| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | 0.057 |
| 2025 | 2023 | 2022 |
|---|---|---|
| 5.7% | 6.2% | -28.5% |
The Pender Small Cap Opportunity Fund delivered a 5.7% return in 2025, navigating a year of significant dispersion in small-cap markets. The fund's top contributors included Kraken Robotics, 5N Plus, and Tantalus Systems, all aligned with key secular themes of defense spending and energy transition. Kraken Robotics benefits from increased global defense spending in undersea and autonomous systems, while 5N Plus and Tantalus Systems are positioned for the energy transition through specialty semiconductors and grid modernization technologies. After years of small-cap underperformance in Canada, the managers see improved opportunity sets heading into 2026, with many high-quality businesses trading at compelling valuations. The portfolio remains predominantly Canadian at 86% allocation. Looking forward, potential catalysts include AI commercialization, lower interest rates, and increased M&A activity. The managers maintain a disciplined approach focused on quality businesses with durable margins and strong balance sheets, believing these companies can generate compelling returns while providing better downside protection during challenging periods.
Focus on well-managed, competitively advantaged Canadian small-cap businesses trading at sensible valuations, with emphasis on companies aligned with secular themes like defense spending and energy transition.
The managers believe a portfolio of well-managed, competitively advantaged Canadian businesses, trading at sensible valuations can generate compelling returns over the coming quarters and years. They remain focused on staying balanced and disciplined rather than trying to forecast every macro outcome or market turn. Quality businesses have historically held up better than the broader market when conditions become more challenging.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 13 2026 | 2025 Q4 | DND.TO, FDY.TO, GRID.TO, NGEX.TO, PAR, PNG.TO, SYZ.TO, TCS.TO, VNP.TO | Canada, Defense Spending, Energy Transition, Quality, small caps, value |
VNP CN GRID CN |
Kraken Robotics is positioned to benefit from heightened geopolitical tensions and increased global defense spending, particularly in undersea and autonomous systems. The company designs and… |
| Oct 16 2025 | 2025 Q3 | DNTL, PNG CN | defense, M&A, Robotics, small caps, valuation |
PNG PNG |
Small-cap equities continued to outperform in Q3 2025, driven by earnings growth, M&A activity, and attractive relative valuations. The managers see ongoing value opportunities in… |
| Jul 11 2025 | 2025 Q2 | CVO CN, LSPD CN | Artificial Intelligence, Energy Transition, Enterprise Software, geopolitics, Thematic Investing |
CVO CN LSPD CN |
The letter highlights exposure to structural themes such as artificial intelligence, energy transition, enterprise software, and geopolitics. Management argues these forces are reshaping competitive dynamics… |
| May 5 2025 | 2025 Q1 | TVK CN | - | - | - |
| Jan 27 2025 | 2024 Q4 | MDA CN | - | - | - |
| Oct 7 2024 | 2024 Q3 | MDA CN | - | - | - |
| Jul 29 2024 | 2024 Q2 | DTOL CN | - | - | - |
| Apr 16 2024 | 2024 Q1 | KSI CN, TCXT CN | - | - | - |
| Jan 17 2024 | 2023 Q4 | - | - | - | - |
| Oct 12 2023 | 2023 Q3 | HEO CN | - | - | - |
| Jul 13 2023 | 2023 Q2 | PAR, SYZ CN | - | - | - |
| Apr 19 2023 | 2023 Q1 | MAGT CN | - | - | - |
| Jan 18 2023 | 2022 Q4 | BRND/U CN, MAXR CN | - | - | - |
| Oct 17 2022 | 2022 Q3 | PAR | - | - | - |
| Aug 25 2022 | 2022 Q2 | KXS CN, MAGT CN, STC CN | - | - | - |
| May 13 2022 | 2022 Q1 | MAGT CN | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Defense SpendingThe entire world is rapidly rearming off an extremely low base of defense spending. This exposure focuses on companies that make armaments for nation state security and materially outperformed for the year. |
Defense Armaments Rheinmetall Palantir RTX |
Energy TransitionThe portfolio maintains significant exposure to electrification themes through companies like Bloom Energy, which provides clean, reliable power solutions for AI data centers. The energy transition represents a structural opportunity as companies race to build power infrastructure to support growing electricity demands from AI workloads. |
