<![CDATA[Pender Pulse's Substack]]>https://thependerpulse.substack.comhttps://substackcdn.com/image/fetch/$s_!LzyK!,w_256,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F48992286-7494-42b0-a166-8fd183eebb4f_1080x1080.pngPender Pulse's Substackhttps://thependerpulse.substack.comSubstackThu, 03 Sep 2026 07:01:36 GMT<![CDATA[What If We Run Out of Money?]]>https://thependerpulse.substack.com/p/what-if-we-run-out-of-moneyhttps://thependerpulse.substack.com/p/what-if-we-run-out-of-moneyWed, 02 Sep 2026 19:13:25 GMTFor today’s short-form content, the theme is: we listened to something cool, you probably should too, but if you don’t, here are our thoughts.

Now, we’ve referenced Invest Like the Best countless times here at the Pulse. Patrick O’Shaughnessy is another sage of ours, the combination of quality guests, interesting topics, and timely insights has us tuning in consistently, as well as to the rest of the content available on the Colossus Network.

Yes, I know … if you’ve tuned in to our own Pender Podcast, how could we be promoting a, dare I say, competitor? Well, as they say, imitation is the sincerest form of flattery, and I can safely say I try my best to take a page out of O’Shaughnessy’s playbook whenever I’m hosting.

So, in classic Pulse form, let’s take a quick(ish) detour with a short primer on why we love Invest Like the Best.

The Colossus

Way, way back in the before-times, before AI, before COVID, 2016 gave us Harambe, the Mannequin Challenge, the Chainsmokers’ “Closer,” the premiere of Stranger Things Season 1, Beyoncé’s Lemonade, and Leonardo DiCaprio finally winning his Oscar for The Revenant.

It was the best of times. And what other iconic moment happened that glorious year? Patrick O’Shaughnessy launched a podcast called Invest Like the Best. At the time, it was simply a personal project (a side quest, if you will) a way to interview top investors and sharpen his own thinking.

Fast forward a few years and the show began attracting a very specific type of listener: highly sophisticated investors, founders, and operators. Over time, it also started booking increasingly high-profile guests, from elite hedge fund managers to industry-defining entrepreneurs.

Even today, he can put out bold asks, like the below to Apple’s one-day-old newly appointed CEO.

By 2020, O’Shaughnessy realized he’d built more than a podcast. He’d built a platform: colossus.com. Today, it’s one of our go-to sources of industry reconnaissance.

So what makes Invest Like the Best truly... the best? We think it comes down to two things.

  1. A skilled interviewer. Speaking as one podcast host to another (sort of), the art of the interviewer is a lot more complex than it looks, in fact, if you’re excellent at it, it should look easy. O’Shaughnessy’s edge isn’t just access, it’s execution. Listen to enough investing podcasts, especially the tech-tilted ones, and you get used to seeing the same guests recycled across shows. What’s different about Invest Like the Best is that it consistently produces the more insightful version of that same conversation, an evergreen one you can listen to months, even years, after it’s recorded. That’s a compounding advantage: better interviews attract better guests, which attracts more listeners, and more importantly, the right listeners.

  1. A valuable audience. Part of what draws high-profile guests is the assurance that their story reaches the right people. O’Shaughnessy figured out early that his audience profile was unique and highly valuable, which only reinforced the flywheel above.

Which brings us to today. We listen to most Invest Like the Best episodes, but last week’s was particularly good.

The Guest

The guest was Ben Thompson, founder of Stratechery, a subscription newsletter and podcast covering technology and media. What makes Thompson especially fascinating is that he straddles two schools of tech analysis explained as “East Coast” and “West Coast”. The East Coast methodology starts with the business as it exists today: the numbers, the economics and what you can underwrite. The West Coast methodology is more willing to imagine where the technology could go and work backwards from there. Thompson does both, which gives him an useful perspective on everything from chips and AI business models to China and geopolitics.

Anyways, when we saw Thompson sitting down with Patrick O’Shaughnessy, we had to listen immediately. Here’s the link if you want the full 90 minutes: Ben Thompson on Big Tech, China, and the AI Boom Running Out of Money. But in the meantime, here’s what stuck with us.

The Takeaways

  • Risk doesn’t disappear, it just moves. One of the first topics is what it would actually mean for the U.S. to win the AI race, which inevitably brought the conversation to Taiwan Semiconductor Manufacturing Company (TSMC) and the concentration of advanced semiconductor manufacturing in Taiwan. O’Shaughnessy asked the following question: Haven’t we figured out how to build fabs in the U.S. and reduce our reliance on that single choke point? Thompson’s answer is that the dependence runs much deeper. Technically, many supply chains could be moved away from China and Asia. Economically, it is much harder. If your competitor continues sourcing cheaply from China while you move to higher-cost U.S. production, you immediately put yourself at a disadvantage. Everyone may recognize the strategic risk, but no individual company wants to bear the cost of eliminating it.

That leads to the broader point. TSMC spent years being conservative on capacity, protecting itself from the risk of overbuilding fabs but leaving hyperscalers exposed to scarcity and foregone revenue. Nvidia is now moving some risk in the opposite direction by helping finance neoclouds and other AI infrastructure customers so they can access cheaper capital and buy more GPUs. Thompson argues that this effectively acts like a price concession for Nvidia, even if it never appears as a lower GPU price or weaker gross margin. The bottleneck changes, the accounting changes, but the risk remains.

TLDR: Someone always has to bear the risk. The question is who.

  • Capital, not compute, might be the real constraint. O’Shaughnessy asks what AI can learn from the last infrastructure buildout of comparable scale: the railroads. We often talk about the value of “owning the rails,” owning the infrastructure everything else depends on rather than simply owning what travels across it. The idea has repeated itself from railroads and pipelines to telecom networks, cloud infrastructure and, potentially, AI compute. But Thompson points to a less obvious lesson from the railroad boom: even transformative infrastructure can run into trouble if the money runs out before the economics arrive.

    Railroads required enormous amounts of capital upfront while the payoff could take decades. AI may face a similar mismatch. Hyperscalers have already redirected huge amounts of free cash flow toward AI infrastructure, tapped debt markets and, in Google’s case, turned to equity. Thompson isn’t arguing that AI ultimately won’t generate a return. He’s asking whether there is enough capital to bridge the gap between today’s spending and tomorrow’s payoff: “Everyone talks about, are we going to have enough compute? Are we going to have enough electricity? Maybe the nearest term question is, are we going to have enough money? Which is kind of a bizarre thing to think about. That’s what happened in the 1870s. The world ran out of money.”

TLDR: You can be right about the destination and still run out of money getting there.

  • At a certain scale, absolute dollars matter more than margins. Thompson also draws an interesting parallel between Berkshire Hathaway’s ownership of See’s Candies and BNSF Railway, and what may now be happening at Google. You could look at See’s as almost the perfect business: high margins, little capital required paired with tremendous returns on invested capital. The problem? There is only so much candy you can sell (I know I personally disagree but we digress). BNSF is almost the opposite: a capital-intensive railroad with much lower margins, but operating at such enormous scale that a single year can generate more free cash flow than See’s produced over decades. At Berkshire’s size, earning an extraordinary return on a relatively small amount of capital becomes less useful than earning a decent return on an enormous amount of capital.

    Google may now be entering a similar phase. Search has historically been an extraordinary high-margin, low-capital business. AI is anything but. Google has poured free cash flow into infrastructure, tapped debt markets and even issued equity to help fund the buildout. On traditional metrics, that sounds worse: more capital, potentially lower margins and shareholder dilution. But Thompson’s point is that it can still create enormous value if AI dramatically expands the size of the opportunity. The question isn’t whether AI can replicate Search’s economics. It’s whether deploying more capital at lower returns can ultimately produce more absolute dollars of profit.

TLDR: Owning 90% of a gigantic pie can be worth a lot more than owning 100% of a small one.

  • Could Big Tech be creating its own commodity cycle? It was inevitable that the conversation would get to everyone’s favourite topic: AI capex. O’Shaughnessy points to estimates of roughly $800 billion of spending this year, potentially rising to $1.3 trillion next year, while virtually every unit of compute coming online today is consumed immediately. That makes the economics look extraordinary and reinforces the argument that there simply isn’t enough compute. But Thompson introduces an important wrinkle: we are measuring today’s returns in a period of scarcity, while the capacity being funded today won’t arrive for years. Fabs and data centres have long lead times, meaning much of today’s investment may not manifest as compute until 2028 or 2029.

    That creates a classic commodity-market problem, one I learned about All Too Well during my time in mining equity research. Scarcity creates high returns. High returns attract investment. But because new supply arrives with a lag, everyone can make perfectly rational investment decisions individually and collectively end up building more capacity than the market needs. In a commodity market, the marginal supplier ultimately sets the price. So the important question isn’t whether today’s AI infrastructure earns an attractive payback, because in a compute-constrained world, it probably does. The more important question is whether that same IRR continues when the enormous amount of capacity currently being financed actually comes online.

TLDR: Today’s AI returns are being measured in a world of scarce compute. The risk is assuming those returns survive tomorrow’s supply.

  • Commodity markets, Part 2: Commodities change the world. Of course, becoming a commodity isn’t necessarily a bad thing. We tend to associate differentiated products with great businesses (premium prices, high margins and customer loyalty) while commodities compete on price. Thompson flips that thinking around: “Commodities change the world.” The internet became transformative precisely because bandwidth and distribution became cheap and ubiquitous. His argument is that compute, and eventually intelligence itself, could follow the same path. A differentiated product like an iPhone can be a phenomenal business, but its price inherently limits who can access it. If intelligence becomes cheap and ubiquitous, the margins on providing it may fall while the size of the market and its impact explodes.

    That creates an interesting problem for a company like Nvidia. Nvidia is still selling a highly differentiated product at extraordinary margins, but some of its biggest long-term competitors (particularly Google and Amazon) are developing their own chips and increasingly looking beyond their own walls. They don’t necessarily need to build a better Nvidia; they can compete on scale and cost. Nvidia still has important advantages, including the fungibility and efficiency of its GPUs, but the longer power and compute remain available, the more time competitors have to improve their alternatives. Thompson’s point is not that commoditization makes AI less important. It may be precisely what makes AI transformative.

TLDR: AI becoming a commodity could be great for the world, and much less great for the companies earning scarcity-level margins from it.

Worth the full listen if any of that resonates.

See you on Friday

Pender Events + Publications

  • Pender Market Insights – link - Greg Taylor discusses how At various points during July, it started to feel like markets were finally going to break. After months of defying negative headlines and ominous signals, this seemed to be the window for the correction many had been waiting for. He highlights that it never really played out that way.

  • New Webinar - Trade tensions, geopolitical risk and shifting economic expectations have reshaped the investment landscape. But for credit investors, disruption can also create opportunity. Join Geoff Castle, Lead Portfolio Manager, Fixed Income, and Sara Embury, CIM for a webinar exploring how the Pender Corporate Bond Fund is navigating today’s evolving market environment and where we’re uncovering opportunities across the credit landscape This webinar will cover: Opportunities in energy and commodity-related credits. The implications of managed trade. International credit opportunities. Areas of opportunity across software and AI-adjacent businesses. Tuesday, September 8th, 2026. 10am PST | 11am MST | 12pm CST | 1pm EST. Save your spot: https://bit.ly/4xDiU35. For Financial Professionals and Accredited Investors Only.

  • In a new in The Globe & Mail article, Pender Equity’s Laura Baker argues that investors often anchor to familiar narratives long after the facts have changed leading to investing missteps. Current case in point, while mega-cap technology companies continue to dominate headlines, earnings growth and valuations may be telling a more nuanced story. It’s a look at the gap between perception and fundamentals, and why paying attention to both matters and may be rewarding. Read more (this article is featured behind the subscription wall): https://lnkd.in/eMZf72nT

  • Check out the Pender Summer Hot List 2026 - Over the past few weeks we’ve shared recommendations from across our team, spanning the psychology of money, Canadian business stories, sweeping works of history, and career advice. https://bit.ly/4oVrw1z

  • New Podcast - What does it take to build not one, but two successful public technology companies? In the latest episode of the Pender Ventures podcast, Hamed Shahbazi, Founder and CEO of WELL Health Technologies Corp. (TSX: WELL), sits down with Maria Pacella, Pender Ventures Managing Partner and reflects on his entrepreneurial journey. From building TIO Networks and its eventual acquisition by PayPal to creating one of Canada’s leading digital healthcare companies. The conversation explores the challenges of scaling in regulated industries, the role of acquisitions in accelerating growth, and why healthcare became the next chapter in his career. Hamed also shares lessons on leadership, adaptability, and the importance of articulating a vision that attracts both talent and capital. Listen to the full episode here: https://bit.ly/4zaLR7Y

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • New Podcast - Pender’s CIO Greg Taylor sits down with Laura Baker to break down why traditional diversification has lost some of its potential, and what investors could consider instead. Greg walks through: Why S&P 500 concentration is back at dot-com era levels. How Pender’s Liquid Alternative Multi-Strategy Funds are built to smooth volatility. Why real assets are increasingly on the team’s radar and small caps remain a focus Full episode: https://bit.ly/4x4ZmoR

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • The bull market may be here to stay. Economist and independent strategist Edward Yardeni, who correctly called market bottoms in 2009 and 2020 and predicted the tech-driven bull market of the 2020s, now says there’s an 80 per cent chance the good times will roll into the early 2030s, The New York Times reports. He expects the S&P 500 to hit 10,000 by the end of the decade, which would amount to a 209.5 per cent gain over the 2020s. Corporate earnings are mainly driving the current rally, he says, with AI “as a source of rising productivity and extraordinary profits.”

  • New York-based Marquee Brands will acquire Roots. The company oversees a portfolio of (now) 20 brands including Martha Stewart, Stance, and Anti Social Social Club, and will focus on expanding the brand globally, while bringing on Joseph Mimran, co-founder of Club Monaco and Joe Fresh and his business partner, Tilley chairman Frank Rocchetti, to run the business from Toronto.

  • The country’s largest banks beat estimates across the board as trading and deals fueled a 35% gain from a year earlier in their capital-markets earnings, provisions for credit losses remained contained and the lenders’ domestic-banking units delivered solid results. Royal Bank, which has the largest capital-markets business, saw earnings in the unit reach C$1.54 billion ($1.11 billion) in the three months through July.

  • The global bond rout accelerated on Tuesday, with Japanese yields scaling key levels not breached for over 30 years, as investors bet that policymakers around the world will have to raise interest rates to counter sticky inflation and lax fiscal policy

Macro Morning

  • Canada’s economy is doing better than expected. GDP grew at an annualized rate of 3.3 per cent in the second quarter, the fastest quarterly growth since 2023. Revised data also show Canada was not in a technical recession earlier this year.

  • If Canada ever allows prediction trading on sports and entertainment, the country’s securities regulators said they will not oversee it, adding to the debate around whether these bets should fall under financial or gambling regulators.

  • Kevin Warsh gave his speech on Friday, saying all the things that imply a 25bps rate hike, but the market doesn’t fully believe him. 25bps hike odds are only at 48% per Polymarket.

  • Sixty-four global scholars were awarded C$504 million in funding to relocate their work to Canadian universities and advance projects in areas such as health and artificial intelligence. Forty-eight of the researchers were poached from the US, including from elite institutions such as Harvard University and the Massachusetts Institute of Technology.

  • Top economists told the country’s finance minister that the damage from the spiraling trade war with the US should be manageable, potentially bolstering Carney’s case for walking away from the talks. François-Philippe Champagne called a private meeting with economists from the biggest banks and others in Toronto to discuss the outlook after trade talks collapsed with the US.

  • U.S. Treasury Secretary says Canada isn’t capable of a tit-for-tat trade war. Scott Bessent dismissed the idea of a trade war between the two countries (while making an oddly specific West Edmonton Mall reference), saying that you can’t “be in a tit-for-tat with someone that’s 13 times larger than you are.” He added that Prime Minister Mark Carney turned down “the best trade deal of any country on the globe” for political reasons. (CBC News)

Technology Today

  • Tim Cook says goodbye as Apple CEO LINK Tim Cook worked his final day as Apple’s CEO on Monday, with longtime hardware chief John Ternus stepping into the top job Tuesday. In an emotional memo to staff, Cook said he takes “enormous comfort” in handing over to Ternus, praising his understanding of what it takes to build products that “change the world.” Cook made clear he isn’t leaving Apple entirely, telling employees he’ll continue in a new role at Apple Park, even as he steps back from a job he says he “loved deeply.”

  • NASA launched a new US$4.3 billion telescope into space yesterday that can see 200 times more of the sky than its current Hubble telescope, offering the potential to discover tens of thousands of new distant planets.

  • Meta tests robots for data center jobs LINK Meta is trying out robots to help run the data centers behind its AI, with machines that can swap networking cables, reboot servers, move racks, and check equipment, according to a WIRED report. One worker estimated a working cable-swapping robot could take over up to 80% of some jobs, though that was the employee’s guess, not a Meta forecast, and the robots remain slower than humans.

  • Chinese automakers are following Tesla’s bet that robots are the next big profit machine LINK

  • Dyson toothbrush films inside your mouth LINK Dyson has begun selling the CameraJet, a $499 toothbrush with a 100,000-pixel camera in the brush head, using the images to aim a jet that sprays mouthrinse between the teeth. The camera takes 28 pictures a second and finds gaps between teeth within 100 milliseconds, a system Dyson calls Gap Optical Targeting that runs on 16 million lines of code trained on 470,000 dental images.

AI of the Tiger

  • OpenAI’s ChatGPT ads hit $1B run rate LINK - OpenAI’s advertising business inside ChatGPT has reached a $1 billion annual run rate just under 200 days after launch, a figure based on multiplying its current monthly ad revenue by twelve.

  • Music labels sue Anthropic over piracy LINK Sony Music and Warner Music have sued Anthropic in California federal court, accusing the AI company of pirating copyrighted songs on a huge scale to build and profit from its Claude models. The 48-page complaint names CEO Dario Amodei and co-founder Benjamin Mann, claiming they torrented, scraped, and downloaded thousands of musical works, and it seeks hundreds of thousands of dollars in damages for each infringed song.

  • EU classifies ChatGPT as a search engine LINK - The European Commission has classified ChatGPT as a Very Large Online Search Engine under the Digital Services Act, deciding that a chatbot pulling live web results counts as a search engine rather than just a platform. OpenAI said ChatGPT’s search function averaged about 159 million monthly users in the EU for the six months ending March 2026, far above the 45 million threshold that triggers the bloc’s strictest oversight rules. ChatGPT now has until the end of November to meet obligations like annual risk assessments, independent audits, and data sharing, with breaches risking fines of up to 6% of global yearly revenue.

  • AI-generated videos are already displacing actors and livestreamers across China’s entertainment industry LINK

  • The AI boom has bolstered an unexpected industry: trucking.

  • Apple accuses OpenAI of destroying evidence LINK - Apple has filed new court documents in its lawsuit against OpenAI, saying a forensic look at a laptop used by former engineer Chang Liu turned up “shocking evidence” of stolen trade secrets

Crypto Corner

  • Investors $4.7B underwater across Trump crypto ventures (TB)

  • Charles Schwab expands crypto trading (DC)

  • Bitcoin wallets untouched for 10 years move $40M (CD)

  • Dunamu and Visa partner on stablecoin business (TB)

  • California passes bill to ban memecoin issuance (CT)

Energy Transition Today

  • Next-generation geothermal company Fervo Energy signs a deal with Google, which will purchase nearly 400 MW of power from its Cape Station project in Utah. (Wall Street Journal)

  • The U.S. built a record 20.2 GWh of battery storage in the second quarter of 2026, with most of that capacity coming from utility-scale installations. (SEIA)

  • Holtec announces its Michigan nuclear plant has begun loading fuel as the company plans to restart a shuttered nuclear facility for the first time in U.S. history. (news release)

  • Solar officially passed coal as China’s top source of power capacity as of the end of July, with solar now responsible for 31.5% of the country’s total installed generation. (Bloomberg)

The Dig

  • Dominic Barton, the Rio Tinto chairman and former Canadian ambassador to China, has been named the new chair of Invest in Canada — the arm’s-length government agency in charge of attracting foreign investment to the country.

