One Fund Manager thinks Sandvine could be takeout !!Lipper winner Fund managers target: tech firms ripe for takeover SHIRLEY WON Special to The Globe and Mail Published Tuesday, May 09, 2017 7:00PM EDT Last updated Wednesday, May 10, 2017 10:03AM EDT Visit TICKERS In This Story 3 Comments f t i A A Print Takeover potential is often on David Barrs mind when he goes bargain-hunting for stocks to fill his Pender Small Cap Opportunities Fund. Weve had a total of 128 companies in the mutual fund [since its launch], and 43 have been acquired, says the 43-year-old president and portfolio manager at Vancouver-based PenderFund Capital Management Ltd. We try to find businesses that we know and understand, said the stock-picker who leans toward technology plays. We try to get into the mindset of potential buyers and figure out what they would pay When the price is suitably cheap, we look to buy. That is what we think really drives our returns long term. Stock ideas can come from meeting with company executives, which may lead us to look at one of their competitors, suppliers or customers, he said. Newspapers can also give leads on firms or industries that may have short-term troubles. Initial public offerings tend to be too expensive for us, but well follow the company and buy its stock when the opportunity seems right, or its shares suffer a pullback due to a misstep, Mr. Barr added. For instance, he began following Vancouver-based bill-payment processor Tio Networks Corp. in the early 2000s. Their original business was selling kiosks to corner stores where people could go in and pay their bills in real time, he said. That was really a high capital-expenditure business, which can be very risky. He liked its management, but only started buying Tio shares after the company transitioned into a multi-channel payment processor so that bills could also be paid through retail point-of-sale terminals, mobile apps or through a website. Tio has become one his funds biggest wins. San Jose, Calif.-based PayPal Holdings Ltd. struck a $304-millon deal in February to buy the company, and the transaction is set to close later this year. We bought a lot of our position in the low 20-cent range, and now it is getting acquired for $3.35 a share, he said. Nearly half of his $160-million Canadian small-cap fund is in technology names, such as Sandvine Corp., Terago Inc. and Absolute Software Corp. I spent the first eight years of my career looking exclusively at technology and life sciences businesses, so I have built out a large network in the space, Mr. Barr said.