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 PerformancePlease rotate your device to better view the content
May 31, 2015
1 Mo. 3 Mo. 6 Mo. 1 Yr. 3 Yr. 5 Yr. YTD Since Inception1 2010 2011 2012 2013 2014 Class A -0.82 7.10 27.37 33.84 30.13 24.97 16.24 23.12 22.85 4.66 31.29 32.98 23.76 Class F -0.47 7.85 28.59 35.67 31.47 26.30 17.24 24.22 22.80 6.74 32.15 34.32 24.78 1Since inception date for Pender Small Cap Opportunities Fund is 1 June 2009
Growth of $10,000 since Inception (June 1, 2009)
Date Class A Benchmark Inception 10000 10000 Dec'09 10793 11528 Jun'10 11416 11235 Dec'10 13259 13558 Jun'11 14104 13580 Dec'11 13876 12378 Jun'12 16344 12187 Dec'12 18218 13267 Jun'13 19757 13150 Dec'13 24226 14991 June'14 26136 16921 Dec'14 29138 16814 May'15 34853 17512
Pender Small Cap Opportunities Fund Holdings
Sector Allocation (%) Information Technology 40.58 Healthcare 11.68 Utilities 8.11 Consumer Discretionary 5.39 Energy 5.27 Diversified Financials 5.12 Industrials 3.19 Other Sectors 3.26 Cash 17.39 Sector Allocation (%) Information Technology 40.58 Healthcare 11.68 Utilities 8.11 Consumer Discretionary 5.39 Energy 5.27 Diversified Financials 5.12 Industrials 3.19 Other Sectors 3.26 Cash 17.39 Geographic Allocation (%) Canada 87.31 United States 12.69 Geographic Allocation (%) Canada 87.31 United States 12.69 Top 10 Holdings Fund (%) Polaris Infrastructure Inc. 5.88 Nobilis Health Corp. 5.79 Absolute Software Corporation 4.83 Espial Group, Inc. 4.54 Ebix Inc. 3.81 QHR Corporation 3.78 Redline Communications Group Inc. 3.30 RDM Corporation 3.14 Sandvine Corporation 2.95 Terago Inc. 2.92 Total Percentage of Top 10 Holdings 40.93% Total Net Assets of Fund $135,385,589
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 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.
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.
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.
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.
- David Barr