Northstar Healthcare Considered Compelling Stock in Pender Small Cap Opportunities Portfolio

February 11, 2014

Pender keeps it small cap, delivers big returns


Pender keeps it small cap  delivers big returns   BNN News

Sultan Ameerali, staff
2:20 PM, E.T. | February 11, 2014
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The Pender Small Cap Opportunities fund is a victim of its own success. Despite returning more than 20 percent since inception, the 5-star Morningstar-rated fund is closing to new investors on Friday.

David Barr, chief investment officer at Pender Fund Capital Management, has generated huge returns investing in tiny, and often ignored, stocks. His fund currently manages only $57 million but his strategy limits the amount of cash that can be effectively deployed.

“If you have too much money you can’t do the really interesting things that help create a lot of alpha over the long-term,” Barr tells BNN.


Wi-Lan (WIN-T 3.42 -0.03 -0.87%): The patent licensing company struggled in 2013 after a strategic review didn’t lead to a sale. Barr says the fund has owned Wi-Lan for a while and will continue to hold it – but he’d be surprised if it’s still in the portfolio at year-end. “The company is on the block and we think they’ll probably get sold this year,” Barr says.

Terago (TGO-T 6.32 -0.21 -3.22%): Shares of the broadband communications provider plunged last year after Terago shut down an auction for the company without finding a buyer. Barr built a position in the $6-7 range after the sell off. He says the core business is cheap and there is a big growth opportunity as Terago moves to consolidate data centres.

Vigil Health Solutions (VGL-X 0.25 0.05 25.00%): Vigil provides patient monitoring services for long-term care facilities. The company had a near-death experience during the financial crisis but Barr says Vigil is poised to grow earnings as the drop in the Canadian dollar flows directly to the bottom line.

Northstar Healthcare (NHC-T 1.12 -0.05 -4.27%): Northstar runs ambulatory surgical centres in Texas and is the second-largest holding in the fund. Barr describes Northstar as “an orphaned company” having come to market in Canada as an income vehicle for retail investors – who then abandoned the stock when it eliminated its payouts. Barr says the company is back on track and experiencing huge revenue growth as it experiments with local marketing campaigns.
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