  • Boliden AB‘s proposed acquisition of a controlling stake in Nexa Resources SA emerged as the highest-valued M&A transaction in the metals and mining sector for the week ended Aug. 28

  • An updated feasibility study for Northcliff Resources Ltd.‘s tungsten-molybdenum project in New Brunswick, Canada, outlined a posttax net present value of C$6.92 billion, discounted at 8%, with an internal rate of return of 49.8% and a 1.6-year payback period.

The Picks List

  • $100 chicken nuggets: how the US Open became obscenely expensive - link - Over the past decade the Open has transformed itself into something closer to a three-week New York cultural festival, a late-summer collision of sport, fashion, celebrity and conspicuous consumption. The $23 Honey Deuce is no longer merely a cocktail but a souvenir, status marker and social media prop. Celebrities fill the suites, influencers populate sponsor boxes and Arthur Ashe Stadium can feel less like the main show court than an aperitif to fashion week. The Open surpassed one million visitors for the first time in 2024 and shows little sign of slipping back below that mark. Everybody wants in because everybody else wants in.

  • Divorces can get messy. But divorces featuring billionaire hedge fund titans fighting tooth and nail can get very entertaining.

  • What a run it was - Novak Djokovic will fall out of the top 10 when the next ATP rankings are released on Sept. 14. That will mark the first time since Oct. 7, 2002,* that neither Djokovic nor Roger Federer nor Rafael Nadal will be in the top 10 — a 1,249-week stretch of uninterrupted Big Three presence.

The Breakroom

  • A man sued his wife for having an affair, using footage recorded with his robot vacuum as evidence. Then his spouse countersued for invasion of privacy—and now he faces prison time.

  • The world’s oldest person, as acknowledged by Guinness World Records, turned 117 last Friday. Ethel Caterham shared that her secret to longevity is her “nonconfrontational” attitude towards life: never arguing while rarely compromising.

  • Toronto menswear store King & Bay is offering suits made out of extremely rare and expensive fabric made from the wool of vicuñas — an alpaca-like animal that lives in the Andes. A full suit will cost upwards of $80,000, but just the jacket is a much more reasonable $35,000.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Active is Dead, Long Live Active Management]]>https://thependerpulse.substack.com/p/active-is-dead-long-live-active-managementhttps://thependerpulse.substack.com/p/active-is-dead-long-live-active-managementFri, 28 Aug 2026 22:47:02 GMTIt’s a strange thing, spending a career in an industry you’re constantly told is dying. In my time in institutional equity sales, I heard it from my first day of undergrad to my last day on the desk, and, well, the desk is still there. Turns out I have a habit of choosing things people love to pronounce dead. At least with AI now coming for everyone, I’m in good company.

But I digress… as a result of the consequences of my own actions I have become predisposed to be suspicious of “the debate is settled” which is probably why a talk I went to this month has been rattling around in my head ever since.

I attended an event where Aaron Brown was discussing his new book, Wrong Number: How to Extract Truth From a Blizzard of Quantitative Disinformation. The premise: models, data and incentives drift from decision-making tools into sources of hidden risk, and the fix is learning to interrogate what a number is actually measuring … not just whether it’s accurate.

Wrong Number: How to Extract Truth From a Blizzard of Quantitative Disinformation: Brown, Aaron: 9781394379781: Books - Amazon.ca
Wiley

I left with a book for the “To Be Read” pile and a question that had nothing to do with the book’s actual examples: what if we’ve made the same mistake with active management … declared the numbers a verdict when they might just be measuring the wrong thing?

Brown’s argument, as I understood it, wasn’t that active managers have secretly been good all along. The conventional numbers are … challenging: a lot of active managers have underperformed, assets have migrated to passive, case closed. Except his point was that we might be reading those numbers correctly while interpreting them wrong, that active has been caught in a structural headwind created by the migration to passive, one that makes stock-picking ability look worse than it actually is.

This isn’t a case of “is the data wrong?” but rather “what exactly is the data measuring?”

Because remember, numbers don’t lie... Or do they.

Let’s get into it

The NeverEnding Story

You know the argument. Most active managers don’t beat the index. They charge more. The costs compound. Why own a fund when you can own the market cheaply instead.

Now this story has worked. We’ve found ourselves in an unprecedented bull market where 87% of U.S. equity funds lagged their index after fees over 10 years. The last year in which a majority of active funds beat the S&P 500 was 2009.

Ooof

That’s the kind of statistic you file under Things Not to Think About When Someone Asks What Keeps You Up at Night.

But passive didn’t attract trillions because investors were irrational, it solved a real problem. Lower costs. Instant diversification. And it made the hardest question in investing disappear: which stocks should I actually own?

Because, as it turns out, most of them aren’t very good.

However, circling back to the questions I had after listening to Aaron Brown, what does this data actually prove? That most active fund investors would’ve been better off in the benchmark, sure. Does it prove markets became so efficient that stock selection stopped working? Or that managers suddenly lost the ability to identify good businesses? That’s a bigger leap. Which left we wonder if something else may have changed at the same time.

Buy the Haystack

One of the most exciting parts about investing is uncovering undervalued, undiscovered or underappreciated companies trading below intrinsic value. That’s what drives us self-proclaimed “stock junkies”… the thrill of the hunt.

Unfortunately, Hendrik Bessembinder has some nightmare material for us. In 2017, the Arizona State University professor published a paper with a seemingly ridiculous title: Do Stocks Outperform Treasury Bills? Surely the answer was yes. Everyone knows stocks outperform Treasury bills. But applying a little of Aaron Brown’s data-hunting mentality, perhaps the more interesting question is: what exactly do we mean by “stocks”?

The stock market has dramatically outperformed T-bills. The typical individual stock has not. That distinction turns out to matter enormously.

Because what Bessembinder found.

“Most common stocks do not outperform Treasury bills.”

The number wasn’t wrong. Our interpretation of the number was incomplete.

Earlier this year, Bessembinder extended the research to a full century: 1926–2025, roughly 30,000 U.S. stocks (One Hundred Years in the U.S. Stock Markets). Fewer than half generated positive lifetime returns. Just 41.17% beat T-bills. And just 46 stocks accounted for half of the roughly $91 trillion in net wealth the entire U.S. stock market has ever created.

Forty-six. Out of thirty thousand.

This just goes to prove something that many of us have grown to understand – either euphorically… or sometimes traumatically. Equity returns aren’t normally distributed. They’re absurdly skewed. The market has been a phenomenal investment. The typical stock has not, and that may be the best argument for passive investing yet. If you can’t identify which 46 companies become the great compounders, what do you do?

Jack Bogle had an answer: “Don’t look for the needle in the haystack. Just buy the haystack.”

Except there’s another way to read the same data. If a handful of stocks create most of the wealth, finding even a few of them early is enormously valuable. And if most individual stocks are mediocre-to-bad long-term holdings, avoiding the persistent losers is valuable too. Same evidence, two different conclusions:

  • Passive: I don’t know which 46 will matter, so I’ll own everything and guarantee I capture them.

  • Active: If most stocks aren’t worth owning, why would I want to own all of them?

Diversification versus selection. Same problem, opposite tools.

Who Picks the Winners?

If neither camp knows which 46 stocks will matter, the natural follow-up is whether anyone ever does. Ben Carlson looked at the ten largest companies in the S&P 500 at five-year intervals going back decades (link). The names turn over constantly (IBM, Exxon, GE, Microsoft, Apple, Nvidia). Of 100 available top-ten slots across his sample, 42 different companies occupied one. Roughly four new entrants every five years.

That should make the passive case airtight, nobody knows who’s next, so why bother guessing? But here’s the catch: the index doesn’t pick winners either. It didn’t identify Nvidia’s competitive advantage or forecast AI demand. It simply owned progressively more Nvidia as Nvidia became more valuable. That’s the elegance of cap-weighting, your exposure migrates toward winners automatically.

But an index takes prices as given. So: if more and more capital is a price-taker, who’s left doing the work of making prices right?

Passive Flows, Active Woes

This is where Brown himself picked up the thread. He recently wrote a Bloomberg Opinion piece “We Now Know Who Really Benefited from Indexing” walking through a paper actually titled “Passive Flows, Active Woes,” by Hannah Unterberg at UC Irvine.

The active-fund shortfall numbers are exactly what I described earlier, but Unterberg’s paper is where they get interesting. From 1984 to 2009, the average active equity fund lagged its risk-adjusted benchmark by 0.72% a year, basically its fee, which is what you’d expect from an efficient market working as intended. After 2010, that gap widened to 1.82%, even as fees fell. And Active Share (the degree to which a portfolio deviates from its benchmark) used to predict outperformance: pre-2010, the funds that deviated most beat the closet indexers by 0.85% a year before fees. Since 2010, they’ve trailed by 1.11%.

That’s not a fading edge. That’s a sign flip. If markets had simply gotten more efficient, the premium for being different should shrink toward zero, not reverse.

Unterberg’s explanation is flows. When money leaves an active fund, the manager has to sell what they own, their best ideas, their overweights. When that money lands in an index fund, it buys benchmark weights instead, regardless of price. Repeat that with trillions of dollars over fifteen years, and you get sustained selling pressure on exactly the stocks active managers favour, and buying pressure on whatever already dominates the index. She estimates each percentage point of flow-driven demand moves fund returns by two to three points, and that pressure doesn’t wash out quickly. Roughly half of it is still showing up in prices three years later.

She also heads off the obvious objection, that this is just the mega-cap decade catching stock-pickers underweight the giants, by pointing out the same underperformance shows up in active small-cap funds, where mega-cap exposure isn’t even a factor.

Unterberg’s own framing, as Brown relays it, is almost gentler than what we said above: manager skill hasn’t gone anywhere. Their investors just can’t capture it under the current flow dynamics. Which is a very different conclusion than “active management stopped working.”

None of this proves passive caused active’s struggles outright, two things moving together isn’t proof one drove the other. But it’s hard to look at trillions of dollars mechanically reallocating into cap-weighted baskets, and roughly $50 billion a year in gross alpha going somewhere, and conclude that shift explained nothing.

When the Winners Become the Index

Which brings us back to Carlson’s top-ten list, because turnover is only half the story. Concentration at the top isn’t new, but how much of the index those recognized winners now occupy is. The top ten S&P 500 names are roughly 40% of the index today, up from about 18% in 1995, 25% in 2020, and 35% in 2025.

And it’s not just weight … it’s returns. The Magnificent Seven generated close to 42% of the S&P 500’s total return in 2025 alone.

As we have said before, there’s a good reason these are enormous companies. They’re excellent businesses, Mag 7 EPS grew roughly 33% in 2024 versus about 5% for the other 493 names, and consensus still expects faster earnings growth from them in 2026. Passive flows may have influenced relative prices. They didn’t create the Mag7’s fundamentals.

So the active case isn’t “these are bad companies.” But rather the question that active mangers are trying to answer is - what return are you being offered from here? A great company and a great investment aren’t automatically the same thing, and cap-weighting doesn’t ask whether the next dollar into the largest company beats the next dollar into company #200. It doesn’t need to. An active manager does.

So... Now What?

Passive flows haven’t reversed, actively managed U.S. retail equity funds were still seeing outflows as recently as July. I’m not telling you investors have suddenly rediscovered active management. Nor am I saying active needs passive to fail. It just needs the environment that made differentiation so punishing to ease off a little. A few signs suggest it might be starting to:

  • Concentration is extreme. The payoff from broader market leadership is larger than it’s been in a long time.

  • Valuation dispersion is wide. Small caps are trading in roughly their cheapest quintile versus large caps since 1990.

  • Leadership is beginning to broaden. The equal-weight S&P 500 has outperformed the cap-weighted index year-to-date in 2026, and the Mag 7 were roughly flat in the first half of the year while the broader index advanced. Dispersion is a key ingredient in successful stock-picking; if everything moves together, selection has nothing to work with.

  • And there are fewer eyes further down the market. The average S&P 500 company has about 21 sell-side analysts covering it. That drops to roughly 12 for the S&P MidCap 400, and about 7 for the S&P SmallCap 600. Today’s small caps contain some of tomorrow’s 46. An index will own them once they’re obvious. An active investor has the chance to own them before that.

Active Is Dead. Long Live Active.

I went to hear Aaron Brown talk about numbers and left thinking about active management.

The numbers we see in doomsday headlines aren’t wrong. Active managers have underperformed. Passive has done better than anyone could have anticipated. The largest companies delivered extraordinary fundamentals. None of that’s in dispute. What’s in dispute is the story we built on top of those numbers, the leap from “active underperformed” to “active doesn’t work,” when a much bigger, much quieter number was moving underneath it the entire time.

For fifteen years, active managers have swum against a structural tide that rewarded benchmark-hugging and rising concentration. None of that has to disappear for the trade to change. Passive doesn’t have to lose. Mega caps don’t have to collapse. The rest of the market just has to start mattering again, and the signs above suggest that shift may already be underway.

Price matters a little more. Fundamentals matter a little more. Stock selection matters a little more.

Not a reversal. A tailwind … one we’re excited to take advantage of.

Pender Events + Publications

  • Pender Market Insights – link - Greg Taylor discusses how At various points during July, it started to feel like markets were finally going to break. After months of defying negative headlines and ominous signals, this seemed to be the window for the correction many had been waiting for. He highlights that it never really played out that way.

  • New Webinar - Trade tensions, geopolitical risk and shifting economic expectations have reshaped the investment landscape. But for credit investors, disruption can also create opportunity. Join Geoff Castle, Lead Portfolio Manager, Fixed Income, and Sara Embury, CIM for a webinar exploring how the Pender Corporate Bond Fund is navigating today’s evolving market environment and where we’re uncovering opportunities across the credit landscape This webinar will cover: Opportunities in energy and commodity-related credits. The implications of managed trade. International credit opportunities. Areas of opportunity across software and AI-adjacent businesses. Tuesday, September 8th, 2026. 10am PST | 11am MST | 12pm CST | 1pm EST. Save your spot: https://bit.ly/4xDiU35. For Financial Professionals and Accredited Investors Only.

  • In a new in The Globe & Mail article, Pender Equity’s Laura Baker argues that investors often anchor to familiar narratives long after the facts have changed leading to investing missteps. Current case in point, while mega-cap technology companies continue to dominate headlines, earnings growth and valuations may be telling a more nuanced story. It’s a look at the gap between perception and fundamentals, and why paying attention to both matters and may be rewarding. Read more (this article is featured behind the subscription wall): https://lnkd.in/eMZf72nT

  • Check out the Pender Summer Hot List 2026 - Over the past few weeks we’ve shared recommendations from across our team, spanning the psychology of money, Canadian business stories, sweeping works of history, and career advice. https://bit.ly/4oVrw1z

  • New Podcast - What does it take to build not one, but two successful public technology companies? In the latest episode of the Pender Ventures podcast, Hamed Shahbazi, Founder and CEO of WELL Health Technologies Corp. (TSX: WELL), sits down with Maria Pacella, Pender Ventures Managing Partner and reflects on his entrepreneurial journey. From building TIO Networks and its eventual acquisition by PayPal to creating one of Canada’s leading digital healthcare companies. The conversation explores the challenges of scaling in regulated industries, the role of acquisitions in accelerating growth, and why healthcare became the next chapter in his career. Hamed also shares lessons on leadership, adaptability, and the importance of articulating a vision that attracts both talent and capital. Listen to the full episode here: https://bit.ly/4zaLR7Y

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • New Podcast - Pender’s CIO Greg Taylor sits down with Laura Baker to break down why traditional diversification has lost some of its potential, and what investors could consider instead. Greg walks through: Why S&P 500 concentration is back at dot-com era levels. How Pender’s Liquid Alternative Multi-Strategy Funds are built to smooth volatility. Why real assets are increasingly on the team’s radar and small caps remain a focus Full episode: https://bit.ly/4x4ZmoR

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Abercrombie shares surged 35.67% after the retailer blew past quarterly expectations and raised its full-year guidance: Increased momentum in the Americas, along with improving trends across Europe, the Middle East, and Africa, helped both Abercrombie and Hollister post record sales. Same-store sales at the Abercrombie brand rose 4%, though Hollister comps fell 3%. The rally comes just one day after fellow retailer Dick’s Sporting Goods went in the opposite direction. Shares plunged 31% for its worst day on record after missing earnings expectations and slashing its full-year outlook. Most of the weakness came from Foot Locker, which Dick’s acquired last year for $2.4 billion: Dick’s core comparable sales rose 4.9%, while Foot Locker comps fell 3.6%.

  • Loblaw is bringing back signs and labels that shoppers used last year to avoid US products as they protested tariffs and threats from Trump. Canada’s largest grocery chain, which had about C$64 billion in sales in its most recent fiscal year, will restore its previous practice of labeling the country of origin on signs in its fresh produce section, a spokesperson said. It’s also using the maple leaf symbol in stores to help customers identify Canadian products.

Macro Morning

  • The Trump administration is discussing additional trade penalties against Canada after Carney unveiled dollar-for-dollar retaliation to new tariffs imposed by the US. Additional US escalation against its northern neighbor could include higher tariffs and other trade actions, according to a White House official. The threat underscores the prospect of a spiraling trade war.

  • Canada’s former chief trade negotiator said the country’s relationship with the US will likely get even more precarious before it gets better. Steve Verheul said the two sides appeared on track for a deal last week, but the US tried to impose unworkable terms — including a demand for Canada to add tariffs on steel and aluminum coming from other countries, which would have meant breaching trade agreements. The US was also “not prepared to accept any constraints on their ability to add further tariffs going forward,” he added.

  • Data center backlash reshapes the midterms LINK Growing anger over data centers across the U.S. has upended the 2026 midterm elections, forcing politicians from both parties to distance themselves from projects while President Trump defends an industry expected to draw over $700 billion this year.

Technology Today

  • SpaceX to build $100B Louisiana spaceport LINK SpaceX plans to build Starbase Louisiana, a $100 billion spaceport spread across 125,000 acres on the Gulf Coast, becoming its fourth and largest launch site with room to support thousands of missions each year. The self-sustaining facility will hold five launch complexes, each with two pads and a propellant farm, plus power generation, deep-water shipping, and an airport, with construction starting in 2027 and the first launch targeted for 2029.

AI of the Tiger

  • Bill Gates had some stark warnings about how AI could widen inequality and disrupt the economy.

  • Zuckerberg’s plan to replace thousands of Meta workers with AI fell apart LINK - Mark Zuckerberg’s plan to swap thousands of Meta employees for AI, known as Project OT, collapsed after the CEO scrapped a second round of layoffs planned for November, according to documents seen by Reuters. The plans aimed to shrink teams by up to 60%, running two waves of cuts in May and November, with small human “talent-dense” groups overseeing virtual AI workers and new “AI systems” helping decide promotions.

Crypto Corner

  • Wall Street banks are looking to roll out stablecoins…with their tails between their legs

  • Bitcoin’s uninspiring run this year is making a turn for the better. It needed a catalyst and Wednesday’s announcement from the Treasury Department that it will double the size of buybacks for longer-dated securities jolted the debasement trade — a bet against fiat currencies like the dollar – back into life. The cryptocurrency surged as much as 23% in the days following Secretary Scott Bessent’s decision

Energy Transition Today

  • Amazon will build 1.2 GW of solar and another 1.2 GW of storage in eastern Oregon, where it already has 40 data centers, as observers say state climate policies are keeping it from building gas generation to power the facilities. (Cleanview)

  • New EPA guidance for power plants built to serve one facility, like a data center, reveals that there are few regulations in place to mitigate the environmental and climate impacts of these generators. (Grist)

  • The U.S. Army plans to award up to $2.2 billion to five companies to build small nuclear reactors at military bases around the country, with Antares Nuclear, General Atomics, and Westinghouse among the awardees. (New York Times, Axios)

The Dig

  • Copper fell for the first time this week, retreating from a record high closing price as the US dollar strengthened and a severe market squeeze in the metal eased.

  • Chile and Argentina are reviving a cross-border mining framework that could unlock more than US$20.7 billion in investment across the Andes, with officials from both countries approving additional protocols

  • The Democratic Republic of Congo and Angola signed a railway agreement that aims to improve access to major economic centers, ease the transport of minerals, and strengthen the DRC’s access to the Atlantic Ocean through Angola’s Lobito port.

