PenderFund

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 (%)
    March 31, 2016
    1 Mo.3 Mo.6 Mo.1 Yr.3 Yr.5 Yr.YTDSince Inception1201020112012201320142015
    Class A2.2-2.6-0.2-5.617.717.5-2.618.122.94.731.33323.86.6
    Class F2.3-2.40.3-4.219.018.8-2.419.122.86.732.234.324.88.2
    1Since inception date for Pender Small Cap Opportunities Fund is 1 June 2009

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

    DateClass A
    Inception10000
    Dec'0910793
    Jun'1011416
    Dec'1013259
    Jun'1114104
    Dec'1113876
    Jun'1216344
    Dec'1218218
    Jun'1319757
    Dec'1324226
    Jun'1426136
    Dec'1429138
    Jun'1534250
    Dec'1531969
    Mar'1631128
  • Pender Small Cap Opportunities Fund Holdings

    Sector Allocation(%)
    Information Technology46.0
    Healthcare15.7
    Utilities6.1
    Consumer Discretionary5.5
    Diversified Financials5.0
    Energy4.7
    Industrials4.1
    Telecommunications2.8
    Cash10.0
    Sector Allocation(%)
    Information Technology46.0
    Healthcare15.7
    Utilities6.1
    Consumer Discretionary5.5
    Diversified Financials5.0
    Energy4.7
    Industrials4.1
    Telecommunications2.8
    Cash10.0
    Geographic Allocation(%)
    Canada87.0
    United States13.0
    Geographic Allocation(%)
    Canada87.0
    United States13.0
    Top 10 HoldingsFund (%)
    TIO Networks Corp.5.5
    QHR Corporation5.0
    Medicure Inc.4.5
    Ebix Inc.4.3
    Absolute Software Corporation4.0
    Sandvine Corporation3.7
    Polaris Infrastructure Inc.3.5
    Espial Group, Inc.3.3
    Wi-Lan Inc.3.2
    RDM Corporation3.2
    Total Percentage of Top 10 Holdings40.30%
    Total Net Assets of Fund$112,243,790
  • 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 President and CEO of Pender. He oversees all business activities of Pender’s fund management and venture capital businesses. His focus is on building a leading west coast mutual fund company, offering forward-thinking, value-based products which generate outstanding returns.

      He is also Co-Chief Investment Officer with Felix Narhi, working together in 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 17 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. In April 2016 Mr. Barr was appointed President and CEO of Pender upon the retirement of Kelly Edmison.

      Read full biography

      Mr. Barr 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.

      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, the technology sector 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, 2014 and 2015.

      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.

      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.

    • Manager’s Quarterly Commentary – David Barr

      Roller Coasters and Small Cap Stocks That was an exciting first quarter. Markets started the year in a steep downturn that was far less thrilling and much more stressful than a roller coaster. The TSX decreased 8.4%, bottoming out on January 20 at 11,843. The ride up the other side from mid-February has been almost as fast as the descent, with the TSX bouncing back and being up 13.9% from the lows at quarter end. The Russell 2000 was down 14.0% from the beginning of the year to February 11, then rebounded 16.8% to end the quarter relatively flat. When prices go down, we get excited and we have taken advantage of the downturn, utilizing our cash positions to deploy capital into what we believe are very attractive opportunities. We believe the funds are positioned very well and are similar to where we were in 2011 after the market sell off in August of that year. Our traditional opportunity set A few years ago, we read “100:1 in the stock market” by Thomas Phelps. It tracked the types of companies which, if you had invested, would have returned over 100 times your original investment over an extended period of time. While such companies are rare, ... 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.