Investment ideas from David Barr of Penderfund
Pro Picks: 3 Small Cap Picks Set to Explode in 2025
Canadian small caps have been abandoned but are they hiding the best opportunities of the next decade? In this episode of In the Money with Amber Kanwar, David Barr of the PenderFund breaks down why he’s staying laser-focused on the most overlooked corner of the market.
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Kraken Robotics (TSXV: PNG, OTC: KRKNF)
Kraken Robotics, originally a treasure-hunting venture, now leads in underwater batteries and sonar systems, poised to capitalize on defense and exploration demand.
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Advanced Technology: Kraken’s batteries and sonar operate at extreme ocean depths, attracting defense contractors and resource explorers.
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Defense Tailwinds: Rising geopolitical tensions and NATO’s shift to cost-effective unmanned drones, bolstered by a partnership with Anduril, drive growth.
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Upside Potential: Barr’s optimism and continued holding after a “huge run” suggest significant upside, fueled by a strong order book and defense spending trends.
Dye & Durham (TSX: DND)
Dye & Durham, a legal software provider, has faced drama but remains a strong turnaround opportunity with robust cash flows at a discounted price.
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Sticky Business: A loyal client base ensures steady free cash flow, despite public boardroom disputes and minor client churn.
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Turnaround Catalyst: A new CEO search and activist-led board changes signal a strategic reset to improve capital allocation.
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Upside Potential: At $9, Barr sees ~177% upside to a $25+ private equity valuation, with further gains possible over 3–5 years under new leadership.
TerraVest Industries (TSX: TVK)
TerraVest Industries, a diversified industrial and energy infrastructure firm, is a Canadian success story with a disciplined growth strategy.
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Proven Growth: From $6.05 in 2014 to $167, TerraVest’s 20% annual free cash flow growth stems from smart acquisitions and operational focus.
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M&A Pipeline: A pool of 400 acquisition targets supports continued expansion in propane tanks and oilfield services.
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Upside Potential: At $167, Barr predicts 100% upside to ~$334 in 5 years, with potential to double again in 10 years, driven by M&A and attractive valuation.