The Picks List

  • Scientists made a cookie out of plastic (it’s allegedly edible). The cookie was originally made as part of NASA’s Deep Space Food Challenge (designed to create food systems to sustain long space missions). It’s created by blending PET (the clear polyester plastic bottles are made of) with biomass like corn stalks and leaves. Hot, pressurized water and oxygen break the mixture into microbe-sized bites, and engineered yeasts turn the plastic into proteins, vitamins, and flavorings. Then some baking ingredients and a 3D printer turn all that into a cookie.

  • The PGA Tour has announced plans for a radical reinvention of its playoff system: match play is coming back. Starting in 2028 the PGA Tour will replace the current three-round stroke-play playoffs with two weeks of match play to determine that year’s champion. This will mark the first time match play has taken place on the PGA Tour since 2023.

The Breakroom

  • A new pill promises to mimic the effects of exercise. It imitates a molecule the body releases during hard exercise—which turns down hunger signals in the brain—to curb appetite, according to its creator. Results from the drug’s first clinical trial, conducted on 88 healthy adults, showed that the pill worked without the drawbacks commonly experienced on GLP-1s like Ozempic (such as muscle loss and nausea). The company is also planning to test it against migraines and inflammatory bowel disease—other conditions exercise is known to help with

  • The “Hand of God” ball that Diego Maradona infamously netted during the 1986 World Cup quarterfinals has sold for $3.35 million at auction

  • A new study of NFL players who had played in at least one game and died between 2016-2021 showed at least 25% of them had chronic traumatic encephalopathy, the degenerative brain disease known as CTE. “We’ve known that this disease process can be caused by, in part, repeated traumatic brain injury. But we didn’t know how common it was,” said Dr. Daniel Daneshvar of Mass General Brigham, the lead author of the study.

  • Toronto Blue Jays pitcher Dylan Cease is making strides in his second career as a painter. The all-star partnered with the Art Gallery of Ontario to drop a retail collection inspired by his artwork, and even had one of his paintings on display at the gallery for a day. “Painting just makes me happy. It makes me feel good about my life,” Cease said at a press conference yesterday, “It helps me balance my life in a lot of ways.”

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[It’s All About The Climb]]>https://thependerpulse.substack.com/p/its-all-about-the-climbhttps://thependerpulse.substack.com/p/its-all-about-the-climbWed, 26 Aug 2026 16:47:47 GMTShort form of the Pulse today, we’re covering Joshua Kushner, who runs one of the most secretive shops in venture (Thrive Capital) and has spent fifteen years not writing investor letters… until now.

Some background: Thrive has backed Instagram, Spotify, Stripe, and OpenAI, among others, and has built a reputation for concentrating its bets, Bloomberg reported in February that several of its fully deployed funds had roughly 90% of capital sitting in just the top 15 positions.

You’ve also probably seen (this) Kushner in the news more recently for a different reason, he and former Disney CEO Bob Iger agreed to buy a majority stake in the Los Angeles Lakers for $12.5 billion which came with its own set of headlines…

Regardless, the firm behind him is the bigger story: Thrive now manages more than $60 billion, and per the letter, has compounded capital at a 41% gross IRR and 33% net IRR since inception, fifteen years of institutional fund management, with Thrive II through Thrive X all landing top-quartile on net TVPI, and about a third of those in the top 5%. Kushner attributes more than half of that AUM growth to investment gains rather than new capital raised. Current marquee names include OpenAI, Stripe, Databricks, Anduril, SpaceX, and Isomorphic Labs — a mix of early, growth, and increasingly public-market exposure.

There’s also two operating subsidiaries, Thrive Holdings (70+ acquired businesses, 35 engineers embedded across them, AI-built tax-prep agents running at 98% accuracy, IT ticket resolution times cut 60%) and Thrive Eternal (permanent capital aimed at identity, culture, and physical-experience assets, Kushner’s hedge against AI commoditization). It’s a deliberate blurring of the line between VC and operating company.

Kushner described the letter itself as a chance to share what Thrive is seeing right now, how that’s shaping strategy, and why the same principles that got the firm here are the ones carrying it forward. Worth noting: we can’t access the letter directly (it went out privately to LPs) but Bloomberg and TechCrunch both reviewed and reported on it in detail. What follows is our own read of that coverage, with the usual Pulse flair.

Let’s get into it!

Investing

“Thrive began with a simple but unconventional idea. We believed an investment firm could be opportunistic across stage, sector, and geography, while remaining deeply concentrated in a small number of people and ideas. We wanted to build a firm with the freedom to follow its curiosity wherever the best opportunities emerged, and the discipline to act only when that curiosity became conviction.”

Concentration, following curiosity, acting on conviction, a fund going after our own hearts. We’ve long believed these are the foundations of any great investment firm, and it’s always nice to see other explorers out there running the same playbook.

Another line worth reading: “Rather, the strategy has been, and always will be, to think from first principles about what founders need, where the best opportunities are emerging, and how we can build Thrive to concentrate our time, capital, and energy on the people and ideas we believe in most.”

In a world where passive is dominant (more on this in a later Pulse), it’s encouraging to see investors stick to their philosophies and concentrate capital into their best ideas, especially as that discipline becomes rarer with each passing year.

Next notable quote: “We have long believed that a small number of exceptional companies create a disproportionate amount of value and can compound their advantages for far longer than the market expects. We also believe that being a meaningful partner requires time, context, and trust. You cannot know a company deeply from a distance.”

This echoes several of the themes we’ve been circling lately, especially around the SaaSpocalypse. Sometimes the best investment ideas look unusual, far-out, even impossible, that’s often exactly where they’re born. It’s a matter of separating clarity from noise, and conviction from consensus.

“AUM will never be the product. We view it as a reflection of trust earned over a long period of time. The product of Thrive is the quality of our judgment, the depth of our partnership, the discipline of our process, and the culture of the team making decisions every day.”

AUM can look like the gold medal, the number that tells you whether you’re winning or not. I get why. It’s the one figure that shows up on every ranking, every pitch deck, every “who’s the biggest” list. But that’s the wrong way to keep score. AUM isn’t the scoreboard. It’s a byproduct.

That’s the same instinct we try to bring to our own process here: chase the quality of the decision, not the size of the number it produces. The number tends to follow anyway. A firm that starts managing toward AUM instead of toward good decisions has quietly swapped its actual job for a proxy of it, and proxies are exactly the kind of thing that stop working the moment everyone starts optimizing for them instead of the real thing underneath.

To be clear, this isn’t an argument that scale is bad, or that bigger firms can’t be good stewards of capital. Thrive itself now manages more than $60 billion, so this isn’t a small-shop-versus-big-shop thing. It’s a sequencing thing. Get the inputs right (judgment, process, culture, partnership) and the number takes care of itself. Chase the number directly, and you tend to get the inputs wrong first and the underperformance second.

Next quote: “It would also be a grave error in our minds to let excitement weaken our investment discipline. In moments of euphoria, investors tend to convince themselves that second- and third-tier assets are actually first-tier.”

As well as: “In difficult moments, independence can mean moving toward an exceptional company while others move away. In euphoric moments, it can mean remaining patient while activity around us accelerates.”

What’s the principal here? Kushner treats returns as outputs, not inputs. The inputs, people, culture, process, data, discipline, judgment, trust, are what he manages directly. Optimizing for the output (IRR) at the expense of the inputs is, in his view, how firms lose the very edge that generated the returns in the first place.

Moving on to …

Technology and innovation

“There are moments in technology when progress feels linear, and moments when it begins to compound in ways that are difficult to understand in real time. Today feels like one of those exponential moments.”

As we have discussed in pervious Pulse iterations, most people underestimate how disorienting that compounding actually feels from the inside. Linear progress is easy to track, you can chart it, model it, check it against last quarter. Exponential progress just feels like the ground moving. There are countless examples in history of this however according to Kushner: “Artificial intelligence is the most important technology paradigm of our lifetimes.”

The unavoidable subject, how could we get through a letter like this without it. “AI has the potential to democratize access to intelligence... Workflows will change. Products will change. Cost structures will change. Entire industries will be rebuilt.”

“For us, the conclusion is not simply that AI will create value. It is that we must be increasingly precise about where value will be captured, and where it will compound over time.”

That’s the key point. Everyone agrees AI creates value. Almost nobody agrees on who captures it. The letter goes on to say the following:

“One area we believe durable value will be created is in the infrastructure required for AI to scale: compute, power, networking, memory, advanced manufacturing, and the supply chains that enable models to be deployed at scale.”

Consider that a little foreshadowing, infrastructure is a theme we’re spending real time on for a Pender thematics piece coming this fall. Keep an eye out.

Life

The next theme of the letter is generally about culture, but it reads just as well as a note on life generally (work or otherwise).

“We try to listen more than we talk. We try to say ‘I don’t know’ when we do not know... Gratitude without ambition can become nostalgia. Ambition without gratitude can become entitlement. We need both... We understand that we will never be a finished product, either as a firm or as individuals. Excellence is not something we arrive at. It is the work itself.”

Never being a finished product is the important part. Constantly learning and growing is a core value of ours too. Striving for excellence is one thing, “arriving” at it is something else entirely, and I’m honestly not sure it’s possible, or that we’d want it to be. It’s a good reminder that the process is the work.

Or to quote Miley Cyrus: ““There’s always gonna be another mountain/I’m always gonna wanna make it move/Always gonna be an uphill battle/Sometimes I’m gonna have to lose/Ain’t about how fast I get there/Ain’t about what’s waiting on the other side/It’s the climb.”

Alternatively Thrive’s has its own version of that line: “We never confuse progress with arrival; as soon as we summit a mountain, we immediately look for the next climb.”

The takeaway

Strip away the headline numbers and the Lakers noise what’s actually notable about this letter isn’t the returns, it’s that a firm this guarded chose now to explain its philosophy.

Kushner didn’t write to LPs to boast about IRR. He wrote to make the case that the outputs only exist because of a specific, deliberately narrow set of inputs, and that the moment you start managing for the number instead of the process, you lose the thing that made the number possible in the first place.

It’s a good letter and so is the lesson underneath it: concentration without discipline is just risk wearing a wig and discipline without conviction is just passive investing pretending it isn’t.

Pender Events + Publications

  • Pender Market Insights – link - Greg Taylor discusses how At various points during July, it started to feel like markets were finally going to break. After months of defying negative headlines and ominous signals, this seemed to be the window for the correction many had been waiting for. He highlights that it never really played out that way.

  • New Webinar - Trade tensions, geopolitical risk and shifting economic expectations have reshaped the investment landscape. But for credit investors, disruption can also create opportunity. Join Geoff Castle, Lead Portfolio Manager, Fixed Income, and Sara Embury, CIM for a webinar exploring how the Pender Corporate Bond Fund is navigating today’s evolving market environment and where we’re uncovering opportunities across the credit landscape This webinar will cover: Opportunities in energy and commodity-related credits. The implications of managed trade. International credit opportunities. Areas of opportunity across software and AI-adjacent businesses. Tuesday, September 8th, 2026. 10am PST | 11am MST | 12pm CST | 1pm EST. Save your spot: https://bit.ly/4xDiU35. For Financial Professionals and Accredited Investors Only.

  • In a new in The Globe & Mail article, Pender Equity’s Laura Baker argues that investors often anchor to familiar narratives long after the facts have changed leading to investing missteps. Current case in point, while mega-cap technology companies continue to dominate headlines, earnings growth and valuations may be telling a more nuanced story. It’s a look at the gap between perception and fundamentals, and why paying attention to both matters and may be rewarding. Read more (this article is featured behind the subscription wall): https://lnkd.in/eMZf72nT

  • Check out the Pender Summer Hot List 2026 - Over the past few weeks we’ve shared recommendations from across our team, spanning the psychology of money, Canadian business stories, sweeping works of history, and career advice. https://bit.ly/4oVrw1z

  • New Podcast - What does it take to build not one, but two successful public technology companies? In the latest episode of the Pender Ventures podcast, Hamed Shahbazi, Founder and CEO of WELL Health Technologies Corp. (TSX: WELL), sits down with Maria Pacella, Pender Ventures Managing Partner and reflects on his entrepreneurial journey. From building TIO Networks and its eventual acquisition by PayPal to creating one of Canada’s leading digital healthcare companies. The conversation explores the challenges of scaling in regulated industries, the role of acquisitions in accelerating growth, and why healthcare became the next chapter in his career. Hamed also shares lessons on leadership, adaptability, and the importance of articulating a vision that attracts both talent and capital. Listen to the full episode here: https://bit.ly/4zaLR7Y

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • New Podcast - Pender’s CIO Greg Taylor sits down with Laura Baker to break down why traditional diversification has lost some of its potential, and what investors could consider instead. Greg walks through: Why S&P 500 concentration is back at dot-com era levels. How Pender’s Liquid Alternative Multi-Strategy Funds are built to smooth volatility. Why real assets are increasingly on the team’s radar and small caps remain a focus Full episode: https://bit.ly/4x4ZmoR

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Blue Owl released their 2026 Mid-Year in focus, calling out several key points: 1) Default rates remain below averages 2) Private credit is offering a 200bps premium to public loans 3) Private Credit is roughly 25% of leveraged lending today and expected to grow further 4) Manager selection is becoming more important and 5) Blue Owl is getting more bullish on digital infrastructure.

  • Brookfield deep dive: Specialization is reshaping private credit. The firm sees increasing interest in the expanded private credit spectrum, including opportunistic credit, real-asset credit, and asset-backed finance. Specialty finance accounted for roughly 20% of all private credit fundraising in 2025, up from 4% in 2024.

  • Walmart is launching a new women’s clothing line called Scenario aimed at younger, more affluent shoppers, per the Wall Street Journal. It marks the 10th in-house brand that Walmart fashion has launched since 2020. Most of the items in the Scenario line, which will include everything from blouses to faux leather handbags, will be priced under US$25.

Macro Morning

  • The Canadian federal government announced that nearly $28bn of imports from the US will face tariffs ranging from 15% to 50%, representing a dollar-for-dollar retaliation. The duties will be applied to goods in sectors heavily affected by US protectionism, such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

  • Some first-time condo buyers have become “accidental landlords.” These surprise landlords bought their condos to live in, but rising costs or a desire to move up the property ladder have left them renting out their units instead.

  • Shuttered churches find new life as affordable housing. According to the Canadian Urban Institute, roughly one-third of Canada’s 27,000 places of worship are expected to close by 2035. Religious organizations and developers are looking at ways to turn the underused land into new homes

  • President Trump says he’ll double his tariffs on Canada’s auto sector to 50% from 1 January. Meanwhile, Canada’s Carney is flagging he’ll return to the negotiating table if the US comes with “the right attitude”. (Reuters)

Technology Today

  • Robots beat Usain Bolt’s 100m record LINK - A humanoid robot called Tiangong Ultra, built by Beijing’s X-Humanoid, ran the 100-meter sprint in 9.39 seconds at the World Humanoid Robot Games, beating Usain Bolt’s human record of 9.58 seconds from 2009.

  • Netflix may sell rival streaming plans LINK - Netflix is reportedly weighing whether to sell subscriptions to rival streaming services like Peacock and Fox One inside its own app, a shift for a company that long said it needed no such help.

  • Fitbit founders launch Luffu Link, an LTE health and safety band LINK

AI of the Tiger

  • Two months after its release, usage of the AI lab’s Fable model has levelled off, making up only 11% of total spending on Anthropic tools. The lower-than-expected adoption of Fable, the most expensive of Anthropic’s models, comes as usage of more affordable Chinese AI models has gained traction. (Financial Times)

  • Anthropic could raise more than $100 billion in its initial public offering, according to The New York Times. Its bankers told potential investors the offering could value the company at $2 trillion. At that size, it would be the biggest IPO ever

  • Taiwanese cybersecurity firm warns that AI tools have more than doubled Chinese state-backed cyberattacks LINK

  • Australias music industry bans AI-generated tracks from official charts LINK

  • “We’ve all been too ambitious”: Sam Altman says our old habits are delaying the great AI transition LINK

  • ChatGPT can now access your iMessages LINK OpenAI has added a feature that lets ChatGPT on the Mac read, write, send, and search a user’s iMessages, along with summarizing conversations, in a move that could raise privacy concerns for Apple.

Defense Docket

  • Prime Minister Mark Carney announced that Quebec shipbuilder Chantier Davie has been awarded a contract to build six new icebreaking ships for the Canadian Coast Guard, using Canadian materials from Algoma Steel. Carney said the deal marked the largest shipbuilding contract in Quebec’s history and that the first icebreaker will be delivered in five years. (The Canadian Press)

Crypto Corner

  • Coinbase fell 3.76% despite launching a new service that lets investors trade US stocks on its crypto network.

  • Crypto extends gains after biggest 3-day rally since 2023 (CNBC)

  • Strategy raised roughly $2 billion through common stock sales while holding off on new Bitcoin purchases, leaving its balance sheet at 840,447 BTC. The company added to its reserves and established a new $1.59 billion cash account to provide operational flexibility for dividends and debt payments. Total cash holdings reached $6.69 billion. [Read more]

Energy Transition Today

  • Tesla discontinues its Solar Roof LINK - Tesla has quietly killed its Solar Roof, the roughly decade-old product that turned shingles and tiles into solar panels, removing all mentions from its website and redirecting the old pages to a generic solar landing page.

  • Tesla recalls 3 million cars as part of China-wide push to stop hidden door handles LINK

  • Americans would rather have a nuclear plant in their backyard than a data center: A Gallup survey found 71% of Americans oppose a data center in their area. This compares to the 53% who would oppose a nuclear energy plant in their area.

The Dig

  • Gold ended its six-month correction as prices surged roughly 17% off July lows, topping $4,700 for the first time since April. The rally was driven by U.S. federal debt exceeding $40 trillion, expanded debt buybacks, a weakening dollar, and strong central bank purchases. Technical indicators favor further upside, with immediate resistance sitting between $4,750 and $4,800. [Read more]

  • Albert Huddleston, who recently sold family-owned shale assets for $5.2 billion, is an anchor investor in a proposal put forward by Glencore and others to take control of Sherritt International, according to people familiar with the matter. The consortium went public with its bid this month without naming him.

  • Elevra Lithium secured a price-floor structure in a deal to supply a new processing facility in Canada, as western countries seek to bolster their critical-mineral supply chains. The Sydney-listed company will supply spodumene concentrate from its project in Quebec to Mangrove Lithium’s planned conversion plant

The Picks List

  • From Bangkok to London to New York, demand for the dachshund has climbed as social media and celebrity owners amplify the short-legged breed’s appeal, while changes in how people live, work and build families reshape what they want in a pet. In 2025, dachshunds overtook poodles to become the American Kennel Club’s fifth-most-popular breed, after a decade-long climb from 13th place. Few dogs are better suited to the moment. Dachshunds are compact enough for urban life, distinctive enough for Instagram or TikTok and packed with personality.

  • Graphic tees are becoming more valuable amid a vintage revival; they’re sought after for their ability to “convey personality and authenticity,” The Wall Street Journal reports. At ThriftCon, a vintage clothing convention, some sold for over $800.

  • TikToks and Reels are, in fact, melting your brain. A new study published in the journal NeuroImage found that short-form videos we enjoy essentially turn off two regions in our brain associated with cognitive control, sending our brain into a low-effort state. The study warns this could contribute to “excessive use and diminished self-control.”

The Breakroom

  • Is Bryson DeChambeau’s run with LIV Golf over? That seems like a distinct possibility after the breakaway tour’s biggest name shared a series of photos from LIV Golf events on Instagram with the caption, “It was a good run.”

  • Italian pedestrians will soon have to pay up if they keep their faces glued to their phones. Under proposed changes to the country’s highway code, distracted walkers could face fines of € 75 or more for scrolling while they cross the street.

  • U.S. sports fans spend around $2,000 a year on tickets, merchandise, and betting, and nearly half are going into debt to do it.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Life is a Highway]]>https://thependerpulse.substack.com/p/life-is-a-highwayhttps://thependerpulse.substack.com/p/life-is-a-highwayThu, 20 Aug 2026 00:11:45 GMTWe are back, The Pulse is back!

As some readers may know, I spent the last week driving back home to Vancouver from Toronto, yes, an exceedingly long drive. It wasn’t my first time doing this, probably won’t be my last, and each time I’m left with observations that are the direct result of hours on end behind the wheel, a little too much Taylor Swift, and pointing out a few too many roadside animals to my partner. I’ve got to say, the number of cows I saw this trip was truly outstanding.

