Author: Minnie Arwood

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Pender Growth Fund Provides Financial Highlights and Company Updates

VANCOUVER, British Columbia, Nov. 26, 2021 (GLOBE NEWSWIRE) — Pender Growth Fund Inc. (the “Company” or “Pender”) today announced its financial and operational results for the three months and nine months ended September 30, 2021.

Financial Highlights (Unaudited)

  • Net income was $75,339,050 for the three months ended September 30, 2021 (September 30, 2020 – $2,730,979) primarily the result of positive investment performance in the quarter.

  • Net income per Share for the three months ended September 30, 2021 was $9.89 (September 30, 2020 – $0.35).

  • Shareholders’ equity per Class C common share (“Share”) was $17.31 as at September 30, 2021 (December 31, 2020 – $6.11).

  • The Company’s total shareholders’ equity was $131.9 million as at September 30, 2021, an increase from December 31, 2020 ($47.3 million) that was primarily the result of positive investment performance during the period.

  • Shares outstanding were 7,616,529, a decrease from December 31, 2020 (7,740,129) that was the result of share repurchases under the Company’s Normal Course Issuer Bid (“NCIB”) which was renewed on February 11, 2021.

  • At September 30, 2021, 85.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the investment portfolio is in private companies and 14.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} is in publicly-listed companies.

PERFORMANCE
(based on Shareholders’ Equity)

3 Month

1 Year

3 Year

5 Year

Since Inception

Class C

47.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

81.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

29.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

15.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

21.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

  • Management Expense Ratio (“MER”) was 4.30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} for the quarter ended September 30, 2021, up from 2.96{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over the same period in the prior period, primarily due to the increase in management fees as a result of the increase in total Net Assets, plus, additional financing expenses.

Portfolio Highlights

We believe that the Company is particularly well-positioned today to pursue its investment objectives in the context of current market volatility and valuations in micro and small cap stocks in North America.

During the period we continued to be active in public markets where we saw what we believed to be strong opportunities both in longer-term compounders and potentially shorter-term close the discount situations. With the continued strength in small cap markets, we have been decreasing some positions and continue to work on new opportunities to deploy capital at attractive rates of return.

As always, this quarter we worked closely with our private portfolio companies and certain of our public portfolio companies. We are pleased to see private technology companies from within our portfolio flourish and build value, including having the opportunity to go public.

In particular, Copperleaf Technologies Inc., a portfolio company we own both directly and indirectly through our investment in Pender Private Investments Inc., listed on the TSX at $15.00 per share under the symbol “CPLF” in early October.

At September 30, 2021, the Company held approximately 97{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} or 16.7 million Legacy Shares of Pender Private Investments Inc. (“PPI”), formerly the Working Opportunity Fund (EVCC) Ltd. (“WOF”). These shares were acquired from shareholders of WOF (“Exiting Shareholders”) under the previously announced transaction (the “WOF” Transaction”). The scheduled second payment for the remaining 50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the proceeds from the sale of their shares has been issued to former WOF shareholders.

Under the Legacy Shares rights, PPI is required to redeem them, on a pro rata basis at NAV, upon PPI‘s receipt of cash proceeds for the sale of any of its portfolio investments. PPI recently received cash proceeds for its divestment of Redlen Technologies Inc. and Teradici Corporation, and redeemed approximately 58.49{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of Legacy Shares on a pro rata basis. In October, the Company received a total of $63,197,947 on redemption of 9.8 million of the Legacy Shares it held. This redemption triggered a requirement for the Company to pay an additional cash payment of $21,136,513, or $1.2661 per share, to the Exiting Shareholders and the Company made the payment effective October 13, 2021.

Other Highlights

On February 11, 2021, the Company launched a new NCIB, under which the Company may purchase a maximum of 700,866 shares, or 10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the Company’s public float on launch date, in the year ending February 11, 2022. During the period we continued to acquire shares of the Company in the market under our NCIB because we believe the shares are trading at a discount to their intrinsic value.

