PenderFund

Pender’s Holiday Reading List 2017

Written on . Posted in Book Reviews, Pender Blog

David Barr

Edward O. Thorp (Author), Nassim Nicholas Taleb (Foreword)
Investing is a probabilistic endeavour and that drew me to this book about Edward Thorp. Thorp is a mathematician and former MIT professor who devised a method for counting cards that could “beat the dealer” at Blackjack. Understanding probabilities and betting aggressively when the odds are in your favour proved to be successful in Blackjack, but knowing when the odds are in your favour is also a key aspect of our investment strategy. Thorp’s curiosity drove him to create a quantitative hedge fund that delivered market-beating returns over the decades. I’m looking forward to learning more about the approach that made him successful across the disciplines.

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Cash as a Strategic Asset Class

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At Pender, we are often asked about our cash levels because it fluctuates over time depending on the individual Fund mandate and the opportunity set. One of the common misconceptions regarding some Pender mandates is that most outsiders think we have generated good risk-adjusted returns despite holding cash. However, we are of the view that good risk-adjusted returns have been achieved because of the opportunistic deployment of cash over the cycle. Without that cash, it would be impossible to deploy capital when individual stocks drop and “fat pitches” suddenly become available, or when the market enters one of its recurring corrections and great opportunities become more widespread.

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A Better Way in Fixed Income

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There is no longer an “easy button” in fixed income whereby investors can earn relatively high real returns from invested instruments guaranteed by the government. While most investors still construct their portfolio with a mix of “ballast” and “earners” (fixed income and equities), many no longer expect to earn meaningful returns from their fixed income allocation. However, we believe that it can be done. Moreover, we believe that there should be a healthy part of investor portfolios assigned to credit instruments that can protect their principal well, while adding to the overall return of their portfolio. Investors no longer have to depend on equity markets to carry the full weight of their return expectations.

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Pender Book Review: Shoe Dog: A Memoir by the Creator of Nike

Written on . Posted in Book Reviews, Pender Blog

Building a business is hard. This is the reality for many CEOs. Just look at some of the most successful companies today. Facebook was confronted with questions on its ability to monetize its network post IPO, and was temporarily in the doghouse. Amazon was constantly questioned on its business model but is now firing on all cylinders and a stock market darling. During the financial crisis of 2008-09, no one was going to spend $5 on a latte, so Starbucks was punished. These are all companies that we admire and look to for insight into building a business, and they all have one thing in common. They are all founder-led.

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