Anyways, over the next few weeks it’s inevitable that learnings from my days (and days) on the road will keep coming up, and today is no exception.

Let’s get into it.

A tale of too many retailers

A drive across a continent is ripe with interesting things to see. Some of my favourites: the world’s largest bison and the world’s largest Holstein cow, Salem Sue (pictured below).

One thing I didn’t expect to see quite so much of, though, was the sheer number of dollar stores. Dollar Tree. Dollar General. Family Dollar. Name it, I saw it. It’s funny, because dollar store shopping hasn’t exactly been top of mind for me lately, outside of the odd themed party where I’m in desperate need of paper plates or cutlery. So, it was interesting to see the stranglehold these stores seem to have on small(er)-town America.

It got me thinking about the K-shaped economy again, my (not so) recent obsession. And luckily for me, we had a pile of corporate earnings to dig through this week to get a sense of what’s actually going on in retail land.

Let’s start with some macro

According to data from Moody’s Analytics chief economist Mark Zandi, the top 20% of earners, households making roughly $175,000 or more a year, now account for nearly 60% of personal outlays in the US, up from about 50% during the dot-com bubble. That’s the same demographic that has benefited most from the increase in stock prices, which is why there’s a real case to be made that retail earnings now track portfolios more closely than they track the broader consumer.

Zandi’s data shows outlays for that top cohort grew roughly 6.5% over the past year (about 4% after inflation), while spending by the bottom 80% barely kept pace with inflation. The top 10% of households now hold something like 90% of household equity, which makes the marginal consumer dollar increasingly a function of asset prices rather than paycheques. The S&P 500 is up roughly 14% so far in 2026, and at this point that seems to matter more to retail sales than wage growth does.

Home Depot’s finance chief made a version of this point on this week’s earnings call, noting that a lot of the company’s recent strength has come from higher-income households, the ones with the balance sheets to keep spending on renovations even as the broader housing market stalls.

It doesn’t help that retail sales fell 0.6% in July, the first monthly drop in nine months, and that consumer sentiment tumbled to a preliminary reading of 51.0 in August, down from 55.2 in July. Those two data points used to contradict each other. In a K-shaped economy, they don’t anymore: the people driving spending and the people saying they feel awful about the economy are increasingly different people.

Zoom back out to the headline retail sales numbers from earlier, though, and one more wrinkle is worth flagging before: Amazon may be to blame for the July wobble. The company moved its Prime Day event from July to June this year, and Walmart+ and Target Circle ran their own membership deal events in June to compete. The result, per the Wall Street Journal: sales at nonstore retailers jumped 7.7% in June, then fell 2.2% in July. Basically, consumers shopped like crazy June, then locked up their wallets in July.

Anyways, Investors have long looked to retail earnings as a gut-check on the health of the consumer, but today… that read is getting noisier, it’s becoming noise rather than signal and may no longer be the bellwether it once was.

Meanwhile, back home

Canadian retail sales told a more constructive story. Sales rose 1.0% month-over-month in May, in line with Statistics Canada’s advance estimate, with core spending and real activity rebounding after two consecutive monthly declines. Statistics Canada’s advance estimate points to slower nominal growth in June, but the drop in consumer prices that month suggests that’s mostly a price effect rather than weaker underlying demand.

However, as we have pointed out before these numbers are helped along by World Cup-related activity and recent federal income-support measures. Keeping this in mind, how durable that is remains an open question. Oil prices have resumed climbing, and while they’re still below the highs hit in April, they’re an incremental tax on household purchasing power … particularly for lower-income consumers.

Now let’s get company-specific

In the US:

Target this year has been a pack leader, generating returns of more than 50% over the last 12 months — well ahead of its peers. Walmart has also done very well, up double digits over the same stretch. Both, notably, skew toward the customer base that’s still spending freely.

Home Depot, though, has lagged the group. Its shares are down modestly on a total-return basis over the past year, even as the company reported solid earnings this week I thought this was interesting especially given where in the K-shaped economy Home Depot’s customer actually lives. Home Depot is as much a housing-market bellwether as a consumer one. The company does well when incomes are rising and mortgage rates are low — that’s the environment that gets people buying fixer-uppers, which in turn means repeat trips to Home Depot for paint, drywall, and whatever other DIY materials the project of the month demands.

Home Depot’s fiscal Q2 results, reported this week, beat expectations on both revenue and comparable sales. Sales were up 5.7% year-over-year, with total comps up 1.7%, the strongest reading since fiscal Q3 2022. However, comparable transactions actually fell 1%, while average ticket size rose to roughly $92.50 from $90.01. Basically people are making fewer trips, but buying bigger baskets. Tickets over $1,000 were up 2.4% year-over-year, and thirteen of sixteen merchandising categories posted positive comps, led by outdoor and seasonal categories like live goods, mulch, patio, and grills.

CFO Richard McPhail was careful to frame this dynamic: “We continue to operate in what I call ‘frozen housing market’ conditions,” he said, “but we also know that we’re taking share and that we’re serving our customers better every day.” On the earnings call, he described the customer as a “healthy cohort” that has the means to spend but is staying on the sidelines for anything requiring financing — housing turnover has sat near historic lows (about 3% of housing stock) for four years running, and McPhail said there’s “no sign of an inflection point” yet.

There’s also a tariff wrinkle worth noting: the quarter got a boost from roughly $730 million in IEEPA tariff refunds, which McPhail said are being used to offset unplanned cost pressure from fuel, energy, and input costs — including the expiration of Section 101 tariffs and their replacement with Section 301 — rather than dropping straight to the bottom line. He expects gross margin to normalize back to roughly flat year-over-year by Q4 as that timing benefit fades.

Home prices, while below their 2022 peak, are still roughly 30% higher than in 2020. Mortgage rates remain elevated and could climb further as bond yields, in the US and globally, sit at multi-decade highs amid a broader sell-off in government debt. Home Depot is, in other words, doing everything right and still waiting on a housing market that has yet to meet it where it stands.

In Canada:

Loblaw posted Q2 2026 retail revenue growth of 4.1% to $15.05 billion, but notably discount banners did the heavy lifting again: CEO Per Bank flagged close to 4% comp growth at hard-discount banners like No Frills and Maxi, with customers leaning even harder into frozen vegetables (up more than 500 basis points in that category alone) as a hedge against sticky produce inflation. (Fresh vegetable prices were up more than 9% year-over-year in June, per Statistics Canada, with tomatoes alone up over 30%.)

Canadian Tire reported a 2.4% increase in consolidated revenue for Q2 2026. Retail sales overall were up 4.5% to $5.39 billion; excluding petroleum, they were up 2.5%, though reported retail revenue excluding petroleum slipped 1.1%. Consolidated comparable sales rose a modest 0.7% — but the real story was SportChek, where World Cup-driven demand pushed comparable sales up 8.0% (12.4% on a two-year stack). CEO Greg Hicks credited “operational agility” for the result, pointing to price cuts for value-seeking customers and adaptation to a wet, uncooperative spring and summer.

Dollarama’s fiscal Q1 2027 results (for the period ended May 3, 2026), showed consolidated sales up 21.4%, with Canadian comparable store sales up 5.6% on higher traffic and basket size. Dollarcity, the Latin American joint venture, contributed $51.2 million in equity income to Dollarama, up 27.1% year-over-year, on a 30.4% jump in Dollarcity’s own sales and a store count that grew from 644 to 752 locations over the trailing year.

Line the three up and the Canadian stocks starts to look less like three unrelated earnings prints and more like one story told three ways. Loblaw’s discount banners are outrunning its conventional ones. Canadian Tire’s value-seeking customer showed up for World Cup gear at SportChek but stayed cautious everywhere else, with consolidated comps barely positive. And Dollarama just keeps compounding regardless of what the macro backdrop is doing, growing sales more than 21% in a quarter when Canadian headline retail sales were up roughly 1%. If the US data is showing a K-shaped consumer split by income, the Canadian data is showing something adjacent: a consumer who’s still spending, but overwhelmingly on their own terms, value-seeking, discount-chasing, and trading down wherever possible.

On the road again

To quote the prophet Tom Cochrane, “Life is a Highway” and that was no clearer to me than on my drive, with all the Dollar Trees and Dollar Generals I couldn’t help but notice.

I don’t think it was a coincidence. Small-town America is disproportionately the bottom 80%, the households whose spending has merely kept pace with inflation while the top 20% continues spending through their portfolio gains. Dollar stores have become a physical retail expression of the K-shaped economy. Every mile of dollar stores I drove past was a data point I was starting to understand more. It’s the same split showing up in the earnings. Target and Walmart, up double digits, disproportionately serve the household that can absorb a price increase without blinking. Home Depot’s healthiest customers are the ones financing a kitchen reno, not patching a leak with whatever’s cheapest at the hardware aisle. Dollarama and Dollar General exist because somebody has to serve the other half of the K.

None of this is new, exactly, the K-shaped economy has been my running theme for a while now, and it’ll keep being one, because it keeps showing up everywhere I look, apparently even on day 4 of my cross country drive with a bag of gummy worms on my lap and Taylor Swift on repeat. But it’s interesting seeing it from the driver’s seat instead of a spreadsheet. It’s what I have always loved about investing: primary research. The stores aren’t just data points on a same-store-sales table, they’re actual buildings, in actual towns, doing actual business. The consumer isn’t an abstraction. They are real, and like me they are driving on I-90, and depending on the tax bracket, either stopping at Dollar General or driving right past it.

Anyway. Home safe, jet-lagged from a car and not a plane, and already thinking about what next week’s drive-adjacent theme is going to be.

Drive on!

Pender Events + Publications

  • Pender Market Insights – link - Greg Taylor discusses how At various points during July, it started to feel like markets were finally going to break. After months of defying negative headlines and ominous signals, this seemed to be the window for the correction many had been waiting for. He highlights that it never really played out that way.

  • New Webinar - Trade tensions, geopolitical risk and shifting economic expectations have reshaped the investment landscape. But for credit investors, disruption can also create opportunity. Join Geoff Castle, Lead Portfolio Manager, Fixed Income, and Sara Embury, CIM for a webinar exploring how the Pender Corporate Bond Fund is navigating today’s evolving market environment and where we’re uncovering opportunities across the credit landscape This webinar will cover: Opportunities in energy and commodity-related credits. The implications of managed trade. International credit opportunities. Areas of opportunity across software and AI-adjacent businesses. Tuesday, September 8th, 2026. 10am PST | 11am MST | 12pm CST | 1pm EST. Save your spot: https://bit.ly/4xDiU35. For Financial Professionals and Accredited Investors Only.

  • In a new in The Globe & Mail article, Pender Equity’s Laura Baker argues that investors often anchor to familiar narratives long after the facts have changed leading to investing missteps. Current case in point, while mega-cap technology companies continue to dominate headlines, earnings growth and valuations may be telling a more nuanced story. It’s a look at the gap between perception and fundamentals, and why paying attention to both matters and may be rewarding. Read more (this article is featured behind the subscription wall): https://lnkd.in/eMZf72nT

  • Check out the Pender Summer Hot List 2026 - Over the past few weeks we’ve shared recommendations from across our team, spanning the psychology of money, Canadian business stories, sweeping works of history, and career advice. https://bit.ly/4oVrw1z

  • New Podcast - What does it take to build not one, but two successful public technology companies? In the latest episode of the Pender Ventures podcast, Hamed Shahbazi, Founder and CEO of WELL Health Technologies Corp. (TSX: WELL), sits down with Maria Pacella, Pender Ventures Managing Partner and reflects on his entrepreneurial journey. From building TIO Networks and its eventual acquisition by PayPal to creating one of Canada’s leading digital healthcare companies. The conversation explores the challenges of scaling in regulated industries, the role of acquisitions in accelerating growth, and why healthcare became the next chapter in his career. Hamed also shares lessons on leadership, adaptability, and the importance of articulating a vision that attracts both talent and capital. Listen to the full episode here: https://bit.ly/4zaLR7Y

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • New Podcast - Pender’s CIO Greg Taylor sits down with Laura Baker to break down why traditional diversification has lost some of its potential, and what investors could consider instead. Greg walks through: Why S&P 500 concentration is back at dot-com era levels. How Pender’s Liquid Alternative Multi-Strategy Funds are built to smooth volatility. Why real assets are increasingly on the team’s radar and small caps remain a focus Full episode: https://bit.ly/4x4ZmoR

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Canadians are bracing for a fresh round of 50% US tariffs due tomorrow (Wed) on a range of items from cement to hockey gear. (CBC)

  • Canadian financial institutions and funds have amassed roughly C$500 billion ($360 billion) of exposure to private credit, according to new research from the Bank of Canada. The bulk of the activity is in the US and is driven by pension funds and insurers. It underscores how the nation’s biggest investors have become significant players in lending directly to companies abroad, but haven’t displaced traditional sources of corporate financing at home.

  • Volatility Shares Trust filed with the SEC to launch 32 new ETFs, with each fund correlating to an NHL team. The ETFs are tied to futures contracts that are traded on a special index tracking wins and losses, with the funds rising and falling depending on a team’s performance during the NHL season.

  • 13% of large-cap active investment funds in the U.S. that outperformed passive indexes, like the S&P 500, over the past decade. Those stock-picking funds did slightly better over the last year, with 27% outperforming the passive indexes, but have disappointed overall given the higher fees that they charge

Macro Morning

  • Among Canadians aged 18 to 34, 56 per cent say they’re devoting anywhere from half to nearly three-quarters of their monthly household budget to their mortgages. And 90 per cent of those who renewed their loans say they’re paying higher interest rates, according to a new survey by Rates.ca.

  • The breakdown of CUSMA could cost Canada 102,000 jobs. Further, according to a new report by Oxford Economics, the U.S. is also projected to lose 214,000 jobs if CUSMA were to end. The report also estimates the breakdown could cost the U.S. economy US$1.04 trillion in GDP and the Canadian economy $271 billion by 2035. In July, the U.S. declined to renew the trade deal in its current form. However, CUSMA isn’t dead just yet — it doesn’t expire until 2036. Meanwhile, the U.S. has threatened an Aug. 19 deadline for new 50 per cent tariffs on a range of Canadian products.

  • Ottawa and Ontario announce $1 billion to fund infrastructure for homes. The Ontario government and the feds will each provide $500 million to help cover the cost of infrastructure needed to build more housing units. The funding will only be available to municipalities that don’t already have development charges for infrastructure like roads, bridges, and water systems. (The Canadian Press)

Technology Today

  • Apple accidentally revealed that it is building AirPods with built-in cameras, using code and a short video hidden in a macOS Tahoe software release that describes the earbuds working with Siri and Visual Intelligence. The cameras aren’t meant for regular photos or video, but let Siri recognize and save things users look at, like reading a book’s title, giving visual context without needing to pull out an iPhone. LINK

  • If you think your Amazon order emails have gotten less helpful (or even downright weird), you’re not alone.

  • Reddit begins testing a new audio and video experience, similar to popular TikTok videos LINK

  • Apple will comply with ‘fairer’ App Tracking Transparency rules in the EU LINK

  • Google has told suppliers it’ll stop making all Pixel smartphones, watches, and earbuds in China from 2027, shifting to Vietnam and India. (Nikkei)

  • Opening arguments kicked off today in a federal court in California, where Meta faces allegations it designed Facebook and Instagram to be addictive to kids. Here’s what’s at stake.

  • Android phones can now sense when they’re stolen and lock themselves before the thief gets far. Here are the key features to turn on.

AI of the Tiger

  • OpenAI has launched ChatGPT for Teens, a version of its chatbot built for users aged 13 to 17 that becomes the default experience for anyone who identifies as a teen or is estimated to be one. The product adds safeguards like frequent break prompts, warnings against uploading sensitive images, and parental alerts when teens discuss violence, while avoiding romantic language or any suggestion the AI has feelings or consciousness. New learning tools include quizzes drawn from chats or notes, homework reminders meant to discourage shortcuts, and a “Study Hours” setting that parents and teens can use to limit ChatGPT to Study Mode each day. LINK

  • The US Justice Department is investigating Andreessen Horowitz over a possible antitrust violation, looking at whether the firm’s partners can sit on the boards of competing AI companies at the same time. The case centers on data firms Databricks and Fivetran, both backed by the firm, with cofounder Ben Horowitz on the Databricks board and partner Martin Casado on Fivetran’s, both companies helping businesses handle large amounts of data. LINK

  • Hollywood strikes first AI copyright truce with ByteDance LINK

  • For months, booksellers wondered why they were receiving bulk orders for a bunch of obscure used books. Now they may have an answer: An Amazon facility in Las Vegas appears to be processing used books and digitizing them, presumably to train its AI. 404 Media says it got a bookseller to plant an Apple AirTag in a book that was a part of a large order. The AirTag took a rather circuitous journey, from California to Milwaukee, then Colorado, before it arrived at an Amazon facility in Vegas. That facility contains a previously unknown warehouse called VGT3, marked by a logo of a menacing dinosaur gripping a book. There, workers spend their time scanning rare books—sometimes destroying them in the process.

  • Last week, OpenAI rolled out a new ChatGPT feature, Computer History, that tracks how you use your computer so it can better understand what you’re doing.

  • Top mathematicians say LLMs are strong calculators but poor creative thinkers LINK

Defense Docket

  • PitchBook’s Q2 2026 Defense Tech Report logged $16.4 billion across 249 deals, down 32.8% from Q1’s record $24.4 billion and still the fourth-largest quarter on record. Trailing twelve months: $69.5 billion.

  • President Trump is scaling back joint military exercises with US ally South Korea, citing its reluctance to support the US in Iran and his “very good” relationship with North Korea’s Kim Jong Un.

  • Jared Kushner has held a rare meeting with the Hamas political leader in Egypt, pushing the US-backed Gaza roadmap that requires Hamas to disarm. (Axios)

Crypto Corner

  • A Trump-backed crypto firm is helping sell the very Chinese AI his government is trying to block LINK

  • Binance helped Russia build case against IT specialist over $700 Ukraine donation, Reuters LINK

Energy Transition Today

  • Tesla is set to put its Cybercab, a two-seat robotaxi with no steering wheel or pedals, onto public roads in Austin as soon as this month, though the first riders will be its own employees. Tesla has built Cybercabs at Gigafactory Texas since February, with over 100 spotted in lots by July, yet it cannot legally sell or let customers drive a vehicle that lacks both controls and, in most places, permission. LINK

  • “So what do they offer to Quebecers if it’s not this agreement? Where will they find the 10,000 megawatts we are bringing to Quebec?” Premier Christine Fréchette rhetorically asked the Parti Québécois (PQ) after the province signed a non-binding deal with Newfoundland and Labrador to share hydropower from the Churchill Falls generating station. The deal would give the two provinces the green light to launch new energy projects worth more than $50 billion and to export power from Newfoundland to the U.S. through Quebec. However, the PQ — the party projected to win Quebec’s October provincial election — says it will renegotiate if it takes power, calling the deal “humiliating” for Quebec.

The Dig

  • Copper rose toward a record on the London Metal Exchange, with soaring spreads highlighting an increasingly acute squeeze in near-term supply. The current supply crunch is being fueled by a surge of shipments to the US and recent tightness in China, leading stockpiles in the LME’s global warehousing network to shrink. Copper futures have risen over 44% the past 12 months amid growing AI infrastructure demand. Relatedly, Australian copper giant BHP just reported a 30% yearly increase in underlying profits

  • BHP is in talks to invest in landmark Saskatchewan uranium project. Canadian uranium miner NexGen Energy says it has held discussions with the mining giant about taking an equity stake in its Athabasca Basin project, which promises to be one of the world’s largest uranium mines. NexGen is looking to drum up US$1 billion over the next nine months for the mine, which broke ground last week. The Athabasca Basin is home to the world’s largest known deposit of uranium. (Reuters)

  • Endeavour Silver announced an illegal blockade at its Terronera Mine and suspended operations as of August 12. The blockade is reportedly driven by concerns from the nearby Ejido community surrounding road maintenance, medical and communications support, water access and control, and requests for increased financial assistance; the company noted that the situation has remained peaceful and respectful

The Picks List

  • Nearly 150 dogs zoomed across a turfed race track as part of the fifth annual Corgi Race Vilnius in Lithuania this weekend. The event saw pups and their owners from nine different countries compete in multiple races, costume contests, a “smartest nose” tracking competition, puzzle-solving contests, and a “Mightiest Voice” barking contest.

