Pender Value is not your typical small cap fund

The experienced management team looks for a unique mix of growth and value.

Shehryar Khan, CFA 29 May, 2018 | 5:00PM
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Pender Value is comanaged by Dave Barr and Felix Narhi. Barr, who also serves as president and CEO of PenderFund Capital Management, is a seasoned investor with over 15 years of experience, many of which were spent on private equity and venture capital investments. Narhi, who serves as the firm's chief investment officer, brought 14 years of U.S. equity expertise when he joined in 2013. The managers use an investment process that allows them to nimbly invest their unitholders' capital throughout a market cycle. Combined with his independent, contrarian streak, Barr has applied his knowledge to public markets with success, as the Pender Value fund boasts an impressive track record. We believe that this small-cap dominated fund will behave quite differently from any benchmark, and that long-term investors who have the risk tolerance for such an allocation in their portfolios will be rewarded over the long term.

Barr and Narhi are part of a nine-person investment team that appears well-resourced given Pender's focused hunting ground. The team's three portfolio managers share research but operate independently. Managers and analysts share research responsibilities and divide their duties by market cap. Barr focuses primarily on small- and mid-cap stocks, especially in technology, as well as special situations (such as distressed or bankrupt companies) while Narhi focuses on midcap and large cap names. As the firm has grown, it has enhanced its research capabilities. For example, Maria Pacella came aboard in 2017 with a long venture capital background. She will focus primarily on private investments, but Barr expects he'll benefit from her industry contacts and microcap research.

The team's investment approach is opportunistic, while remaining mindful of the importance of capital preservation. When valuing a company, the team estimates fair values across a range of scenarios and assigns probabilities to each one. Considering many possible outcomes, including a firm's potential takeover price, encourages realistic forecasts and improves Barr's ability to incorporate new information into his calculations without anchoring to a single fair value estimate.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Athabasca Oil Corp0.85 CAD-2.30
Chipotle Mexican Grill Inc1,894.68 USD0.78Rating
Motorola Solutions Inc241.78 USD-0.90Rating

About Author

Shehryar Khan, CFA

Shehryar Khan, CFA  Shehryar Khan, CFA, is a senior investment analyst for Morningstar’s Investment Management group.

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