We encourage you to refer to the Company’s MD&A and quarterly unaudited financial statements for the September 30, 2021 and the annual audited financial statements for the year-ended December 31, 2020 as well as other disclosures available under the Company’s profile at www.sedar.com for additional information.

Recent Developments

Redlen Technologies Inc, (“Redlen”)

On September 9, 2021, Redlen, one of PPI’s key long-term private investees, reached an agreement with Canon Inc. (“Canon”) to conclude a share transfer agreement, with the goal of enabling Canon to accelerate the development of Photon Counting CT systems and continue to contribute to the advancement of diagnostic imaging. The acquisition was completed on September 28, 2021, resulting in PPI’s divestment of Redlen, as Redlen became a wholly owned subsidiary of Canon.

Teradici Corporation (“Teradici”)

During the quarter, Teradici, one of PPI’s key long-term private investees, entered into a definitive agreement to be acquired by HP Inc. (“HP”) with the goal of enhancing HP’s capabilities in the Personal Systems category by delivering new computer models and software-enabled digital services tailored for hybrid work. The acquisition was completed on October 1, 2021, resulting in PPI’s divestment of this holding.

Copperleaf Technologies Inc. (“Copperleaf”)

As at September 30, 2021, the Company held 12.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of Copperleaf’s issued and outstanding shares, both directly and through its investment in PPI. On October 7, 2021, Copperleaf’s common shares began trading on the TSX under the symbol “CPLF”. The company raised $161.1 million at $15.00 per common share.

About the Company
The Company’s objective is to achieve long-term capital appreciation for its investors. The Company utilizes its small capital base and long-term horizon to invest in unique situations, primarily small cap, special situations, and illiquid public and private companies. The Company trades on the TSX Venture Exchange under the symbol “PTF”. The Company posts its Reporting Nav on its website, generally within five business days of each month end.

Please visit www.pendergrowthfund.com.

For further information, please contact:

Tony Rautava
PenderFund Capital Management Ltd.
(604) 653-9625
Toll Free: (866) 377-4743

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Information

This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the Company and the environment in which it operates. Forward-looking statements are identified by words such as “believe”, “anticipate”, “project”, “expect”, “intend”, “plan”, “will”, “may”, “estimate” and other similar expressions. These statements are based on the Company’s expectations, estimates, forecasts and projections and include, without limitation, statements regarding the benefits of the WOF Transaction, the Company’s belief that its shares trade at a discount to their intrinsic value, investment and liquidation opportunities in the public markets, and future investment opportunities. The forward-looking statements in this news release are based on certain assumptions; they are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the risk that valuations of micro and small cap public companies will change, the general volatility of public markets as well as factors discussed under the heading “Risk Factors” in the Company’s annual information form and MD&A available at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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Stocks sink on fears over new coronavirus strain | Financial Markets

Stocks, US Treasury yields and oil sink as new COVID-19 strain rattles markets.

By Sunil JagtianiBloomberg

Published On 26 Nov 2021

Stocks, Treasury yields and oil sank Friday while the yen jumped as a new Covid-19 strain discovered in southern Africa sent a wave of caution across global markets.

An Asia-Pacific equity gauge was set for the worst slide since March, with Japan and Hong Kong underperforming and travel shares among the biggest decliners. U.S. and European futures fell and the 10-year Treasury yield dropped to 1.56{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.

The World Health Organization and scientists in South Africa are studying the recently identified variant described as very different to previous versions and of serious concern. The U.K. and Israel banned flights from South Africa and some neighboring countries. Hong Kong confirmed two cases of the strain.

The dollar was at a 16-month high, while South Africa’s rand weakened and commodity currencies retreated. Crude shed 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and gold rose. U.S. markets, closed Thursday for Thanksgiving, will have a shortened Black Friday session.

The detection of the strain comes on top of concerns in markets about high inflation and the prospect of quicker exit from ultra-loose monetary settings. Global shares are up about 16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} this year, weathering a plethora of risks after investors poured almost $900 billion into equity exchange-traded and long-only funds in 2021 — topping the combined total from the past 19 years.