  • New videos have emerged of the cast in the upcoming four-part Beatles biopic series recreating the iconic Abbey Road album cover.

  • In the age of cybercrime, crypto scams, and AI hacking, it turns out that one of the most lucrative criminal enterprises is good old-fashioned train robbery.

  • The World’s Ugliest Dog contest was held over the weekend in Santa Rosa, California, and beating out a field of tough competition, a pug named Jinny Lu took home the $5,000 grand prize.

The Breakroom

  • The upcoming season is “probably my last year of football,” Cristiano Ronaldo, 41, said in an interview following his wedding.

  • LIV Golf has officially canceled its team championship in Michigan, the latest in a series of setbacks. This week’s event in Indianapolis will now be the season finale as the reeling tour tries to reimagine itself “as a fundamentally new league” moving forward.

  • Venus and Serena Williams played their first official doubles match together since 2022 on Monday at the Cincinnati Open, where they fell in three sets to Peyton Stearns and Marta Kostyuk in the first round.

  • 50%. Increase in people who received Canadian citizenship between April 1 and May 31, driven by Americans using the new “Lost Canadian” law to receive a certificate. Under the new rules, anyone who can prove they have a Canadian ancestor can obtain citizenship, even if that ancestor left the country several generations back.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[The Paradox of Skill and Luck]]>https://thependerpulse.substack.com/p/the-paradox-of-skill-and-luckhttps://thependerpulse.substack.com/p/the-paradox-of-skill-and-luckTue, 04 Aug 2026 21:44:55 GMTOne of my go-to podcasts is How I Built This, where Guy Raz interviews some of the world’s best-known (and most interesting ) entrepreneurs about how they built their companies. I’ve been a listener for years, partly for the human side of it: the real, unpolished moments of doubt and failure that sit alongside the eventual win. I love the storytelling, the ups and the down. It humanizes titans in a way that only human connection can. The part of each episode that exemplifies this is the last question Raz asked each founder and that is how much of their success they’d attribute to luck versus skill.

The answers, over the podcast’s history, have varied as much as the backgrounds of the different guests:

  • Tobias Lütke (Shopify) put it at 90% luck, comparing his timing to winning the lottery five times in a row.

  • Jen Rubio (Away) called it a clean 50-50 split between luck and hard work.

  • Whitney Wolfe Herd (Bumble) rejected the premise outright. She wasn’t sure she’d call any of it lucky.

I thought about this discrepancy a lot. So many different founders, so many (wildly) different answers, all defensible.

Not often you see that distribution…

The question fascinated me enough that by the time Guy Raz published his book, How I Built This: The Unexpected Paths to Success from the World’s Most Inspiring Entrepreneurs, I bought on principle (how could I not!) But I was also happy to see that he’d also been pondering the question over as many times as I had.

Raz frames luck and skill not as opposing forces but as an interconnected loop. He sees skill as what allows a founder to recognize luck when it shows up, and to actually do something with it. He notes that timing and geography matter, but hard work and deep expertise are what let a founder survive long enough for the lucky break to find them. He calls it the “lucky-and-good” feedback loop, which is a phrase I now plan to incorporate in many future commentaries here.

More recently I came across a piece that Michael Mauboussin had published that goes over the same dilemma (sort of). Now for background if you don’t know Mauboussin, he is Head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management, an adjunct professor at Columbia Business School since 1993, and something close to a house philosopher here at Pender. He writes about investing the way that spansoutside the traditional textbook environment looking at process first and results a distant second.

His 2010 paper, Untangling Skill and Luck: How to Think About Outcomes — Past, Present, and Future, later expanded into his book The Success Equation, is the most rigorous treatment of this question I’ve come across. Guy Raz asks the question from the founder’s chair. Mauboussin answers it with statistics.

The more I’ve sat with it, the more I think this might be one of the more important ideas in investing … and also in life.

The Paradox

Ok quick definition break let’s define these terms before we move on any further! (Taken form Webster’s Ninth New Collegiate Dictionary)

Skill is “the ability to use one’s knowledge effectively and readily in execution or performance.” A process or repeatable series of actions aimed at a goal.

Luck is “the events or circumstances that operate for or against an individual.” Or we can take the Mauboussin definition which frames it as a distribution centred on zero, which means, in theory, luck is transitory. It evens out. Eventually. Luck is not disguised effort. It’s the thing that happens in addition to effort.

Thought about it another way Mauboussin offers a test that may explain the difference better than any dictionary: can you lose on purpose?

If you can’t (or if it’s genuinely hard to try) luck dominates the activity.

  • Roulette: you cannot lose on purpose no matter how hard you try.

  • Chess: anyone could throw a game against a grandmaster without anyone noticing the difference from a legitimately bad day.

So this raises the question, where does investing sit? The answer is that its somewhere in the middle and that’s the frustrating part.

You see it’s a desirable thing to believe that success is mostly luck, happy accidents, right place, right time. It’s comforting in a specific way: it means the outsized winners aren’t fundamentally different from you, they just got the bounce. Anyone could have started that company, caught that trade, written that hit song, if the dice had landed differently.

Flip it, and the opposite story is just as romantic. That success is entirely earned, a monument to grit, discipline, and hard-won judgment, with luck cropping up nowhere in the story. This version flatters the person telling it even more than the first one flatters the listener.

So which is it? Honestly, we don’t fully know, and pretending otherwise is its own kind of narrative fallacy. What we do know is that we’re wired to reverse-engineer good outcomes into good decisions. We see a great result and assume it must have come from a clean process, no messiness, no near-misses, no calls that were one basis point from disaster. That instinct is almost always wrong. Outcomes are a function of skill plus luck, not a referendum on decision quality. Sometimes:

  • Great decisions lose.

  • Terrible decisions win.

This is especially true over short time horizons, which is precisely the horizon most people are watching.

That’s the paradox in a sentence. One of Mauboussin’s cleanest lines on it: A good process can produce a bad outcome. A bad process can produce a good outcome.

It’s a particularity frustrating concept when your entire industry is graded on quarterly outcomes. It’s also, maybe the single best argument for judging a process on its own terms rather than back-solving from whatever the market happened to do this quarter. The founders on How I Built This who credit “luck” aren’t being falsely modest, they’re some of the only people honest enough to admit the scoreboard doesn’t always tell the whole story.

Converted from Michael J. Mauboussin “Untangling Skill and Luck How to Think About Outcomes—Past, Present, and Future”

The Beautiful Game(s)

This line of thinking resurfaced for us while prepping this summer’s content series around the World Cup. Business and investing are interesting places to think about the skill-luck paradox… but sports may be the best observation deck because it plays out in real time, in front of an audience, with a time clock.

This year’s World Cup gave us no shortage of material.

My beloved Cabo Verde Blue Sharks, a nation of roughly 500,000 people with almost no World Cup pedigree, became the smallest country ever to reach the knockout round, holding Spain to a scoreless draw along the way. Their 40-year-old goalkeeper, Vozinha, became a global story almost by accident: one of Cabo Verde’s own players had been scouted off LinkedIn. Was that skill, or an extraordinary run of bounces going their way for exactly long enough? In the Round of 32, Cabo Verde took Argentina to extra time before a deflected header off their own defender ended the run, the kind of moment that gets called brilliant defending when it goes the other way, and bad luck when it doesn’t.

Then there was Brazil, five-time champions, knocked out in the Round of 16 by a Norway team that had never before reached a World Cup quarterfinal. Erling Haaland scored twice in the final eleven minutes to win it, which is a legitimate, generational-talent story on its own. But rewind twenty minutes earlier and Brazil had a penalty to take a 1-0 lead… saved. Norway’s keeper guesses right, Brazil’s captain doesn’t finish, and the entire shape of that tournament bracket changes. Nobody remembers Haaland’s goals without that save happening first, and the save had nothing to do with Haaland.

Or look at Messi, who scored in his eighth straight World Cup match and pushed Argentina all the way to a final against Spain, decided in extra time. Hall-of-Fame case of skill outlasting the tournament, or one of the greatest players ever finally catching the run of form and matchups he needed at 39? Probably both, which is exactly the answer nobody wants, and exactly the one Mauboussin would give you.

I love sports partly because each game makes randomness visible in real time (and I LOVE randomness). A save goes in the highlight reel and a goalkeeper becomes a hero; the same shot two inches to the left and nobody remembers it. That’s what makes it so fun to watch, and why we’ll never fully separate the two forces after the fact.

Mauboussin doesn’t just make this argument philosophically, he backs it with numbers, and basketball is the clearest case study for why skill dominates some sports more than others (maybe as a control freak, this is exactly why basketball was my sport of choice back in my own athletic career).

But why, though? Well, something I heard about far too often, and which infuriated me as someone vertically challenged in a basketball-specific sense, is the “height factor.” Most sports draw their athletes from a wide range of body types, so the pool is large. Basketball doesn’t work that way: only a sliver of the population is even tall enough to play in the NBA, and that sliver barely overlaps with the pool of people who are also elite athletes. When the eligible pool shrinks that much, the players who make it are disproportionately the most skilled ones available, part of why NBA outcomes are so much more predictable from talent alone than, say, hockey outcomes are.

Hockey is a useful contrast. Some stats repeat reliably year to year (shots on goal, for example) while others barely repeat at all, like shooting percentage or plus-minus. The stats that persist are picking up something real about ability. The ones that bounce around are picking up noise. The trouble is, from the outside, a shooting streak and a genuine skill jump look identical in the moment. You only find out which one it was by watching what happens next.

Converted from Michael J. Mauboussin “Untangling Skill and Luck How to Think About Outcomes—Past, Present, and Future”

Why Our Brains Get This Wrong

This is where it’s time to bring in behavioural finance (you knew we’d get there eventually). Decades ago, psychologists Amos Tversky and Daniel Kahneman, the duo whose work basically invented behavioural economics, and later won Kahneman a Nobel Prize, named a bias they called the “belief in the law of small numbers”: our tendency to treat a small sample as if it tells the whole story. The less skill involved in an activity, the worse this mistake gets. Watch a sprinter win five races in a row and it’s reasonable to call her the best in the field. Watch a baseball player go through ten at-bats and you’ve learned almost nothing about his talent, by some estimates, luck accounts for roughly 80% of a batting average over that short a sample. Five winning trades. One great year. Ten at-bats. None of it is enough evidence to declare genius. It just feels like enough.

Which is basically the entire premise of Moneyball, one of my favourite books growing up. Billy Beane’s insight wasn’t a new way to spot talent. It was recognizing that the stats everyone relied upon (batting average, RBIs, etc.) were mostly noise, while a handful of unglamorous ones, like on-base percentage, actually persisted and predicted future performance. He wasn’t smarter than everyone else about baseball. He was more careful about which numbers were signal and which were noise. The same split shows up everywhere: in hockey, shots on goal persist while shooting percentage doesn’t; in investing, one-year returns are noisy while a sound research process persists.

Illusion of Control

Now we wouldn’t be The Pulse without bringing up at least one more companion bias, and that’s the illusion of control — the tendency to believe our odds of success are higher than chance would suggest, simply because we feel like we’re the one steering.

I’d bet you’ve fallen for this more times than you’d like to admit. It shows up when people throw dice harder for a high number and softer for a low one, despite that having zero effect on physics. It shows up when you jab the crosswalk button four more times than necessary, as if repetition negotiates with the traffic light. It shows up in poker players talking to their cards, in the pre-flight ritual some people swear keeps the plane in the air, in “lucky” socks that have somehow survived several playoff runs unwashed.

None of it does anything. All of it feels like it does something, which is the entire point of the bias. The feeling of control and the fact of control are two completely different things, and our brains are not built to tell them apart. As much as us control freaks wish that were not the case.

So when we look at investing, avoiding these biases means judging our own process, rather than just the trailing scoreboard. Assessing how we arrived at a decision tells us a great deal more than whether it happened to work out last quarter. It’s a harder discipline to actually practice than to agree with, but a sound process is still the best available bet on getting a good outcome over time.

Mean Reversion

Humans are pattern-seekers by nature, which makes reversion to the mean one of the most interesting concepts out there. Something can be changing and staying exactly the same at once, and somehow that makes… sense?

The “changing” part is reversion to the mean itself: teams, funds, and asset classes that have run hot or cold in one stretch tend to drift back toward average in the next. Most people resist this instinctively, recent form feels like the truest signal, so a trend gets treated as the new normal. The mistake people then make in the other direction is assuming reversion means everything eventually converges. It doesn’t … not in the way people assume. Rank funds, teams, or sectors by performance, check back in five years, and most of the extremes will have drifted toward average. But the overall spread of outcomes across the whole group hasn’t shrunk at all. Individual results revert. The dispersion around them doesn’t.

Mauboussin cites a study Jack Bogle once conducted that ranked mutual funds by their 1990s performance and tracked those same quartiles into the 2000s: the top quartile from the ‘90s gave back nearly 8 percentage points of relative performance, and the bottom quartile clawed back almost exactly that much. The pattern isn’t confined to fund manager skill, either, it showed up across styles (value versus growth), asset classes (stocks versus bonds), and geographies.

And yet investors keep betting against it. Small caps go quiet for a stretch, a few years of large-cap and mega-cap tech outperformance is all it takes, and capital drains out right around the point the odds have quietly turned in small caps’ favour. Then the reversal shows up, the flows chase it back in months later, and whoever left early misses the part that actually pays. It’s the illusion of control’s quieter cousin: nobody thinks they’re timing the market, they think they’re following the evidence. But rotating out of an asset class because it’s underperformed isn’t a research process. It’s pattern-matching dressed up as conviction. And it’s the same mistake, over and over: mistaking a stretch of luck, in either direction, for a change in skill, one cap-size cycle at a time.

So, the question remains: if luck keeps doing this much of the work, humbling the hot hand, rescuing the laggard, punishing the performance-chaser, what’s actually left for skill to do?

Converted from Michael J. Mauboussin “Untangling Skill and Luck How to Think About Outcomes—Past, Present, and Future”

Where does this leave us?

Mauboussin’s framework breaks it into three pieces...

  • Analytical skill — finding mispriced expectations, not just good companies. A great business trading at a price that already reflects how great it is offers no edge. The edge lives in the gap between what a price implies and what’s actually likely to happen.

  • Behavioural skill — thinking independently, reading widely, staying probabilistic rather than certain. Contrarian with a calculator, not contrarian for its own sake.

  • Organizational skill — having the structure, incentives, and culture that let a good process survive the inevitable stretch where it doesn’t produce a good outcome. This one gets the least attention and matters the most, because even a sound process will occasionally lose money for reasons that have nothing to do with whether it was right.

So, how much of anyone’s success comes from skill, and how much from luck? I don’t think we’ll ever fully untangle it, and I’m suspicious of anyone who claims they have. Ask Tobias Lütke, Jen Rubio, and Whitney Wolfe Herd three people who built great companies, and three completely different answers to Guy Raz’s question. They’re not disagreeing about the facts. They’re just proof that nobody gets a clean read on their own luck from inside it.

What we can say is that luck always matters, in both directions, and the only lever anyone actually gets to pull is process. Perhaps that’s the real paradox: we spend enormous energy trying to predict outcomes, when the only thing really worth mastering is the quality of the decisions that lead to them.

Pender Events + Publications

  • In a new in The Globe & Mail article, Pender Equity’s Laura Baker argues that investors often anchor to familiar narratives long after the facts have changed leading to investing missteps. Current case in point, while mega-cap technology companies continue to dominate headlines, earnings growth and valuations may be telling a more nuanced story. It’s a look at the gap between perception and fundamentals, and why paying attention to both matters and may be rewarding. Read more (this article is featured behind the subscription wall): https://lnkd.in/eMZf72nT

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • New Podcast - Pender’s CIO Greg Taylor sits down with Laura Baker to break down why traditional diversification has lost some of its potential, and what investors could consider instead. Greg walks through: Why S&P 500 concentration is back at dot-com era levels. How Pender’s Liquid Alternative Multi-Strategy Funds are built to smooth volatility. Why real assets are increasingly on the team’s radar and small caps remain a focus Full episode: https://bit.ly/4x4ZmoR

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • The FTC sued telehealth company Hims & Hers, alleging it shared users’ sensitive health information with advertisers including Meta (Hims & Hers denies the claims).

  • A once high-riding $20 billion hedge fund led by a former OpenAI researcher was forced to unwind its roughly $16 billion public-stock portfolio on Thursday, according to multiple reports. The Financial Times said Leopold Aschenbrenner’s AI-focused Situational Awareness boasted returns of 439% on the year to investors just last month. In recent weeks, the wheels fell off.

Macro Morning

  • The Bank of Canada’s governing council agreed the economy was “adjusting” to shocks, but some policymakers questioned whether the recovery was sustainable, according to a summary of the bank’s mid-July meetings published on Wednesday. The notes also suggest there’s concern within the BOC about rising inflation expectations.

  • Carney rejected the notion that Canada should curb the supply of vital resources to the US to retaliate against tariffs, arguing that it’s more important for the country to keep its reputation as a dependable producer. “Being a reliable supplier is important,” he told reporters Wednesday in response to a question about the trade war. “People trust us. And so when you’re a supplier of a key commodity, key service, you’ve got to think really hard about not supplying

Technology Today

  • DoorDash is building its own drone delivery business LINK

  • With its core product on sales cruise control, Bloomberg reported this week that Apple now plans to renew its effort in the home-based smart device category: That includes a brand new “smart hub” device featuring a 7-inch display screen, capable of FaceTime, home security monitoring, smart device control and more. The smart hub will be built around the company’s new Siri AI and can sit on counters or walls via a magnetic hanging system. Apple also plans to soon launch refreshed, AI-ified versions of its longstanding Apple TV set-top box and its HomePod Mini smart speaker, part of a product family it has sold since 2018. The goal, according to Bloomberg, is to convince users to have multiple interconnected iDevices throughout the home.

  • A rural New York school district paused its plan to put a humanlike AI robot named “Sally” in a high school classroom after parents, teachers, and state officials pushed back. , the nearly $60,000 robot was supposed to help students learn robotics, coding, and technology by answering approved questions, explaining difficult concepts, and showing students how AI machines are maintained and updated. School leaders said Sally would not record students, collect personal information, search the open internet, or replace teachers. But the plan raised viral concerns about privacy, trust, and whether robots belong in classrooms at all. The backlash grew stronger because Realbotix, the company behind the robot, has ties to a sister company connected to hyper-realistic intimacy dolls

  • IBM claims ‘trusted quantum advantage’ (DC)

  • World Cup generates $20B in prediction market volume (CD)

AI of the Tiger

  • Mark Zuckerberg waxed philosophical with a 982-word op-ed titled “The AI Future Is for Everyone” in the Wall Street Journal yesterday.

  • The hottest jobs in AI right now are the physical ones, with some paying “42% more than similar jobs in other fields.”

  • AI companies are recruiting electricians by the thousands (NYT)

  • Google is adding two big AI features to Google Vids: Gemini Omni and personal avatars. Gemini Omni lets people create and edit videos by typing what they want in plain language. You can start with a prompt, add a photo or rough sketch for reference, and the tool generates a video around that idea. After that, you can keep editing by chatting with it, asking it to change the background, improve lighting, add effects, or tweak parts of the clip without starting over. The second feature, personal avatars, lets users upload a selfie and short voice recording to create a digital version of themselves that can deliver typed scripts on video.

  • An international bidding war for the hot new book Call Me, I’ll Hide the Body quickly cooled over allegations that it was written largely with AI. An unpublished crime novel by first-time author Jerry Falade was on track to become the biggest book deal of the year. Minotaur Books, an imprint of Macmillan Publishers, paid $2.4 million for the book and a sequel. While the author has maintained he didn’t use AI, the book apparently raised enough red flags among AI detection tools that everyone got cold feet.

Defense Docket

  • The Iran conflict showed new signs of spreading across the Middle East as the US retaliated against attacks on its forces, hitting a number of targets in a two-hour operation. Drones struck two LNG tankers on Egypt’s Mediterranean coast, the first incident in Egyptian waters since the war began in February. Saudi Arabia and Iraq have also been drawn into the latest flareup.