Electrification Clean Energy Power Generation Fuel Cells Grid Infrastructure | |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q3 |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q2 |
Thematic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 16, 2025 | Fund Letters | David Barr | PNG | Kraken Robotics Inc. | Information Technology | Aerospace & Defense Technology | Bull | TSX | autonomous systems, Defense, diversification, EBITDA, growth, robotics, Sonar | Login |
| Oct 16, 2025 | Fund Letters | David Barr | PNG | Kraken Robotics Inc. | Information Technology | Aerospace & Defense Technology | Bull | TSX | autonomous systems, Defense, diversification, EBITDA, growth, robotics, Sonar | Login |
| Jul 11, 2025 | Fund Letters | David Barr | CVO CN | Coveo Solutions Inc. | Information Technology | Application Software | Bull | New York Stock Exchange | AI, Enterprise Search, growth, Software, valuation | Login |
| Jul 11, 2025 | Fund Letters | David Barr | LSPD CN | Lightspeed Commerce Inc. | Information Technology | Internet Services & Infrastructure | Bear | New York Stock Exchange | growth, Software, strategy, take-private, valuation | Login |
| Jan 13, 2026 | Fund Letters | David Barr | VNP CN | 5N Plus Inc. | Materials | Semiconductors | Bull | New York Stock Exchange | Defense, Energytransition, materials, semiconductors, Solar | Login |
| Jan 13, 2026 | Fund Letters | David Barr | GRID CN | Tantalus Systems Holding Inc. | Information Technology | Application Software | Bull | New York Stock Exchange | Electrification, Grid, Smartmeters, Software, utilities | Login |
| TICKER | COMMENTARY |
|---|---|
| DND.TO | We bought about 1% point of Dye & Durham at C$6.91/share. |
| FDY.TO | Manage position sizing after a period of outperformance and to reallocate capital toward higher-conviction opportunities. |
| GRID.TO | Tantalus Systems operates in the grid optimization and modernization market, providing smart meters and data analytics software that help utilities modernize infrastructure and support the energy transition through improved grid efficiency. |
| NGEX.TO | Manage position sizing after a period of outperformance and to reallocate capital toward higher-conviction opportunities. |
| PAR | Software has always been a hyper-competitive industry teeming with well-funded start-ups. Consider PAR Technology's niche in restaurant point-of-sale (POS). Despite facing over 6,000 global competitors—including countless "free" alternatives requiring no subscription—PAR consistently wins mandates from Tier-1 restaurant chains. A prime example is their newly announced deal with Papa John's, which abandoned its in-house software to migrate to PAR. This dynamic runs 180° counter to the prevailing market narrative. AI will undoubtedly turn up the heat on this already intense global competition, but it will also accelerate PAR's product velocity, broaden its capabilities, and vastly expand its TAM. Ultimately, the endgame for incumbents is unlikely to be the race to zero gross margins that so many software skeptics are predicting. |
| PNG.TO | Kraken Robotics designs and manufactures advanced subsea robotics, sonar systems, and batteries used in autonomous underwater vehicles for defense, offshore energy, and infrastructure applications. It is positioned to benefit from heightened geopolitical tensions and increased global defense spending, particularly in undersea and autonomous systems. |
| SYZ.TO | Sylogist weighed on performance during the year, primarily due to company-specific execution challenges and elevated near-term investor uncertainty, rather than a deterioration in long-term fundamentals. |
| TCS.TO | Added to position after the stock sold down. Thesis unchanged. |
| VNP.TO | 5N Plus develops, manufactures, and distributes specialty semiconductor and performance materials critical to industries tied to the energy transition and defense, including solar, space, and advanced electronics. |
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