“It’s a scary headline” about the virus variant, so it may have caused a knee-jerk reaction, said Kyle Rodda, an analyst at IG Markets Ltd. He added that “North America off the desks means there’s a wall of buyers missing” and that thinner markets make for more pronounced moves.

Variant ‘playbook’

December futures on the Cboe Volatility Index, a gauge of implied equity swings for the S&P 500, advanced as traders braced for turbulence when U.S. markets reopen.

Justin Tang, head of Asian research at United First Partners, pointed out that “the world has gone through this before with delta,” adding “there is already a playbook for such situations” and that “mutations are expected and not something unknown.”

Meanwhile, Goldman Sachs Group Inc. economists said they expect the Fed to tighten policy faster than previously anticipated, including doubling the pace at which it tapers bond purchases to $30 billion a month from January. They see an interest-rate liftoff from near zero in June.

In China, regulators have asked Didi Global Inc.’s top executives to devise a plan to delist from U.S. bourses, people familiar with the matter said. That may revive fears about Beijing’s intentions for its giant technology industry. A gauge of Chinese tech stocks slid.

The Chinese economy continued to slow in November with car and homes sales dropping again as a housing market crisis dragged on, according to Bloomberg’s aggregate index of eight early indicators.

For more market analysis, read our MLIV blog.

Here are some key events this week:

  • Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday
    Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} as of 5 a.m. in London. The S&P 500 rose 0.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} on Wednesday
  • Nasdaq 100 futures fell 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. The Nasdaq 100 rose 0.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} on Wednesday
  • Japan’s Topix index dropped 2.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • Australia’s S&P/ASX 200 index fell 1.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • South Korea’s Kospi index shed 1.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • Hong Kong’s Hang Seng index declined 2.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • China’s Shanghai Composite index lost 0.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • Euro Stoxx 50 futures tumbled 2.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • The euro was at $1.1223, up 0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • The Japanese yen was at 114.72 per dollar, up 0.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • The offshore yuan was at 6.3934 per dollar, down 0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

Bonds

  • The U.S. 10-year Treasury yield fell eight basis points to 1.56{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
  • Australia’s 10-year bond yield fell nine basis points to 1.78{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

Commodities

  • West Texas Intermediate crude fell 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to $76.06 a barrel
  • Gold was at $1,797.75 an ounce, up 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

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Dollar Tree hikes prices 25{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. Most items will cost $1.25

The company — one of America’s last remaining true dollar stores — said Tuesday it will raise prices from $1 to $1.25 on the majority of its products by the first quarter of 2022. The change is a sign of the pressures low-cost retailers face holding down prices during a period of rising inflation.

Dollar Tree (DLTR) said in a quarterly earnings release Tuesday that its decision to raise prices to $1.25 permanently, however, was “not a reaction to short-term or transitory market conditions.”

Selling stuff strictly for $1 hampered Dollar Tree, the company said, and forced it stop selling some “customer favorites.” Raising prices will give Dollar Tree more flexibility to reintroduce those items, expand its selection and bring new products and sizes to its stores.

Dollar Tree also said that hiking prices will help the company increase its profit margins by “mitigating historically high merchandise cost increases,” including freight and distribution costs, as well as wage increases.

“This is the appropriate time to shift away from the constraints of the $1 price point,” CEO Michael Witynski said in a statement.

The end of dollar stores

Dollar Tree carries primarily seasonal goods, toys, stationary, home decor, kitchenware and party items.

It caters to suburban, middle-income shoppers, unlike Dollar General (DG), its more rural-focused rival. Family Dollar — owned by Dollar Tree — targets mostly low-income shoppers in cities.

Dollar Tree has sold products at $1 for 35 years and was the last of the major dollar store chains to actually be a dollar store. (The company was called “Only $1.00” in the late part of the 20th century, before changing its name to Dollar Tree in 1993.)

CVS is closing 900 stores, and the big winner is Dollar General

Dollar Tree had started moving away from only offering goods for $1 in recent years, in part as a response to pressure on Wall Street to raise prices. Dollar Tree has lagged Dollar General and other discount chains.

In 2019, an activist investor took a stake in the company and pressed the chain to raise prices. The group ended its fight after Dollar Tree announced it planned to test different prices.