  • Ukrainian artillery crews are poised to get access to extended-range shells by the end of the summer — a high-tech tool Kyiv hopes will drastically expand the frontline “kill zone.” By piling battlefield setbacks atop waves of strikes deep inside Russia that have triggered fuel shortages and pushed up prices, Ukraine aims to increase pressure on Moscow to end the war.

Crypto Corner

  • Treasury invokes Satoshi in plea for Clarity Act (DC)

  • Coinbase misses on Q2 earnings (DC)

  • Strategy posts $8.2B loss (TB)

  • US sanctions Iranian firm taking crypto for Strait of Hormuz (TD)

  • Ray Dalio holds 1% BTC in his portfolio (BM)

  • Canadian crypto ownership increases to 25% (CT)

Energy Transition Today

  • Brookfield is teaming up with NextEra Energy on a more than $100 billion transformation of a shuttered Cold War uranium-enrichment facility in Kentucky into a data center campus with a generating plant. The privately funded effort will include construction of a 2-gigawatt natural gas-fired power plant at or near the government site in Paducah in western Kentucky and as much as 2.6 gigawatts of battery storage capacity, the US Energy Department said.

  • A startup revived a failing geothermal plant with AI. After buying a geothermal plant in New Mexico that was rapidly losing heat and struggling to generate power, an energy startup brought it back to life by using AI models. The AI found hidden systems and pinpointed where to most productively drill at the site—the new well is now one of the most productive of its kind in the US, the company said

  • Global EV sales remained slow in the first three months of the year but rose 35% in the second quarter even amid lackluster growth in China and the U.S., the world’s two biggest EV markets. (International Energy Agency)

The Dig

  • Zijin Gold’s C$5.5 billion ($3.9 billion) takeover of Canada’s Allied Gold was scrapped after the deal failed to get Chinese regulatory approvals ahead of a deadline. The companies terminated the transaction after concluding there’s “no reasonable likelihood” that all conditions for its closing on it. Zijin Gold has instead agreed to buy about $295 million in shares in the African-focused metals producer, giving it a 9.2% stake.

  • Anglo American is discussing a deal to sell its De Beers diamond business for $1 billion, just a fraction of what the one-time diamond monopoly was once worth. Anglo has been looking to sell De Beers since it fended off an almost $50 billion approach from BHP Group in early 2024, yet its disposal process has been stymied by a crisis in the diamond market

  • Cameco has said it has filed for an IPO of its Westinghouse Electric business which it owns jointly with Brookfield Renewable Partners

The Picks List

  • Canadian billionaire Larry Tanenbaum is betting that women’s sports leagues, long undercapitalized relative to men’s, now offer some of the industry’s most compelling growth. The 81-year-old mogul is cashing out of the investment of a lifetime, selling his 25% interest in Maple Leaf Sports & Entertainment to Rogers Communications for C$4.35 billion. So he’s turning his focus to his women’s sports portfolio — his ownership of the Toronto Tempo of the WNBA and a $100 million investment into the Professional Women’s Hockey League.

  • New running apparel and footwear brands that prioritize fashion and performance are picking up speed in popularity. Brands like SATISFY, Bandit Running, and District Vision have seen double-digit sales growth over the past year, despite premium price tags — like SATISFY’s holey $140 “MothTech” shirts. Many of these companies operate on streetwear-style limited-edition drops to drive demand. Some even offer memberships for early access.

  • The Verge wrote about how artists are taking legal action (and, in some cases, winning) against AI slop.

  • The roller coaster aiming to break 6 world records - A Six Flags theme park in New Jersey unveiled plans to build a new roller coaster it says will break six world records. The park says that when the coaster, named Bakunawa after a serpent from Philippine legend, opens next year, it will be the world’s: 1) fastest spinning coaster (zooming 100 miles per hour) 2) fastest inversion 3) first upside down launch 4) longest stall inversion 5) tallest spinning coaster and 6) first floorless spinning coaster.

The Breakroom

  • EBay, former executives to pay $56 million to couple sent cockroaches in harassment campaign- link - eBay and its former execs will pay $56 million to a couple over a 2019 campaign to scare them into silence. Here are some of the things eBay sent them: live spiders and cockroaches, a funeral wreath, a book called Grief Diaries: Surviving Loss of a Spouse, and a bloody pig mask. There was also a scheme to plant a GPS tracker on their car, and one exec told the security team to do “whatever it takes

  • An upcoming Qantas route will connect travelers directly from Australia to London or New York, creating the world’s longest commercial passenger flight. When Qantas’ Project Sunrise is ready to roll, its flights will last a whopping 22 hours. Qantas is using 12 specially designed Airbus A350 jets for the service, each carrying 238 passengers across four cabins: first, business, premium economy, and economy. That’s fewer passengers than the aircraft typically hold, but the tradeoff is more legroom, additional beds, and a dedicated “well-being zone” for stretching and snacking. There are other innovations, too. NYT reports that Qantas worked with food and health experts to help reduce jet lag, including custom lighting throughout the flight and curated meal plans (caffeine and chili for breakfast, for example).

  • The New York Times chronicled the saga unfolding on Nantucket around whether influencers should be allowed in certain spaces.

  • Cavities can be stopped without drilling by painting silver diamine fluoride directly on a tooth, per large US study; treatment permanently darkens the decayed part of the tooth, with scientists currently focused on baby teeth.

  • A Welsh library recently received two books that had been checked out by a man’s grandfather…over a century ago. The overdue titles from the Llanrwst Library survived two World Wars, the creation of the internet, the rise of social media, and more before finally making their way back to the shelves.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Selling the Beautiful Game]]>https://thependerpulse.substack.com/p/selling-the-beautiful-gamehttps://thependerpulse.substack.com/p/selling-the-beautiful-gameWed, 29 Jul 2026 18:17:20 GMTEven though the World Cup is over, that doesn’t mean our coverage of it is!! Well, sort of.

This week there was an announcement out of FIFA that sounded a lot less like something you’d read on ESPN and more like something you’d find in a pitch deck.

FIFA is proposing to create a a new commercial entity (FIFA Forward Enterprise, or FFE) that would house everything from broadcast rights to sponsorships, ticketing and licensing across its tournaments. It would then sell up to roughly 20% of that company to outside investors, at a valuation of about $20 billion, raising $4.2 billion.

In other words: FIFA looked at the success of this year’s World Cup and thought, what if we put this in a new entity and sold a minority stake? What if we monetized the economics of the World Cup... without giving up control of the sport itself?

The proposal includes the following :

  • FIFA would create a separate commercial company housing media rights, sponsorships, ticket sales, and licensing across men’s, women’s, and youth soccer.

  • Outside investors would own a minority economic interest. FIFA insists it retains complete control over the rules of the game, tournament formats, and governance.

  • Proceeds would flow largely to FIFA’s 211 member associations, currently $8 million a year each, rising to $20 million for the 2027–30 cycle, with further increases promised after that.

  • JPMorgan has been retained to run the process and Thrive Eternal (already a minority investor in the San Francisco Giants) is the reported frontrunner to lead the investment

Unsurprisingly, this proposition didn’t land with universal enthusiasm…

UEFA (Union of European Football Associations), the governing body for soccer across Europe, immediately criticized the proposal, calling the deal a line that “should never” be crossed and warning it offers “zero transparency as to who gains financially.” Reports suggest UEFA is even considering a boycott of FIFA events in protest.

Fan groups and politicians have piled on too, framing this as selling out a sport that’s supposed to be run by nonprofits, not private capital. The critique, roughly: FIFA is meant to be a steward of the game, not a PE sponsor.

I think the main pushback comes from this: investors don’t typically write multi-billion-dollar cheques out of sporting passion. Ask Jim Balsillie, who spent years and hundreds of millions trying to buy an NHL team and bring it to Hamilton, only to get rejected by the league three separate times. Sports passion has a long history of being an expensive investment thesis. Investors don’t usually confuse fandom with capital allocation. Sports owners do that all the time. Investors, less so.

So, is this actually as unprecedented as the backlash suggests? Or is FIFA just the latest institution waking up to something much bigger already underway?

The real story isn’t soccer. It’s broadcasting.

More specifically, it’s live broadcasting. Today, broadcasting is going maybe its biggest structural shift since cable television. It’s becoming more fragmented, more data-driven, and increasingly valuable especially for one type of content: live events.

We’ve talked about this before, everything has gone on-demand. Movies. TV. Podcasts. Even news. The one category that hasn’t budged is sports. They’re still consumed live, by millions of people, at the same moment in time. That makes them one of the rarest assets left in media.

Global sports rights are expected to exceed $67 billion in 2026, driven by the FIFA World Cup, the Olympics, and renewed league contracts. That’s why companies are willing to spend billions for exclusivity.

And there is another trend worth paying attention to

Everyone is chasing data

The broadcast models of today no longer look like they once did: League → Network → Viewer

The modern model is becoming: League → Platform → Viewer → Data

Owning the customer relationship is becoming nearly as valuable as owning the content itself. That’s why leagues increasingly want the things a broadcaster never used to hand over: email addresses, viewing habits, merchandise purchases, betting activity, ticketing history. Broadcasting isn’t just distributing video anymore, it’s owning the fan relationship.

The next decade may not be won by whoever owns the best content. It may be won by whoever owns the best live audiences. Everything else (movies, TV, documentaries) can be watched later. Live events can’t. That’s why sports rights keep appreciating while plenty of traditional entertainment assets are under pressure. The scarcity was never the video itself. It’s millions of people choosing to watch the same thing at the same moment. That simultaneity is becoming one of the rarest, most valuable assets in media.

And because we can’t avoid talking about it – let’s look at the AI lese. Generative tools can now produce infinite content at close to zero marginal cost. When content itself stops being scarce, the thing that stays scarce is the real, human, happening-right-now attention. A World Cup final can’t be generated. It can’t be personalized or viewed on demand because of a recommendation algorithm. Twenty-two people are either on a pitch for the world to overserve, or they’re not. In a world about to be flooded with synthetic content, that kind of unscripted, unrepeatable, all-at-once event may end up being worth more, not less.

FIFA didn’t invent this playbook

Formula One separated governance from commercial rights decades ago. CVC has run versions of this exact structure across Six Nations Rugby, La Liga, and the United Rugby Championship.

IT also worth mentioning that the person advising FIFA on how to structure this deal is Greg Maffei, the former CEO of Liberty Media, the company that literally wrote the Formula One playbook FIFA is now borrowing from.

But there is a major difference with this FIFA deal and that is scale. Most prior sports-PE deals have been in the hundreds of millions or low single-billions. FIFA is talking about a $20 billion valuation, a $4.2 billion raise, and meaningful new funding flowing to 211 member associations. If approved, it would be the largest private capital transaction ever involving a global sports governing body.

Let’s see what happens next

Broadcasting rights aren’t really about broadcasting anymore. They’re about four things: attention, data, distribution and capital.

Twenty years ago, broadcast rights were contracts. Today, they’re infrastructure. Brookfield buys toll roads. Royalty Pharma buys pharmaceutical royalties. Music funds buy song catalogues. Those assets share one thing: predictable, recurring cash flow. World Cup media rights arguably belong in that same conversation: global, recurring, scarce, highly predictable.

Suddenly FIFA looks a lot less like a sports organization and a lot more like the owner of one of the world’s most valuable assets.

Pender Events + Publications

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • New Podcast - Pender’s CIO Greg Taylor sits down with Laura Baker to break down why traditional diversification has lost some of its potential, and what investors could consider instead. Greg walks through: Why S&P 500 concentration is back at dot-com era levels. How Pender’s Liquid Alternative Multi-Strategy Funds are built to smooth volatility. Why real assets are increasingly on the team’s radar and small caps remain a focus Full episode: https://bit.ly/4x4ZmoR

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Big Tech has flooded debt markets for months with mega bonds that were initially snatched up by investors keen to get exposure to the artificial intelligence boom. As demand wanes and bubble concerns mount, those deals are becoming harder and costlier to get over the line. BlackRock sold a $12.5 billion bond Monday at a hefty yield of 7.53%, one of the highest levels for a blue-chip data-center debt offering since the AI borrowing binge started last year, according to Bloomberg-compiled data.

  • Brookfield Asset Management has raised about $2 billion for a Middle East-focused vehicle backed by Saudi Arabia’s wealth fund, even as the region grapples with the Iran war. The investment firm is committing $500 million to the private equity fund, while a group of strategic investors comprising Saudi’s Public Investment Fund and other global and regional institutional partners contributed the remainder, according to a statement seen by Bloomberg News. The fund will pursue buyout and growth opportunities across the Middle East in sectors including financials, consumer services and technology, with a target of allocating 50% of its investments to Saudi Arabia.

  • Shein’s Hong Kong IPO revealed that its US revenue slipped 14% after the government closed the de minimis shipping loophole.

Macro Morning

  • Canadians are shaking off months of pessimism as worries about weak growth and higher energy prices fade, according to the latest Bloomberg Nanos poll of consumer sentiment. The share of respondents who see the economy worsening over the next six months fell to 34.4%, the lowest reading since November 2024, the month Donald Trump was elected as US president. The proportion of respondents who say their personal finances are worse off than a year ago is also declining.

  • Vancouver approved a developer’s plan for the construction of Canada’s tallest buildings west of Toronto. At the center of Holborn Group’s C$2.8 billion ($2 billion) proposal for four new buildings is a hotel which may potentially reach 315 meters (1,033 feet) high. If it is ultimately built to that height, it would be Vancouver’s first project above the 300-meter threshold deemed by urbanists as “super-tall.”

  • A bipartisan group of US senators announced a deal on long-awaited legislation to allow President Donald Trump to impose more restrictions on major buyers of Russian energy, as well as Iran. Trump has signaled support for the measure. The bill extends penalties on Iran and singles out Russian gas and oil exports, empowering the president to target the top five buyers of Russian crude and natural gas with tariffs, as well as the top five countries aiding Russia’s energy sanctions evasion.

Technology Today

  • The Trump administration banned the import of new Chinese robots, including humanoid and quadruped models, citing national security concerns and the need to protect US industry

  • According to Emarketer, influencers with fewer than 20,000 followers accounted for 19.5 percent of the total influencer marketing spend in 2021, a figure that is up to 45 percent of campaign spend as of 2026. Katie Deighton, The Wall Street Journal

  • A new social-first sports entertainment company called World1 is reinventing sports for the vertical-video era. Just as microdramas are reinventing soap operas for younger audiences, World1 wants to “make the highlight the sport.” World1 CEO Brett Morris describes the company’s “microsports” as “entirely original sports where world titles are won or lost in 30 seconds.” World1 is hosting competitions built around simple feats of speed and strength, such as a 10-yard sprint and bench press. The events will be held in a movable arena that is a “purpose-built, entertainment-first modular stage that can drop into any large-scale indoor venue in any major city worldwide.” The first event will be announced in the coming weeks and feature a mix of current Olympic athletes and “emerging phenoms worldwide.” World1 has assembled a strong roster of investors, including Mark Cuban, private equity veteran Dan McClory, and Abu Dhabi holding company Palms Sports. It also has the backing of 10 Olympic medalists in its “founders pool,” including swimmer Janet Evans, track and field champion Jackie Joyner-Kersee, and weightlifter CJ Cummings.

  • Meta is making it even easier for the Marketplace’s sellers to make listings and manage their offers, announcing the “Seller” app at the end of last week. The new app comes with a dedicated suite of tools such as a built-in inbox, new AI listing capabilities, and listing performance analytics. Given Marketplace’s growth in recent years — it has ballooned to 430 million monthly listings and now counts 1.1 billion active users.

  • Xbox experienced one of the strangest tech outages in recent memory. Starting Sunday night, players across the country couldn’t stream titles from Game Pass, launch the app store, or use a host of other internet-based features. That seems expected, but the outage also prevented people from playing physical discs. That’s because Xbox consoles now verify each disc online before playing it. Since the console couldn’t do that, it couldn’t read the discs. The outage has since been resolved.

AI of the Tiger

  • The number of security flaws discovered in popular software this year is on pace to double from 2025. Researchers blame AI.

  • Silicon Valley leaders warned against a US crackdown on open-weight AI systems, deepening a debate about how Washington should respond to a recent breakthrough from Chinese startup Moonshoot

  • Nvidia, Microsoft and IBM launch AI alliance (DC)

  • Shared Claude chats are published on Google (DC)

  • Substackers Say New AI Detection Tool Is a ‘Witch Hunt’ - link

  • OpenAI is finally instructing ChatGPT to reject prompts that ask it to mimic the voice of famous authors.

Defense Docket

Crypto Corner

  • New York AG warns Clarity Act weakens crypto enforcement (TB)

  • Brian Armstrong criticizes crypto startups that rebrand to AI (CD)

  • Cantor advises crypto bank AMINA for IPO (CD)

  • Circle buys IBM blockchain patent estate (DC)

  • Binance disappears from Google store in certain countries (CT)

Energy Transition Today

  • Nuclear startup Antares, whose small modular reactor recently achieved criticality, raises $470 million as it seeks to build its tech on military bases. (TechCrunch)

  • Five states have offered to host nuclear waste in exchange for federal help in developing nuclear power plants. (Bloomberg)

  • The data center boom is driving General Motors to continue innovating on battery technologies even as demand for EVs remains low. (Semafor)

  • Brookfield Asset Management will channel renewable energy investments in India into states with robust transmission networks, as grid bottlenecks in some regions are stifling wind and solar generation. One of the firm’s platforms plans to scale up investments in wind projects in southern India, where generation and transmission capacities are better aligned, Nawal Saini, head of India energy at Brookfield, told reporters.

  • China is currently facing an oversupply of solar panels that’s driving down prices, but it’s still powering forward to build more factories. (Grist)

The Dig

  • Aluminum hit a genuine four-year high above $3,780 a tonne in early June 2026, driven by Strait of Hormuz supply fears tied to the US-Iran conflict, but has since pulled back to around $3,150-3,175 as of this week. Separately, on June 30, Alcoa agreed to acquire the bulk of South32’s global aluminum portfolio — including the Boddington bauxite mine, Worsley alumina refinery, Hillside smelter, and the MRN/Alumar assets in Brazil, excluding Mozal — for $4.1 billion upfront consideration ($3.1 billion cash plus ~17 million newly issued Alcoa shares worth roughly $1 billion), with an implied enterprise value of ~$4.7 billion once assumed lease-related net debt is included; South32 can also earn up to $750 million through a contingent value right tied to future alumina/aluminum prices exceeding strike levels across four annual periods starting July 1, 2026. Alcoa expects ~$900 million in NPV synergies and immediate EPS/FCF accretion on close, with the deal targeted to close in H1 2027 pending South32 shareholder and regulatory approval.

  • The US has asked Mexico to mirror its tariff wall against Chinese steel and aluminum by imposing Section 232-style duties on imports from outside North America, four people with direct knowledge of the matter told Bloomberg News. The goal is to preserve preferential treatment for steel produced in the US, Mexico and Canada, while applying a common external barrier to China. While it represents a big ask from US trade officials, Mexico is open to pursuing it amid talks for a broader deal under the USMCA trade agreement review.

  • Chile’s deadly storm adds growing pressure to copper prices – link- Deadly storms in Chile have disrupted copper mining in the world’s top producer in the past weeks, adding pressure to a market already struggling to meet surging demand from artificial intelligence, electrification and the energy transition. The severe weather triggered flash flooding and heavy snowfall across northern Chile, where many of the world’s largest copper mines operate. The storms have left at least 13 people dead and thousands affected across multiple regions, according to government officials. Canada’s Lundin Mining (TSX: LUN) suspended operations at its Caserones copper-molybdenum mine in the Atacama region after heavy snowfall disrupted power supplies. Mining operations at its Candelaria mine were briefly impacted by heavy rainfall, but the mill continued to operate using existing ore stockpiles. Full operations will resume in about two to three weeks, the miner said, after discovering damage to two power line towers at Caserones. Antofagasta (LON: ANTO) halted mining and processing for several days at its Los Pelambres operation and Barrick Mining (TSX: ABX) (NYSE: B) said Saturday it had safely evacuated workers from its Barriales camp in northern Chile by helicopter after roads became impassable because of severe weather. The company said it would keep the aircraft available to Chilean authorities through July 29 to support rescue and logistics efforts.

