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Recap of August

Global equities delivered robust results in the month despite the ongoing macroeconomic uncertainty. Small- and mid-cap stocks performed well, with the Russell 2000 gaining over 7% and value indices broadly outperforming large-cap growth.

Outside North America, developed international equities, as measured by the FTSE Developed ex-US Index, rose 3.3%, supported by strength in Europe and Japan. Emerging markets delivered more muted results overall, though China remained a notable outperformer, up 5% in the month and 29% YTD. Currency movements were a factor, with the US dollar depreciating 0.8% against the Canadian dollar, reducing foreign equity returns for Canadian investors.

Fund specific updates

  • The Pender Global Small/Mid Cap Equity Fund is down ~1.5% YTD.
  • In August, the Fund posted a gain of 1.9%1, compared to the S&P/TSX Composite Index which gained 5.0%, and the S&P/TSX Small Cap Index which gained 9.3%.
  • Our weight in Canadian equities is ~69.2%, with ~29.9% in US equities and a small ~2.6% allocation held outside North America.

As a reminder, we have positioned the portfolio in high quality businesses that are trading at reasonable prices and can continue to compound value for shareholders for the foreseeable future. We still see excellent value in the companies we own, especially as M&A continues to re-accelerate.

For example, in late August one of our holdings - Guardian Capital Group (TSX:GCG/A) announced that it is being acquired by Desjardins for $68/share - a 66% premium. Our position in Guardian was the largest contributor to overall portfolio performance in the quarter, with a +135 bps impact on the Fund.  We believe this is a positive signal of the M&A market opening up.

Another long-term trend that we have previously discussed is the attractive valuations in small caps on both an absolute and relative basis. This has not changed and remains a long-term tailwind for small caps as mean reversion in valuation levels bring these relationships back closer to historical averages. We have seen some signs of this already with some of our portfolio holdings.

Sangoma (TSX:STC) had a standout quarter, with the share price up 8.5%. The month was a busy one for the company, STC announced the completion of the sale of its VoIP Supply subsidiary for 4x EBITDA, expanded its use of Amazon Web Services (AWS), and a new partnership with VTech Hospitality was announced, a targeted vertical with growth potential. Management continues to execute on its planned initiatives to simplify and enhance the go-forward business.

Notable contributors in August: Thesis affirming quarterly results

Earnings season has provided numerous thesis-affirming data points for several core holdings.

  • Premium Brands (TSX:PBH), a Canadian-based specialty food manufacturer, marketer, and distributor, reported Q2 results on August 6, with revenue up 13% y/y, ahead of street estimates. Looking ahead, management has forecasted revenue growth of 9.7% annually over the next three years, more than double the 4.3% industry forecast for Canadian food companies. During the quarter, the company also completed a sale and leaseback of its US sandwich facility, using proceeds to retire its 2025 convertible debenture2.
  • ADENTRA Inc. (TSX:ADEN) reported Q2 results on August 6 with total sales increasing 8.7%, y/y to US$597 million, ahead of street expectations. Adentra returned capital to shareholders through dividends and share repurchases, while also reducing debt, reinforcing balance sheet strength. Despite industry headwinds, Adentra maintained healthy margins and improved profitability, which gave confidence that its business model is resilient. Looking ahead, management continues to highlight solid demand and expects its disciplined acquisition strategy to drive further growth3.
  • Burford Capital Limited (BUR US), a leading global finance and asset management firm focused on law, reported Q2 results in August with increases in both revenue and profitability. The company highlighted the resilience of demand and the strength of its pipeline, supported by a $500 million capital raise in July. Burford also committed to substantial levels of new business year-to-date, reflecting robust demand for its litigation finance solutions and an expanding portfolio that should drive future returns. Management emphasized that Burford’s scale provides a competitive moat and reinforces its market leadership position4.

Detractors

On the negative side, our USD cash balance detracted from performance.

  • Trisura (TSX:TSU) faced headwinds from exposure to interest rates, inflation, and the claims that environmental factors can weigh on sentiment, as volatility in these factors makes reserving and loss estimates less predictable. This came despite solid Q2 results in August that exceeded expectations5.
  • Kinaxis (TSX:KXS) likewise reported a healthy quarter, with revenue ahead of consensus by 2.1% and up ~15% y/y, alongside continued SaaS growth and raised guidance. Nevertheless, the shares declined ~7% in the month, in part due to technical factors, as the stock fell below its 50-day moving average—often a point of resistance for investors.
  • That said, we continue to view both TSU and KXS as high-conviction holdings, and nothing in our outlook has changed6.

Outlook

Looking ahead, volatility is expected to remain elevated. Equity markets have demonstrated resilience since late spring, supported by solid earnings and consumer spending. However, with valuations having moved higher and macro risks still present, we anticipate that security selection will continue to be the key driver of returns. We believe the global small- and mid-cap universe remains fertile ground for fundamental research, where inefficiencies are more pronounced and attractive opportunities can be uncovered.

Markets remain resilient and momentum is building, but we’re mindful that opportunities often emerge in times of change—reminding us that the only constant in investing is change itself.

While year-to-date performance has been more muted compared to recent periods, our focus remains firmly on the opportunities ahead for the companies within the fund. As long-term investors, we continue to emphasize fundamentals, and this discipline is reflected in the fund’s results, with a one-year return of 15.5% and a two-year return of 24.5%.

David Barr, CFA
CEO & Portfolio Manager
September 25, 2025

[1] All Pender performance data points are for Class F of the Fund. Other classes are available. Fees and performance may differ in those other classes. Standard Performance Information for Pender’s Equity Funds may be found here: https://www.penderfund.com/solutions/solutions-equity/

[2] Premium Brands Holdings Corporation – Interim Condensed Consolidated Financial Statements – 2nd Qtr 2025

[3] ADENTURA Announces Strong Second Quarter Results – August 6, 2025

[4] Burford Reports 2Q25 and YTD25 Financial Results – August 7, 2025

[5] Trisura Group Reports Second Quarter 2025 Results – August 7, 2025

[6] Kinaxis Inc. Reports Second Quarter 2025 Results – August 6, 2025