In September, Dollar Tree said it planned to begin selling items at $1.25 and $1.50 at some stores for the first time. It also said it would add $3 and $5 items to more stores, expanding on a prior strategy to offer these prices at select locations.
Since that announcement, a different activist investor built a stake in Dollar Tree and has tapped a former Dollar General CEO to push for changes at the company.

Although Dollar Tree said its decision to permanently raise prices was not a reaction to short-term inflation, one analyst was unconvinced.

“The pace of rollout, along with [the] engaged investor, Mantle Ridge, clearly suggests otherwise,” Kelly Bania, an analyst at BMO Capital Markets, said in a note to clients Tuesday.

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New Jersey Advisor Returns to RBC Following Restraining Order

A New Jersey–based financial advisor managing about $500 million in client assets is returning to RBC Wealth Management several months after leaving the firm for UBS Financial Services.

But Christopher Andreach’s return to RBC also follows a September restraining order the company filed against him and UBS, accusing Andreach of using confidential customer information to “improperly” solicit RBC customers to join UBS. 

According to a court complaint, this confidential data included personal information, account numbers and balances. RBC filed the complaint and called for a restraining order shortly after Andreach departed the firm for UBS earlier this year. Andreach’s longtime assistant, Mary Guastella, joined him in the move, according to RBC’s complaint.

At the time of the suit, RBC argued that both Andreach and Guastella were bound by the firm’s code of conduct, including requirements to protect proprietary information on customers. RBC claimed that the duo resigned effective immediately and without notice on Sept. 3, 2021, and began working at UBS on the same day. 

During the course of RBC’s investigation, the firm allegedly found that between Aug. 1 and Andreach’s departure, the advisor and his assistant “printed out, downloaded, and/or otherwise removed computer files” containing confidential information about RBC’s clients, including names, financial information and Social Security numbers, and both entered RBC offices to gather information in order to solicit clients.

RBC also claimed they had surveillance video from Aug. 9 showing the duo entering RBC’s Red Bank, N.J., offices and leaving multiple times with “extensive amounts of printed paper.” 

RBC also alleged that Andreach had run an “extensive” number of customer portfolio reviews before leaving. According to the firm, each portfolio runs between 20 and 25 pages, and Andreach allegedly ran at least 300 of these reports in the final month of his employment. RBC said Andreach and UBS used the information to attract RBC clients, transitioning about 30 customers from RBC to UBS after Andreach left the former firm.

“Any allegation that UBS encouraged or participated in Mr. Andreach’s conduct as alleged in RBC’s complaint is unequivocally false,” a UBS spokesperson said about the complaint.  

Andreach said he was “humbled” to be invited back to RBC, calling it a place he loved.

“They did identify a few honest mistakes I made on my way out, but the fact that I am welcomed back speaks volumes of the firm’s culture,” he said.

RBC Wealth Management President Tom Sagissor did not mention the recent history in his statement about Andreach’s return but said it served as “an enormous testament” to the culture at RBC. In the statement, RBC announced Andreach would rejoin the firm’s Florham Park, N.J., branch.

Several other firms have made the move from UBS to RBC this past year, including a $1.6 billion seven-person team based in Princeton, N.J., who joined in May. Just a week earlier, The Meridian Group, a Virginia-based firm with $900 million in AUM, also departed UBS for RBC, which manages more than $460 billion in client assets across more than 2,000 advisors.

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Alibaba Stock Price Target Cut Again as More Analysts Smile on Rival JD.com

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7 stocks with the most Thanksgiving exposure: BofA

Thanksgiving feasts will likely draw larger crowds than last year and incur higher costs.

A recent Bank of America note detailed which companies have the most exposure to the top holiday dishes amid supply chain bottlenecks, inflation, lingering COVID concerns, low inventories, and evolving consumer behaviors. 

Those companies are Campbell’s Soup Company (CPB), General Mills (GIS), The Kraft Heinz Company (KHC), Conagra Brands (CAG), Hormel Foods Corporation (HRL), McCormick & Company (MKC), and The Duckhorn Portfolio, Inc. (NAPA). 

