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Mutual Fund News

Small-cap fund bets on aging boomers

swon@globeandmail.com

What are we looking for?

What the pros who manage small-cap funds are buying.

Checking out the top holdings of mutual funds is a good way to get stock ideas or to research the fund itself before investing. Today, we look at Pender Small Cap Opportunities Fund (http://www.penderfund.com).

More about the fund

The $1.1-million Canadian small-to-mid cap equity fund has been managed since 2009 by David Barr of Vancouver-based PenderFund Capital Management Ltd.

The fund returned 11.7 per cent for the year ended Jan. 31 versus an 8.4-per-cent loss for the S&P/TSX small cap total return index. Over two years, the fund has posted an annualized gain of 18.1 per cent.

Mr. Barr is a value-oriented stock picker who also looks at economic trends. He has more than 20 names in his portfolio and has pared his cash position to about 10 per cent from a high of 35 per cent last year.

Although cautious on the global economy because of the euro-zone debt crisis and concerns about slower growth in China, he is upbeat on high-growth sectors such as agriculture and health care. Global food demand is increasing, he said, while aging baby boomers will need more medical services delivered efficiently.

What did we find?

A technology bent in the top names. And double-digit losses over the past year in Hemisphere GPS Inc., QHR Technologies Inc. and Matrix Asset Management Inc.

Hemisphere GPS, which makes global positioning systems to help farmers become more efficient in growing crops, is a stock with legs, Mr. Barr said. The firm raised $8-million in a financing last year at $1.53 a share, but its shares have been punished after the firm failed to make an expected acquisition, he added.

QHR Technologies, which provides online medical-record sharing among doctors, will benefit from the need for a more efficient health-care industry as baby boomers grow older and government budgets become tighter, he said. Telus Corp. recently acquired a rival firm and QHR could be a potential acquisition for Telus or someone else, he suggested.

Sangoma Technologies Corp., a provider of hardware and software that lets businesses transition to an Internet protocol (IP)-based communications systems, also has takeover potential, he added. Under new management, the company has posted strong revenue growth in the last two quarters.

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TOP EQUITY HOLDINGS OF PENDER SMALL CAP OPPORTUNITIES FUND AT JAN. 31, 2012

Company nameSymbolPrice (Daily)High 52-week (Daily)Low 52-week (Daily)YTD price chge (%)One-year price chge (%)PE Ratio (Daily)Yield (Daily)Market capitalization (MRC)Volume (Daily)
QHR TechnologiesQHR-X0.560.780.56-9.68-26.3214N/A23,889,94884,000
March NetworksMN-T4.916.23.132.2929.21N/AN/A88,483,842158,256
20-20 TechnologiesTWT-T3.3342.2133.2-8.7747.6N/A62,661,2492,620
Hemisphere GPSHEM-T1.091.460.5665.15-25.34N/AN/A66,298,606240,690
Absolute SoftwareABT-T5.845.9318.2256.15N/AN/A252,149,300250,978
Descartes Systems GroupDSG-T7.868.255.867.3816.4435.7N/A489,769,2559,748
Matrix Asset ManagementMTA-T0.631.250.59-10-44.7412.69.526,498,40210,600
Vigil Health SolutionsVGL-X0.120.130.072014.29N/AN/A602,827N/A
New West Energy ServicesNWE-X0.060.120.01-7.69-406N/A5,506,82610,000
Sangoma Technologies Corp.STC-X0.4950.590.31.025.32N/AN/A14,769,71510,000
Closing prices are for Tue. Feb. 21.
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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