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 PerformancePlease rotate your device to better view the contentReturns (%) Nov 30, 20131 Mo.3 Mo.6 Mo.1 Yr.2 Yr.3 Yr.YTDSince Inception1201020112012
Class A 2.36 8.92 14.31 31.23 29.98 21.11 23.74 19.78 22.85 4.66 31.29 Class F 2.44 9.15 14.80 32.46 31.08 22.51 24.9 20.73 22.80 6.74 32.15 1Since inception date for Pender Small Cap Opportunities Fund is 1 June 2009
Growth of $10,000 since Inception (June 1, 2009)DateClass ABenchmark
Inception 10000 10000 Sept'09 10650 11099 Dec'09 10793 11528 Mar'10 10840 11890 Jun'10 11416 11235 Sept'10 11827 12388 Dec'10 13259 13558 Mar'11 13886 14318 Jun'11 14104 13580 Sept'11 13988 11948 Dec'11 13876 12378 Mar'12 16041 12920 Jun'12 16344 12187 Sept'12 17076 13042 Dec'12 18218 13267 Mar'13 19071 13710 Jun'13 19757 13150 Sept'13 21415 13973 Oct'13 22023 14632 Nov'13 22542 14698
Pender Small Cap Opportunities Fund HoldingsSector Allocation(%)
Information Technology 44.29% Health Care 10.22% Energy 9.07% Telecommunications 5.00% Diversified Financials 4.15% Industrials 3.52% Other 1.84% Cash 21.91%Sector Allocation(%) Information Technology 44.29% Health Care 10.22% Energy 9.07% Telecommunications 5.00% Diversified Financials 4.15% Industrials 3.52% Other 1.84% Cash 21.91%Geographic Allocation(%) Canada 88.83% United States 11.17%Geographic Allocation(%) Canada 88.83% United States 11.17%Top 10 HoldingsFund (%) Terago Inc. 5.00 QHR Corporation 4.79 RDM Corporation 4.41 SolarWinds, Inc. 3.98 CRH Medical Corporation 3.86 ICG Group, Inc. 3.72 AgJunction Inc. 3.70 Absolute Software Corporation 3.59 Sierra Wireless Inc. 3.58 Wi-Lan Inc. 3.33 Total Percentage of Top 10 Holdings 39.97 Total Net Assets of Fund $49,077,609
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.
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.
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.
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.
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
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 began his career as a consultant to emerging technology companies, assisting them in the development of strategic and financing plans. He became an investment analyst, then investment manager, at a Vancouver-based venture capital fund. When the fund was transferred to Pender, he took on full portfolio management responsibilities for both it and Pender’s other venture capital fund.
After managing venture capital for five years, Mr. Barr was appointed Chief Investment Officer at which time he proposed a new direction for the company. Pender launched two mutual funds in June 2009, two more in November 2010 and another two in July 2013.
Mr. Barr holds a Bachelor of Science degree from the University of British Columbia and an MBA (Finance and Strategic Management) from the Schulich School of Business at York University. 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 an advocate of value investing, a strategy of selecting undervalued stocks in anticipation of an upward correction when the market recognises a company’s intrinsic value. This forms the basis of Pender’s overall investment strategy and product structure, 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.
Not only does Mr. Barr strive to research and select stocks that are trading at a discount to intrinsic value, but he also takes a contrarian approach to investing. 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.
- David Barr