Manager’s Quarterly Commentary – David Barr – Q2 2013 – Pender Value Fund

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After four years of successfully managing the Pender Small Cap Opportunities Fund, we are launching the Pender Value Fund in order to take advantage of opportunities that arise within our circle of competence but are outside the market cap or geographical constraints of the Pender Small Cap Opportunities Fund.

The performance of the Pender Small Cap Opportunities Fund demonstrates the impact of removing constraints for a value investor. Before that, in our venture capital fund, we were only able to invest in BC based technology companies with under 100 employees and we had to buy the shares from treasury.

As a value manager, I like to see distressed sellers in the market. It generally means that there is an opportunity for an investor like me to do my homework on the opportunity and take advantage. By increasing the investment universe, we have increased the number of occasions when market inefficiencies provide an interesting investment opportunity.

Pender not only has the analytical edge to take advantage of these situations, but has the investment culture necessary to “buck” the trend. We will hold investments that others don’t like – there is no forced window dressing of our investment portfolios.

The Pender Value Fund will invest in the top 20-30 opportunities that we identify at Pender. As we launch we will be adding investments that, to date, I haven’t been able to participate in due to constraints. We will complement these investments with ideas from the Pender Small Cap Opportunities Fund. I will also be adding ideas from Felix Narhi, CFA, my colleague and Portfolio Manager of the Pender US All Cap Equity Fund.

I believe that this is a very compelling opportunity and I invite investors to join us in participating in the Fund as it launches.

David Barr,
July 2, 2013

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