There’s value in small cap Canadian tech, says Pender Group fund manager David Barr.
Barr appeared on BNN’s Business Day with hosts Frances Horodelski and Marty Cej recently to talk about some of the stocks that have provided the lift for the outstanding performance of the Pender Small Cap Opportunities Fund which, as of March 31st, enjoyed an annualized return of 21.30%, compared to 10.3% for the TSX over the same period.
Barr says he likes Calgary-based next-generation GPS maker Hemisphere GPS (TSX:HEM). Big-picture wise, he is bullish on the prospects of the company because, globally, farmland is in short supply and demand for food is increasing. Hemisphere’s GPS’ technology optimizes a tractor’s route through the field, producing immediate savings in fuel. Barr said that when the company’s stock was hit because an anticipated acquisition fell through last fall he was buying, and kept buying when investors piled on with tax loss selling. Hemisphere bottomed at $.56 cents last December, before rebounding early this year.
This story is brought to you by Serenic (TSXV:SER). Serenic’s market cap of $3.18 million (as of January 27th, 2012) was less than its cash position of $4.03 million (as of Q2, 2012). The company has no debt. Click here for more information.
Another pick that has performed well for Barr is Redline Communications (TSX:RDL). Shares of the once high-profile Markham-based company were hammered from more than $6 to pennies, as its move into the WiMAX space proved to be a disaster. Redline’s losses, particularly in 2008 when it was in the red by nearly $30-million, were staggering and ultimately forced the company upon on a restructuring that would return it to its roots in providing broadband wireless equipment to niche markets. Barr likes the company’s performance in these niche markets, such as the oil and gas space.
Barr’s third selection, QHR Technologies (TSXV:QHR) will be more than familiar to those who follow analysts featured on Cantech Letter, such as Versant Partner’s Tom Liston. Like Liston, Barr is impressed with the job QHR has done in consolidating the electronic medical records space in Canada. Pointing out that nine-thousand Canadian doctors now use QHR’s technology, Barr says QHR should be able to continue their impressive growth rate because its solutions make service providers much more efficient.
60% of Pender’s Small Cap Opportunities fund is presently in Canadian small cap tech stocks, including Descartes Systems (TSX:DSG), TIO Networks (TSXV:TNC) and Sangoma Technologies (TSXV:STC)