PenderFund

Pender Small Cap Opportunities Fund

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

    Please rotate your device to better view the content
    Returns (%)
    November 30, 2014
    1 Mo.3 Mo.6 Mo.1 Yr.3 Yr.5 Yr.YTDSince Inception12013201220112010
    Class A3.902.205.0821.3827.0521.7112.9520.0732.9831.294.6622.85
    Class F3.882.365.5122.3528.1022.7213.7721.0334.3232.156.7422.80
    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
    Sept'091065011099
    Dec'091079311528
    Mar'101084011890
    Jun'101141611235
    Sept'101182712388
    Dec'101325913558
    Mar'111388614318
    Jun'111410413580
    Sept'111398811948
    Dec'111387612378
    Mar'121604112920
    Jun'121634412187
    Sept'121707613042
    Dec'121821813267
    Mar'131907113710
    Jun'131975713150
    Sept'132141513973
    Dec'132422614991
    Mar'142538115901
    June'142613616921
    Sept'142606016821
    Nov'142736216814
  • Pender Small Cap Opportunities Fund Holdings

    Sector Allocation(%)
    Information Technology42.09
    Healthcare17.70
    Diversified Financials7.28
    Industrials5.71
    Energy5.46
    Telecommunications4.40
    Utilities3.54
    Other Sectors3.30
    Cash10.53
    Sector Allocation(%)
    Information Technology42.09
    Healthcare17.70
    Diversified Financials7.28
    Industrials5.71
    Energy5.46
    Telecommunications4.40
    Utilities3.54
    Other Sectors3.30
    Cash10.53
    Geographic Allocation(%)
    Canada84.83
    United States15.17
    Geographic Allocation(%)
    Canada84.83
    United States15.17
    Top 10 HoldingsFund (%)
    Absolute Software Corporation6.60
    Northstar Healthcare Inc.6.46
    TIO Networks Corp.5.00
    RDM Corporation4.64
    Terago Inc.4.40
    Redline Communications Group Inc.4.18
    QHR Corporation4.16
    CRH Medical Corporation3.98
    Savaria Corp.3.84
    Maxim Power Corp.3.54
    Total Percentage of Top 10 Holdings46.81%
    Total Net Assets of Fund$82,835,817
  • 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.

    Continue Reading

    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 Opps Fund – Manager’s Commentary – Q2 Review

      The Fund has now passed its five year milestone and we are pleased to announce 5 year returns of 21.19%1 as compared to benchmark returns over the same period of 10.90%2. We believe that long term track records are a reliable indicator of the strength of the investment strategy as they account for Fund performance under various market conditions. Recently, the Canadian energy sector has performed well over the last year which is driving some expected underperformance relative to the benchmark because the Fund maintains a relatively low weighting in energy. PERFORMANCE   3 Month     1 Year     3 Year     5 Year     Since Inception3   Class A 2.98% 32.29% 22.83% 21.19% 20.80% S&P/TSX Capped Composite Index 6.42% 28.68% 7.61% 11.02% 10.90% 1 Refers to Class A units in the Fund. 2 S&P/TSX Capped Composite Total Return Index. 3 Inception is June 2009. Where the advantage lies for Pender People are always asking us where we find our ideas. We dig very deep when we look into a potential holding and we maintain an understanding of the key factors affecting our investment thesis after we buy the stock. Sometimes we uncover information that points to strong or weak potential performance, but that is buried too deep for the market to react to or even be aware of. ... 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.