Episode 3 – Equity – The 80/20 Rule
July 11, 2018

Episode 3 – Equity – The 80/20 Rule

In the last of this three part series, Dave and Felix look back on the investment strategies and how they translated into some of the better ideas in the Fund.

Winners and losers – Investments and what we learned from them.

They discuss various holdings, their original investment theses, how they played out and ultimately, what they learned that they can use to drive future investments in the Fund. In their analysis of the winners and losers in the portfolio, David and Felix uncover two key themes – having cash on hand during firesales and focusing on the long term. Ultimately, employing patience in the portfolio and thinking long term about the companies held as they build their value is what led to Pender’s success. Tune in to find out more.

Key Takeaways

1:59 The top 20 stocks in the Fund generated 87% of the positive returns. The 80-20 rule applies to the market and to the Fund as well.
3:18 Two themes emerge when assessing where Pender found opportunities that drove the portfolio - companies that are having temporary problems, and undiscovered, unfollowed companies. David and Felix unpack their investment in Panera Breads.
7:30 Recognising patterns - David compares Freshii to Panera in its early days.
9:19 Invest for the future. Why patience and a long-term outlook are crucial to investment success.
12:25 Screening may not always be as important as people make it out to be. Companies that have the capacity to reinvent themselves in a timely manner may be more crucial. The best companies transition themselves at their peak!
17:20 Unfollowed companies are another bucket in the success that the Fund has had. David and Felix dive into some of the big winners, and the genesis and evolution of those ideas.
22:37 What is Pender's philosophy with cash? David outlines changes in cash positions and how they relate to ideas.
26:34 Being willing to sit on cash really speaks to patience, it’s an unexpiring option.
31:41 Discount companies vs compounders. It all goes back to the 80-20 rule, and having the patience to maintain that long-term outlook.

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