
  • Pender Small Cap Opportunities Fund Holdings

    Sector Allocation(%)
    Information Technology46.5
    Consumer Discretionary5.7
    Diversified Financials4.5
    Sector Allocation(%)
    Information Technology46.5
    Consumer Discretionary5.7
    Diversified Financials4.5
    Geographic Allocation(%)
    United States12.9
    Geographic Allocation(%)
    United States12.9
    Top 10 HoldingsFund (%)
    TIO Networks Corp.5.7
    Medicure Inc.5.3
    Sandvine Corporation4.7
    Absolute Software Corporation4.2
    Ebix Inc.4.0
    QHR Corporation3.9
    Polaris Infrastructure Inc.3.5
    Espial Group, Inc.3.5
    RDM Corporation3.2
    goeasy Ltd.3.0
    Total Percentage of Top 10 Holdings41.0%
    Total Net Assets of Fund$112,316,572
  • 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 of several of Pender’s funds.

      LIPPER_2015AWARD_VERT_CANADA (2)In November 2015, the Pender Small Cap Opportunities Fund, managed by Mr. Barr, won a Lipper Fund Award 2015 for Best Canadian Small/Mid Cap Equity Fund over both three and five year performance periods.


      Mr. Barr has over 15 years of investment experience. He initially 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 Ltd 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 (now closed), the Pender Value Fund, launched in July 2013 and the Pender Select Ideas Fund, launched in September 2014.

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      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, The Globe & Mail and other 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 received Fundata’s FundGrade® A+ Award in 2012, 2013 ad 2014.

      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 and this approach forms the basis of Pender’s overall investment strategy, which aims to preserve and grow clients’ capital.


      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 – Q2

      The second quarter was met with some volatility in the Canadian markets, but we are glad to report the Fund performed positively. The Pender Small Cap Opportunities Fund returned a positive 3.90%1 vs the benchmark return of negative 1.63%2. Since inception our Fund has returned an annualized 22.42%1 in comparison to the benchmark return of 9.14%2. Without trying to sound like a broken record, it was again the Fund’s limited exposure to energy that drove this quarter’s outperformance over the benchmark. As an example of this fact, the S&P/TSX Equal Weight Oil and Gas Index fell 5.74%3 in the second quarter of 2015 and makes up nearly 25% of the S&P/TSX Capped Composite Index. 1 Refers to Class F units of the Fund. 2 S&P/TSX Capped Composite Total Return Index 3 Source: CapitalIQ Key Portfolio Drivers Main contributors to the Funds’ performance were Polaris Infrastructure, Nobilis Health Corp. and Webtech Wireless. On the negative side, the three largest detractors to the portfolio were Loyalist Group, Terago Inc. and Espial Group. Nobilis’ share price improved during the quarter as the stock was previously oversold due to a financing with a warrant attached. This has a big impact on the portfolio as Nobilis remains one of the largest ... 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.