The Picks List

  • The Interview chats with rock legend Mick Jagger about his legacy with The Rolling Stones and the possibility of retiring from live touring.

  • Vox breaks down why F1 drivers don’t die behind the wheel.

  • British pubs poured an extra 30 million pints over the 39-day World Cup period, equating to a sales boost of ~$200 million, according to British Beer & Pubs Association figures.

The Breakroom

  • Arizona State University announced a new “Content Creation” program launching this upcoming term. It’s not just a class — it’s an entire major that culminates in a Bachelor of Arts degree

  • Watch this explanation of why every song you’ve heard lately has the same melody.

  • Ford debuted a limited edition of 1,000 Bronco SUVs with a magenta color scheme inspired by the state of Utah. The company’s Matt Simpson told CNBC it plans to increase limited offerings in a manner similar to “Nike dropping a sneaker

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Paddles Up]]>https://thependerpulse.substack.com/p/paddles-uphttps://thependerpulse.substack.com/p/paddles-upFri, 24 Jul 2026 20:03:13 GMTWhere do you get your ideas?

Stephen King said if you have to ask, you shouldn’t become a writer. Murakami said it’s about paying attention. Joyce Carol Oates said inspiration comes from the act of writing itself.

When I think about what goes into the Pulse, I don’t usually falter for ideas. The harder question is whether an idea is worth pursuing. Too obscure. Too well understood. Too confusing. Too … much?

I’ve tested all four in my old life in a previous role, where I learned the hard way that not everyone needs a stock pitch that compares a TSX-listed company to the Barbie movie. But a lot of people did love hearing how, exactly, I connected reinsurance to the Barbie Dreamhouse. It happened. It was rare. I was there. I’d write it again in a heartbeat.

That’s the thing about creative thinking, or thinking of any kind, really, you start down a path without knowing if or when inspiration strikes, or what shape it takes when it does.

The Hive reads THE HOBBIT (READALONG) | Fantasy-Hive

This one’s a bit of a detour. Our investment team held its annual strategy session in Whistler this year, and normally that’s not Pulse material, a company offsite is the most well-worn topic there is. Browse LinkedIn for ten minutes and you’ll hit three recap posts about one.

But the more I sat with it, the more this one earned its own space, not because it was a break from investing, but because it wasn’t. Same instincts, same habits of mind, just pointed at a lake instead of a balance sheet. Which is how I ended up blindfolded in a canoe, drifting toward the middle of that lake, in what turned out to be a pretty accurate re-enactment of what happens when nobody wants to be the first to say we’re off course.

Now grab a paddle as we talk about four moments from that offsite ended up teaching us as much as anything on the formal agenda.

1. The importance of a perspective change

This was my first time at an our Investment team strategy session, and the drive up made the case for the whole event before we’d even arrived.

In the age of maximum productivity, leaving the office, stepping away from the daily critical path that keeps the funds running, feels counterintuitive. But almost as soon as we hit the Sea-to-Sky Highway, I felt my perspective start to shift.

It starts small. The to-do list gets quieter. The daily routines fade into background noise. As the highway curved into the mountains, my mind cleared, and the space to think slow came back.

That’s both the fun and the hard part of this business: managing thinking fast alongside thinking slow. Balancing the immediate and critical against the longer-term ideas that are easy to lose to the day-to-day. Sometimes the only way to think differently is to physically remove yourself and think somewhere else. You’d be surprised what surfaces when you do.

Sometimes it’s a stock idea. Sometimes a Substack topic. Sometimes something deeper.

It’s a small thing, but it’s also curiosity in its most literal form, the willingness to go looking, even when you don’t know what you’ll find.

2. The importance of learning from your own team

As part of the offsite, we heard from a range of speakers. One,covered already in our piece on physical AI, was Daniel Lee, Managing Director, Investment Banking, Technology & Innovation Sectors at CIBC Capital Markets, on robotics and the physical manifestations of artificial intelligence.

But the presentation I didn’t know what to expect from was our own Ampere Chan’s update on Pender Software Holdings (PSH).

PSH invests in software-driven businesses with strong market potential, durable competitive advantages, and scalable growth. Its core areas include: Vertical software, Consumer & SMB applications, Marketplaces, Data & analytics platforms and Social networks.

Ampere walked us through PSH’s history — the wins, the challenges, and what the team is building next.

Most of us left more informed on a genuinely cool business that, even sitting under the same overarching company, we hadn’t fully understood. That’s the thing: you don’t know what you don’t know, even about your own colleagues down the hall.

The other side of it: we were encouraged to ask questions and push back. Watching how other teams think, what they value, what experience they bring, and hopefully, in turn, giving the PSH team a useful outside-in read on their own business.

This is where team player stops being a value and starts being a consistent action, genuine curiosity about a colleague’s business, offered in service of making their work better, not just yours.

3. Can you see my reflection?

Another part of the offsite: looking back at investments past. Sometimes we call it a post-mortem. Sometimes a reflection.

It’s an important part of our process, and an uncomfortable one. In the pace of day-to-day decision-making, it’s easy to move on, no matter how haunting a call might be. Often that’s the healthier option. Made a mistake? Who wants to dwell, when you could move forward instead.

But we took a step back this year and looked critically at our decision-making, examining specific calls made in the past: what went well, what didn’t, and why.

It’s harder to admit a fault than to make it. But it’s harder still to make the same one twice and expect a different result … I hear they call that insanity.

The point of a reflection isn’t to assign blame. It’s to learn, deliberately, from our own misses, so we don’t repeat them. Sometimes it’s holding too long. Sometimes it’s exiting too soon. Sometimes it’s misjudging management. Other times it’s market beta, or a geopolitical shock entirely outside our control.

Rather than dwell, we try to learn, and not repeat ourselves.

This is integrity doing the unglamorous work: sitting with a decision that didn’t pan out and being honest about why, in a room with the people who made the call. And it’s excellence, too, not the trophy kind, but the kind that shows up as a deliberate process for getting better, one uncomfortable debrief at a time.

4. Team bonding

Say “team building event” and you’ll get a predictable set of reactions.

The karaoke band at my wedding told me they play a lot of corporate team-building events … the kind where the whole company sits in an auditorium while the bravest (or most volun-told) souls take the stage to belt out “My Heart Will Go On” in front of their colleagues. As a karaoke lover myself, I can say with confidence: that would not be my version of a good time. Neither would a trust fall. Neither, frankly, would a team song.

So when I heard our version of team building involved “getting wet” and that we should “dress accordingly,” I wasn’t sure what to expect.

Turns out it was the Amazing Eco Race, an afternoon with my teammates by a lake in sunny Whistler. Sign me up. What I didn’t expect was how much real camaraderie got built, and tested, over a few somewhat ridiculous challenges “team building” label notwithstanding.

The egg race taught us to cheer on a teammate’s coordination even when it’s actively working against them. The bike race … on a child’s bike, no pedals … taught problem-solving under absurd constraints. Mini put, for the two of us who are left-handed and stuck with right-handed clubs, taught us that the odds being stacked against you doesn’t mean you’re knocked out. The Lego challenge, allegedly built for children, evidently not built for adult dexterity, taught patience, communication, and the ability to laugh at yourself when the task in front of you seems genuinely unreasonable. Every team finished. Eventually.

And then there was the canoe.

Blindfolded canoe racing is, it turns out, an excellent way to learn the importance of communication and trust, because the alternative is capsizing, or in one team’s case, drifting swiftly and silently toward the middle of the lake with absolutely no idea how they got there. Somewhere between “paddle harder” and “wait, did we just hit a dock?” the boat in question achieved a kind of directionless momentum that, in hindsight, is a pretty fair metaphor for a bad trade thesis: full conviction, wrong bearing, no one willing to be the first to say so.

They made it to shore safely…. Eventually, mostly because someone finally admitted they had no idea where “there” was, and the realization that it was time to just take the blindfolds off already. Turns out the trick isn’t paddling harder. It’s someone speaking up.

That’s what being a team player actually looks like in practice — showing up fully for something a little ridiculous, because the people next to you are worth showing up for, and knowing the rest of your team is cheering you on from shore, laughing with you the whole way (or at least most of it).

Whistler wasn’t a break from the work. It was the work, from a different angle. Idea generation is easier with a clear head. Investment analysis is sharper when you’ve actually sat with real businesses instead of assuming you understand them. Filtering out the noise takes patience, and reflection takes integrity. And none of it holds together without people who’d rather paddle a blindfolded canoe with their colleagues than sit it out on the dock.

It’s easy to put words like these on a wall. It’s harder to build a team that actually lives them, one that stays curious, plays for the team, tells the truth about its own mistakes, and still shows up passionate for the ridiculous parts. That’s what a lake, a canoe, and a very confused sense of direction taught me this year.

Same time next year, paddles up.

Pender Events + Publications

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • New Podcast - Pender’s CIO Greg Taylor sits down with Laura Baker to break down why traditional diversification has lost some of its potential, and what investors could consider instead. Greg walks through: Why S&P 500 concentration is back at dot-com era levels. How Pender’s Liquid Alternative Multi-Strategy Funds are built to smooth volatility. Why real assets are increasingly on the team’s radar and small caps remain a focus Full episode: https://bit.ly/4x4ZmoR

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Oracle stock has fallen more than 50% since June 2. Shares are down 36% year-to-date versus a 9% S&P 500 gain and now trade at just 15.5 times forward earnings, days after S&P cut Oracle’s credit rating to one notch above junk. (Yahoo Finance)

  • Elon Musk said short sellers against SpaceX won’t survive (CNBC)

  • Musk Leaves Room For a Potential SpaceX-Tesla Merger LINK

Macro Morning

  • The US is on the verge of losing its place as the world’s leading “farm superpower,” the FT reports. In 2025, Brazil exported just $2 billion less agricultural products — including fruits, vegetables and grains — than the US did, compared to a $56 billion gap in 2021.

  • Premiers gathering in Charlottetown this week were anxious for Prime Minister Mark Carney to share his plan for addressing the latest threat of US tariffs. Carney stopped short of a roadmap for negotiations. But he said that “everything’s on the table” if there’s no agreement and new 50% tariffs come into effect later this summer.

  • Canadian retail sales rose in June after months of gasoline-driven gains, while the data point to consumers broadening their purchases. An advance estimate suggests retail sales increased 0.4% in June following a 1% gain in May, Statistics Canada reported. If that comes to pass, it would be the sixth consecutive increase.

  • The United Arab Emirates expects to announce an economic deal with Canada this week. The Comprehensive Economic Partnership Agreement could be one of the fastest such deals the UAE has concluded, taking less than 90 days, Minister of Foreign Trade Thani Al Zeyoudi said in an interview. The talks come after the UAE said last year it would invest $50 billion in Canada, without giving a timeframe. “The relationship with the Canadian government is really good,” Al Zeyoudi said. “Projects we can invest in are under discussion.”

Technology Today

  • TikTok is doubling down on sports content as its next major engagement driver. TikTok’s first live sports event will feature superstar fighter Amanda Serrano defending her title from Lucrecia Manzur. It will be broadcast on August 21. As a reminder, TikTok signed both the NBA and the WNBA to its TikTok GamePlan product suite, which allows leagues to “activate on the titular app and partner with its creators,” per Tubefilter.

  • Locked out of your Google account? No worries. You can now get back in with a selfie video.

  • Apple Maps to power navigation experience for Ford UEV Platform LINK

  • IBM is buying Boeing and GM’s secretive research laboratory to supercharge quantum computing LINK

AI of the Tiger

  • OpenAI is adding two new independent board members ahead of a planned IPO later this year: Nubank CEO David Vélez, and Bank of New York Mellon CEO Robin Vince

  • OpenAI says one of its advanced AI agents escaped a controlled security test and accessed internal systems at Hugging Face, a major platform for sharing AI models. OpenAI called the incident “unprecedented” and is investigating it with Hugging Face. Hugging Face CEO Clement Delangue said it was “mind-blowing” that the attack happened without human help.

  • The US government plans to spend $5bn using AI to solve major scientific problems, including chronic diseases, drug discovery and stronger building materials. Researchers will get access to the Department of Energy’s supercomputers, specialist data and AI tools. The White House says the project will help different agencies work together and make better use of government data on areas such as health, chemicals and critical minerals.

Defense Docket

Crypto Corner

  • Coinbase lets businesses accept USDC payments from AI agents LINK

  • Senate unanimously opposes Sam Bankman-Fried pardon (DC)

  • Crypto bill faces final test over Trump conflicts (TB)

  • Morgan Stanley launches crypto trading on E*Trade (DC)

  • Visa unveils stablecoin platform for banks (DC)

Energy Transition Today

  • Carbon dioxide emissions from the U.S. power sector rose by 4% in 2025 compared to the year prior, due to growth in electricity generation and coal use. (Utility Dive)

  • California EV sales climbed between April and June after dropping to historic lows during the first quarter of 2026, with electric models accounting for nearly a fifth of all new vehicles sold in the second quarter. (E&E News)

  • President Trump approves a landmark deal with Saudi Arabia that would see the U.S. support the creation of a nuclear power program in the kingdom, although the agreement still requires a vote from Congress and could spark concerns about the spread of nuclear weapons. (NBC News)

The Dig

  • Vale SA recorded its highest second-quarter production for iron ore since 2018, with output increasing 0.8% year over year to 84.3 million metric tons. Its copper output increased 6.3% year over year to 98,400 mt, while nickel production rose 4.2% to 42,000 mt.

  • Lynas Rare Earths Ltd. expects China to tighten export curbs further, leaving Lynas customers concerned about supply amid unexpectedly high magnet demand, interim CEO Pol Le Roux said.

  • Glencore PLC is looking into withdrawing about 30,000 mt of lead from London Metal Exchange warehouses after stocks reached record highs, Reuters reported, citing industry sources with knowledge of the matter.

  • The National Coal Council urged the Trump administration to use trade agreements as part of a suite of pro-coal policy recommendations to expand the US export market and preserve the domestic coal power fleet.

The Picks List

  • MIT researchers publish new study detailing how to grow artificial blood vessels, a feat scientists have struggled to achieve due to their microscopic size.

  • A BCI chip implanted behind your eye just got approval in Europe and will begin restoring some blind patients’ ability to read as early as September.

  • Investor Kevin O’Leary turned himself into the face of capitalism. The famed Shark Tank host and entrepreneur has no problem playing the villain and it’s helped him achieve a net worth of roughly $400 million. (The Profile)

The Breakroom

  • The final FIFA men’s World Cup viewership numbers are in, and a whopping 75% of Canada’s population watched the action in some capacity.

  • PWHL owner Mark Walter facing federal investigations. The league’s biggest financial backer is in the hot seat over possible financial wrongdoings involving two insurance companies he owns. The investigation is looking into whether those companies invested billions of dollars into other businesses connected to Walter without fully disclosing those ties.

  • A Tesla solar customer went to check their lease online—and instead of finding the usual legalese about kilowatt-hour rates, they got a scanned copy of the Book of Enoch, a more than 2,000-year-old religious text about fallen angels and the origins of demons. Tesla’s support team acknowledged the swap and sent the actual lease, per Electrek—without explaining how apocalyptic scripture ended up where the payment terms should be

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[The Leverage Effect]]>https://thependerpulse.substack.com/p/the-leverage-effecthttps://thependerpulse.substack.com/p/the-leverage-effectWed, 22 Jul 2026 15:18:09 GMTWorking through this month’s commentaries, the same word kept coming up: volatility. Now generally speaking that’s been in reference to oil, inflation, rates... the standard. But this week I came across an article in Barron’s that introduced us to a new name on the list of volatility drivers, and this kind comes from someone (or a lot of someone’s) with $2,000 and a trading app.

As we find ourselves in the summer months, markets have not obliged the well-respected summer slowdown, instead greeting us with wave upon wave of volatility. Today’s environment is characterized by a significant and widening bifurcation. Mix in an energy supply shock, re-accelerating inflation, the continued question on AI spending sustainability and “higher-for-longer” monetary policy regimes, let’s just say it’s mayhem in the marketplace. All the usual suspects, essentially. But there’s a newer force at work too, one based on individual stocks rather than the broader macro picture.

Let’s start with a stat: in June, margin debt hit a record high of $1.5 trillion, up 49% from a year ago, according to the Financial Industry Regulatory Authority.

How about another: average volatility across a basket of 20 popular retail stocks has increased by 80%, relative to the same period last year. Even in tickers where institutions own a vast majority of the outstanding shares, small, we are seeing retail traders with the ability to create major swings in price action.

So, what’s going on? A Dot-Com era rule that previously restricted margin access for high-frequency traders to those with account balances of $25,000 or more has gotten a revamp. Last month, a new margin framework replaced the 25-year-old pattern day trader rule. Under the new intraday margin rule, retail traders can now execute unlimited day trades on margin with account balances as low as $2,000, granting smaller, less capitalized accounts far greater access to leverage.

Webull CEO Anthony Denier said during the company’s first-quarter earnings call in May that he expects the elimination of the pattern day trader rule to eventually boost trading volume by at least 20%.

Although the new rules were met with excitement from retail investors, not all is well on the home front. When a trade goes wrong or markets turn quickly, traders operating with only a few thousand dollars in their accounts have fewer resources to meet margin calls, increasing the risk of forced selling during market declines. That vulnerability is growing as volatility rises across many heavily traded retail stocks, where sharp price moves make margin calls more likely. Even in a zero-commission environment, smaller, less experienced traders lose money due to a variety of factors, overconfidence in their information and abilities, volatility, and the reality that other market participants are better equipped to seize profitable trades and liquidity in seconds.

Not to mention the impact of everyone’s favorite Reddit forum, WallStreetBets. Stocks including Micron Technology, Sandisk, and AST SpaceMobile, all popular among retail traders on forums like WSB, have experienced sizable increases in volatility over recent weeks. Look back at what happened in prior years to stocks like GameStop, or even closer to home, BlackBerry. With these new leveraged opportunities in place, the future doesn’t necessarily look that friendly.

If you want a preview of where unchecked retail leverage can lead, look no further than South Korea. The intense volatility rocking their chip-heavy stock market has come to America too, but so far Wall Street has only suffered modest losses by comparison. The question is whether this is just noise, or whether the semiconductor slump and vulnerability among highly leveraged investors eventually catch up to additional markets as well.

Regulators in Seoul have ramped up efforts to curb wild swings in equity prices, fueled in part by heavily leveraged retail investors using ETFs. These investors were pulled in by the extraordinary AI boom, and many have been caught out by the rapid snapback. According to Goldman Sachs, more than 1.2 million leveraged retail trading accounts in South Korea triggered margin calls as of July 13, with an estimated 320,000–360,000 accounts fully liquidated. Goldman’s strategists reckon this means around one in 30 adults in the country, or 3.4% of the adult population, have received margin calls.

That could have a meaningful impact on Korea’s economy more widely, if many South Korean households are now sitting on losses, that could weigh on the country’s economy moving forward. Given rising retail participation in U.S. stocks, exposure to the AI theme, and the rising popularity of leveraged vehicles: could Wall Street, and the broader economy, be next?

The market just handed smaller traders a bigger lever to pull, right as tariffs and geopolitical risk start stacking up on the macro side. If this is what volatility looks like on a quiet news day, what happens on a loud one?

Pender Events + Publications

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • New Podcast - Pender’s CIO Greg Taylor sits down with Laura Baker to break down why traditional diversification has lost some of its potential, and what investors could consider instead. Greg walks through: Why S&P 500 concentration is back at dot-com era levels. How Pender’s Liquid Alternative Multi-Strategy Funds are built to smooth volatility. Why real assets are increasingly on the team’s radar and small caps remain a focus Full episode: https://bit.ly/4x4ZmoR

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • 52% of the Russell 2000 small-cap index’s return in the first half of the year came from AI-related companies.

  • Apple’s stock is up 60% over the past year and just surpassed Nvidia to again become the most valuable company in the world

  • Netflix is down 8% after a weaker Q3 revenue forecast extended a slide that has cut the stock nearly in half since last summer as its P/E compressed to 18.5x from 45x a year ago.

  • Paramount Skydance must put its $110 billion acquisition of Warner Bros. Discovery on hold for a couple of weeks, a U.S. federal judge ruled on Monday, after a California-led coalition of states argued the merger would irreparably harm competition. The judge will hold a hearing on August 3 on whether the deal should be delayed throughout the course of the lawsuit, which could take months to reach a final ruling.