“We looked at companies’ exposure to the top Thanksgiving dishes: turkey, stuffing, dinner rolls, gravy, green bean casserole, potatoes, mac & cheese dessert and wine,” the analysts stated. “Overall CPB, GIS, KHC, CAG, MKC, HRL and NAPA are the most exposed. KHC and NAPA are our favorite stocks in this group.”

Not just turkey stock: Key food companies exposed to Thanksgiving meal trends. (Source: BofA)

Key companies exposed to Thanksgiving meal trends. (Source: BofA)

Thanksgiving ‘center of the plate’ items see more pricing power

People appear to be gathering around the table again, the analysts stated, as data from social media conversations found mentions of “vaccines” on the rise while mentions of “FaceTime,” “social distancing,” and “canceled” declined. (“Friendsgiving” and “day drinking” also saw increases.)

And whether consumers opt for turkey or ham, mashed potatoes or marshmallow-topped sweet potatoes, traditional or plant-based options, they’re likely to pay more with inflation hitting food prices.

The American Farm Bureau Thanksgiving cost index projects a 14{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} year-over-year increase for 2021, led by a 24{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase in turkey prices.

“When you look at more of the center of the plate sort of food items, typically, there has not historically been a lot of pricing power,” Bryan Spillane, a senior food and beverage analyst at BofA Global Research, told Yahoo Finance Live (video above). “But what’s unusual this year is that there has been. Food companies, in particular, began raising prices the middle of the year, and there’s virtually been no elasticity.”

Frozen turkeys in Philadelphia, Wednesday, Nov. 17, 2021. First, the good news: There is no shortage of whole turkeys in the U.S. this Thanksgiving. But those turkeys — along with other holiday staples like cranberry sauce and pie filling — could cost more. (AP Photo/Matt Rourke)

Frozen turkeys in Philadelphia, Wednesday, Nov. 17, 2021. (AP Photo/Matt Rourke)

That said, Spillane added, consumer behavior is expected to change at some point.

“Something that we’re really watching as we move into next year is: At what point does the consumer begin to push back and do we begin to see some trading down or other behavior that demonstrates that consumers are feeling that pinch?” Spillane said.

Investor appetite for food and beverage companies 

The top company with the most upside or downside potential is Campbell’s, which BofA gave an “underperform” rating. 

“Campbell’s struggling from a few issues,” Spillane said. “One is they are experiencing a material amount of inflation. They have a product portfolio that’s a little bit more skewed… to kind of middle and low-income households. So, that’s, maybe, an area where there may be some sensitivity around passing those prices through.”

The iconic soup company also has a lot of direct and indirect exposure to labor shortages and higher labor costs, Spillane added.

Cans of Campbell's Soup are displayed in a supermarket in New York City, U.S. February 15, 2017. REUTERS/Brendan McDermid

Cans of Campbell’s Soup are displayed in a supermarket in New York City, U.S. February 15, 2017. REUTERS/Brendan McDermid

BofA also gave seasoning-maker McCormick & Company an “underperform” rating, with an $84 price target. 

McCormick is “still trading at a premium valuation,” Spillane said, adding that while it has benefitted from people having cooked at home more in the last 18 months, “at some point, as things moderate, you’re going to see less of that cooking at home behavior. And that’s going to create an overhang for McCormick.”

On the flip side, “Hershey [HSY] is well-positioned,” Spillane said, especially when it comes to the inflationary environment. 

“The combination of a category that’s still growing very strongly where there’s still a lot of product innovation and where there’s been demonstrated pricing power, we think that Hershey is set up really well to be able to maybe even more than protect margins, maybe potentially grow margins as we cycle through some of this inflation,” he explained.

BofA also awarded Stove Top stuffing-maker Kraft Heinz a buy rating with a $46 price objective.

“We believe this is justified based our view that KHC is well positioned to capture growth associated with changing consumer demand patterns related to recessions and pantry stocking offset by higher than average debt levels,” the analysts wrote.

Grace is an assistant editor for Yahoo Finance.

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