  • National Bank of Canada is assessing investors’ appetite for a significant risk transfer deal, adding its name to a growing list of lenders exploring the instruments as a way to create room on their balance sheets. The Montreal-based lender is considering an SRT tied to a portfolio of project financings, according to people familiar with the matter. Banks use SRTs as a way to insure loans against default, offloading some of the risk to other investors, who in turn receive payments.

  • Kraft Heinz and Walt Disney announced a multiyear partnership Tuesday that will place brands including Heinz, Philadelphia, and Kraft Mac & Cheese across Disney’s North American theme parks, resorts, and cruise ships. The alliance also covers Disney’s studios and streaming platforms, giving the companies opportunities to develop advertising, digital content, themed products, and experiences using Disney characters and franchises.

Macro Morning

  • Using Section 338, President Trump announced this evening a 50% tariff on nearly $20 billion of imports from Canada, effective in 30 days. With Canada exporting roughly $400 billion to the U.S., the measures affect just under 5.5% of total exports. In effect, they raise the average Canada-U.S. tariff rate by a little more than 2.5 percentage points. Notably, Section 338 has not been used since the 1930s and has never previously been used to impose tariffs, which suggests the measure could face legal challenges. The timing is also notable, and it is likely these tariffs will serve as additional leverage in upcoming CUSMA negotiations.

  • Inflation cooled more than expected in June, thanks to lower gas prices. The annual rate slowed to 2.8 per cent from 3.2 per cent in May. Gas prices fell 10 per cent month over month as the U.S. and Iran moved toward a tentative peace agreement (which has since fallen apart). Grocery prices also eased, although checkout costs are still up 3.9 per cent from a year ago. That’s the 17th straight month grocery inflation has outpaced overall inflation.

  • the Bank of Canada held its policy rate steady at 2.25 per cent for the sixth straight meeting last week. Governor Tiff Macklem said policymakers are trying to steer inflation back to two per cent — the sweet spot for supporting economic recovery.

  • Wealthy boomers are increasingly upsizing houses as they age. Boomers, who hold roughly $110T in wealth and make up 42% of home buyers, already own 28% of US homes with three-plus bedrooms compared to 16% for millennials with kids, citing more space as their main reason for a new home.

Technology Today

  • Anyone who checked their Amazon Web Services account late last week may have found that they unexpectedly owed more than the GDP of most countries. A global billing glitch inflated estimated costs in Amazon’s billing console, with subscriptions that normally cost a few dollars now in the billions (and, in one case, $1.5 trillion). For example, the head of marketing at a UK charity “almost had a heart attack” when an app that usually runs 43 cents a month showed a $7.8 billion bill. The good news is that nobody actually has to pay these exorbitant sums. Amazon acknowledged the error and apologized, tracing the mess to a unit-pricing bug in its estimation subsystem, and confirmed the numbers wouldn’t hit any invoices.

  • AliExpress fined almost $630 million over illegal product sales LINK The European Commission fined AliExpress, the Chinese shopping site owned by Alibaba, €550 million (about $629 million) for letting sellers offer counterfeit and unsafe goods across the European Union, the largest penalty yet under the Digital Services Act. Investigators found millions of fake products, unsafe toys, and dangerous cosmetics still for sale after being flagged, and said AliExpress lacked enough staff, with screeners sometimes given just tens of seconds to judge whether an item met EU standards.

  • France doubles down on restricting access to Polymarket LINK

  • SpaceX is in talks to sell computing power to the Pentagon, potentially worth several billion dollars, similar to existing arrangements with Google ($920M/month) and Anthropic ($1.25B/month).

AI of the Tiger

  • US weighs ban on Chinese AI models LINK The Trump administration is looking at ways to block Chinese AI models in the US, with options ranging from sanctions on Chinese labs to security warnings and an executive order that would put liability on American companies hosting those models. Officials at the Commerce Department, NSA, and White House have weighed these steps since 2025, and support for tighter rules grew after China released its Kimi K3 model and staff changes shifted the balance in the White House.

  • AI fakes a growing problem on Apple Books, some ‘written’ in a few hours LINK

  • AI advice made people three times less accurate but twice as confident, researchers found LINK

  • AI note-taking apps are so normal in Silicon Valley that people aren’t even asking for permission anymore—one VC says it’s starting to feel like East Germany.

  • Apple is reportedly piloting a program that records and uses AI to summarize your Genius Bar conversations—and even though it’s opt-in, employees are nervous.

  • Violent threats against AI companies are on the rise, per the WSJ, and it has their execs “fearing for their lives.”

Crypto Corner

  • Crypto.com, developer of a cryptocurrency platform, raised $400.0M of Series A venture funding from Citadel Securities at a pre-money valuation of $19.6B.

  • BlackRock, Goldman, and JPMorgan try tokenized stocks (DC)

  • Trump meets with senators to work on crypto bill (CD)

  • Japan recognizes crypto as financial product (TB)

  • Revolut receives UAE approval for crypto services (CT)

  • Crypto clearinghouse Glacis Labs raises $6.8M led by Lightspeed Faction, with participation from Franklin Templeton, Coinbase Ventures, and others (TB)

Energy Transition Today

  • China’s construction pipeline for utility-scale wind and solar plants continues to outrun the rest of the world, even as the risk increases that some of the power generated will be wasted. The country had about 262 gigawatts of solar and 251 gigawatts of wind under construction in June, according to a Global Energy Monitor report on Tuesday. Both numbers are up from the end of 2025 and show that China is maintaining its renewables pace, despite the massive slowdown in official installation data, said Aiqun Yu, senior East Asia strategist for GEM, which tracks energy infrastructure. The distortion has arisen after new electricity pricing rules from June 2025 led companies to speed up construction schedules to finish before the deadline, effectively front-loading installations. Overall building activity has remained relatively consistent, Yu said.

  • BloombergNEF estimates U.S. data centers will account for 20% of the country’s power consumption by 2035, up from 5.9% today — an expansion that analysts say can’t be met even by maxing out new power generation additions to the grid and adding on-site gas generation. (Bloomberg)

  • The U.S. House passes legislation that would accelerate next-generation geothermal research and commercialization. (E&E News)

The Dig

  • Cadillac Mines and some of its backers are seeking to raise as much as C$363 million ($258 million) in an initial public offering, adding to the mining-driven rebound of public listing activity in Canada. The Toronto-based mineral exploration company expects to receive about C$190 million gross proceeds in the IPO, with the rest going to current shareholders. Cadillac is the latest mining firm in a growing Canadian pipeline of metals-based listings that also includes BG Gold and Amapa Minerals

  • US President Donald Trump signed two directives aimed at bolstering domestic aluminum production and securing critical mineral supply chains

  • Chinese shipments of rare earth compounds and metals to Japan fell sharply to 45 kilograms in June from 714 kg in May, as Beijing maintained strict export controls affecting trade with its island neighbor

  • The DRC’s Chamber of Mines urged the government to delay proposed reforms to the country’s mining code until formal consultations with stakeholders are completed, warning that rushed amendments could undermine investor confidence.

The Picks List

  • People used AI to make a whole lot of predictions during this World Cup. But for all the data it was presumably fed, AI was in a surprisingly close race against an oracle with famously limited memory and not a single GPU to its name: a goldfish named Swimbappé.

  • Christopher Nolan’s “The Odyssey” opened to $264.1M worldwide, a $124.5M domestic debut that outpaced franchise releases like “Star Wars: The Mandalorian and Grogu” and “Supergirl”. 53% of attendees named Nolan himself as their top reason for going, part of a broader industry shift toward director-driven bets, as legacy franchises like Marvel and Transformers cool off.

  • Smucker’s $5 billion acquisition of Twinkie-maker Hostess has gone horribly wrong.

  • One of the UK’s largest mazes has been transformed into a giant mountain gorilla to celebrate Sir David Attenborough’s 100th birthday. The three-mile attraction at Wistow Maze in Leicestershire spans ~8 acres and features wildlife-themed quiz trails inspired by the legendary broadcaster’s nature documentaries.

The Breakroom

  • The Museum of Endangered Sounds is a website that preserves the noises of nostalgic (but mostly obsolete) tech: the Windows 95 startup chime, a VHS tape getting swallowed by a VCR, the old Nokia ringtone, and many more. Click on a thumbnail, and it’ll start playing the sound—or click a few at once for a full industrial-nostalgia symphony.

  • 57% Of Americans placed a bet last year. Only 38% read a book.

  • A group of Italian students just claimed a world record for largest paper airplane ever assembled, launching the giant plane just under 200 feet across a warehouse to claim the title. Their creation, built from paper and glue, measured nearly 23 feet long and had a wingspan of 65+ feet

  • Neil the Seal is somewhat of a local celebrity in Hobart, Tasmania, where the elephant seal oddly decided to take up residence twice a year during molting season. Other male seals will find remote islands to travel to for the big event, but Neil just can’t stay away from his adoring fans.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[The Age of Physical AI]]>https://thependerpulse.substack.com/p/the-age-of-physical-aihttps://thependerpulse.substack.com/p/the-age-of-physical-aiWed, 15 Jul 2026 21:07:28 GMTWe hosted our investment conference last week (more on that in Friday’s Pulse), one of the highlights was a series of external speakers who came in to talk about the themes reshaping the investment landscape, including how we can use new and evolving technologies to improve our own investment process.

One topic that left our whole team buzzing: physical AI which we learned about from Daniel Lee, Managing Director, Investment Banking – Technology & Innovation Sectors at CIBC Capital Markets.

In keeping with our (attempted) trend of short-form Wednesdays, I won’t go deep today, but I do want to give you the highlights.

What is physical AI?

Physical AI is the application of AI beyond the digital ecosystem. How far beyond you may ask… let’s chat robots!

Robotics and physical AI represent the next major evolution in artificial intelligence, this is the physical manifestation of moving beyond digital data processing in the cloud to systems that can perceive, reason, and act within the physical world.

Traditional robotics followed rigid, rule-based programming. Physical AI integrates multimodal models and reinforcement learning so robots can operate autonomously in complex, unstructured environments. In other words: the AI perceives, reasons, and acts in the physical world in real time.

What makes that possible is a combination of:

  • Advanced sensing technologies (vision, audio, depth, motion)

  • Increasingly robust semiconductors

  • Physical systems, the robots and machines themselves

The interesting part isn’t the hardware. It’s that instead of following rigid, pre-programmed instructions, these systems can interpret unstructured environments, adapt to new situations, and make autonomous decisions.

Time for a quick, self indulgent flashback

In my past life (aka when I was in high school) I took an intro to robotics course. Yes, I know that probably tells you a lot about my teenage experience… Anyways, I remember the frustration of trying to program my Lego-esque robot to wheel along a path I’d diligently mapped out for it. But heaven forbid there was a bump in the carpet, a poorly shaded line, or *gasp* a fellow student walking through its path. The robot would have a full technological tantrum and simply stop. No problem-solving, no adapting, no autonomous decisions. Just a meltdown.

The robots of today are a completely different beast. To be workforce-ready, they need the ability to improve and upgrade throughout their life cycle, which is turning robots into software-defined products. Humanoids, for example (not my Lego creations), can acquire new skills and improve their perception-to-action performance over time. Rather than relying on hardware redesigns, physical AI lets robots “learn” their way into an ever-expanding set of capabilities.

Where the capital is flowing

When we look at real-world examples of capital deployment, defense and industrial robotics have been the logical first adopters.

First up: drones, which we’ve talked about in The Pulse before. Another one hits closer to home, from my time covering mining companies, I can absolutely see the case for hazardous-environment robots doing inspection, quality control, and material handling instead of putting people in harm’s way.

But it’s the next wave that really got me thinking:

  • I watched footage of the humanoid robot races, equal parts exciting and terrifying.

  • Domestic consumer robots, never having to do laundry or the dishes again? Sign me up.

  • Delivery robots are genuinely everywhere now. I was in Miami recently, and these little delivery bots were buzzing along the sidewalks, dropping off coffee and Chick-fil-A. The future is already here.

Real-world deployment is happening now

Outside of critical Chick-fil-A delivery there are many other examples of physical AI being put to work in real world environments, far more actually then I even realized:

  • Amazon has deployed over 1 million robots across its fulfillment centers, using its DeepFleet AI model to improve robot travel efficiency by 10%. The company estimates its robotics initiatives could generate up to $12.6 billion in operational cost savings between 2025 and 2027.

  • In surgical robotics, AI is being integrated into minimally invasive surgery to automate video annotation and support machine-learning-based performance evaluations for surgeons.

  • Eli Lilly and NVIDIA are connecting “agentic wet labs” with computational dry labs, a move that could cut preclinical development costs and timelines by 50–70%.

  • Yaskawa is developing its MOTOMAN NEXT series, pairing motion control with AI-driven recognition to automate tasks previously considered too complex for traditional robots.

Let’s not forget about the humanoid sector which is moving out of the lab and into commercial reality:

  • Tesla Optimus is targeted for mass production, aimed first at manufacturing and eventually household applications.

  • BMW has piloted Figure AI humanoid robots at its Spartanburg plant to handle logistics sequencing and sheet-metal insertion, proof that humanoids can do repeatable work under real production conditions.

  • China’s humanoid industry now includes over 150 companies, with Unitree emerging as a leader, the company has filed for an IPO and reported 60% gross margins in 2025.

  • Figure AI raised over $1 billion at a $39 billion valuation, while Skild AI raised $1.4 billion to build “Skild Brain,” a universal robotic foundation model.

All of this is still early. We haven’t come close to fully integrating robots into daily life. But if the pace of GenAI adoption is any guide, it’s probably only a matter of time before physical AI performs, and surpasses, what we can imagine today. We’ll for once be on the lookout for who the eventual winners will be, because if anything has become clear, they won’t be limited to the companies actually building the robots.

More on the conference in Friday’s Pulse and big thank you to Daniel Lee from CIBC Capital Markets

Pender Events + Publications

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Shares of PayPal are surging 20% on reports that Stripe and private equity firm Advent International have put in a $53 billion offer to take the company private. The $60.50/share offer represents a nearly 30% premium to where the stock closed yesterday but the stock traded at those levels and higher less than a year ago.

  • Shein Global Holdings Ltd. is targeting a $2-3B Hong Kong IPO as soon as August at a valuation of ~$30B, roughly a third of its prior peak of over $90B. The listing follows China Securities Regulatory Commission approval on Friday and marks Shein’s third attempt at going public after failed US and London IPOs.

  • DeepSeek is preparing for a Chinese IPO filing as soon as this year. The AI pioneer is raising a fresh round targeting at least 10B yuan (~$1.4B) just weeks after closing a record $7B financing at a $50B valuation from backers including Tencent and CATL. The new round is targeting a pre-money valuation of at least $71B, up from the $50B set in the earlier round.

  • Thomson Reuters agreed to sell 51 percent of its Global Print business, which publishes legal and tax information, to KKR for about $500 million. (Reuters)

Macro Morning

  • China’s economy grows at its slowest rate in three years. Beijing’s National Bureau of Statistics said G.D.P. expanded by 4.3 percent in the second quarter. A consumer spending slump and a persistent real estate crisis have offset an export boom driven by artificial intelligence, raising expectations for more government stimulus this year.

  • Oil surged by the most since April after Trump said he would reimpose a blockade on Iranian ships transiting the Strait of Hormuz and demand payment for all other cargo moving through the waterway, dashing hopes for a near-term recovery in shipping flows. West Texas Intermediate futures jumped 9.4% to settle near $78 a barrel, the highest in nearly a month, while Brent closed above $83.

  • A judge ruled that Trump’s lawsuit against the IRS was a “bad faith” attempt to manipulate the judicial process and barred him and his administration from citing its supposed settlement in any future regulatory or judicial proceedings. The president had sued the IRS and US Treasury over the unauthorized leak of his tax information, but the judge found that the suit was not legitimate because Trump had authority over both defendants as president.

Technology Today

  • The European Union is considering sweeping new rules that could ban or restrict social media access for children and require platforms to prove their services are safe for young users. If approved, the legislation would add to a growing global push to tighten protections for children online.

  • Spotify now lets Premium users talk to a chatbot about music, podcasts, and books LINK

  • Uber is in advanced talks to buy Delivery Hero, the European food-delivery company, reportedly for more than $13.7 billion. (Bloomberg)

  • Prediction markets crush sportsbooks in $50B breakout (CD)

AI of the Tiger

  • Apple has sued OpenAI, accusing the company of using former Apple employees to access confidential product information. Apple claims at least two long-time employees sent themselves internal files before joining OpenAI. It says this gave the AI company details about unreleased products, manufacturing methods and other sensitive work. Apple also claims OpenAI asked job candidates from Apple to bring real product parts to interviews for “show and tell”.

  • Meta has removed an AI feature that let people edit photos from public Instagram accounts after it faced criticism over privacy and misuse. The feature launched earlier this week as part of Muse Image, Meta’s new AI image generator. Users could create images by tagging a public Instagram account as a visual reference. However, the person whose photos were used would not be notified. Meta has now said the feature “missed the mark” and removed it.

  • OpenAI’s first device is screen-free LINK - OpenAI is reportedly building its first consumer hardware device, a screen-free home companion centered on ChatGPT that Bloomberg says is described internally as a “humanlike AI companion that lives in the home.” Instead of just answering voice commands like a normal smart speaker, the device is meant to learn about its owner over time and pull from their digital life, including emails, while including moving mechanical parts to feel more like a companion.

  • China approves Apple Intelligence LINK - China’s internet regulator, the Cyberspace Administration of China, has cleared Apple Intelligence, the set of AI tools that summarize emails, write reports, and edit photos, for use on iPhones sold in the country. The approval covers only iPhones, and the official notice did not say whether iPads or Mac computers sold in China would also be allowed to run the AI features; Apple has not commented.

  • White House launches AI cyber defense LINK - The White House has created a new group called “Gold Eagle” that unites AI developers and critical service providers to strengthen national cybersecurity by sharing information about software flaws found by AI systems. Gold Eagle has begun receiving and ranking vulnerability reports across industries, using AI to cut down duplicate scanning and quickly pass threat and repair details to those defending federal and private sector systems.

  • Jamie Dimon says JPMorgan has slashed 40% of jobs in some departments, thanks to AI LINK

Defense Docket

  • In 1965, Canada spent 2.6% of GDP on defence and had 107,000 people in uniform. Today we sit 28th on the Global Firepower index - one spot below Algeria - with roughly 71,000 troops, one of four submarines operational, and the distinction of being the only G7 country that can’t launch a rocket.

Crypto Corner

  • Lummis says Clarity Act coming ‘in next few days’ (TD)

  • US government moves $288M seized crypto to Coinbase (DC)

  • US-UK taskforce unveil crypto roadmap (TB)

  • Polymarket partners with crypto firm during World Cup (BBG)

  • Binance bets on becoming crypto ‘super app’ (CD)

Energy Transition Today

  • There was a 38% increase in Chinese shipments of lithium batteries from January to June from the same period last year. Wind turbine exports rose 36% on the period, according to China’s General Administration of Customs

  • Elon Musk’s xAI installed 59 gas turbines without federal permits at a data center in Tennessee.

  • A group of Canadian oil sands producers reached an agreement with the Alberta and federal governments on next steps toward building a carbon capture and storage system. The Oil Sands Alliance, made up of Canadian Natural Resources, Cenovus Energy and three other companies, will build the so-called Pathways Project to transport and store about 6 million metric tons a year of captured carbon dioxide underground in the Cold Lake area by 2035. That’s smaller than earlier concepts for Pathways.

The Dig

  • Cameco announced that production at its Cigar Lake mine in northern Saskatchewan has resumed after a temporary suspension caused by operational challenges at Orano’s McClean Lake mill (sulfuric acid plant), which processes Cigar Lake ore. With the mill now back in operation, Cameco has restarted mining activities and begun shipping stockpiled ore to the facility. The company also said the temporary disruption has not affected its 2026 production outlook for Cigar Lake.

  • De Beers is shutting down South Africa’s biggest diamond mine for two years as it cuts costs. The Venetia mine churns out 40% of South Africa’s diamonds and 10% of those used by De Beers. The diamond giant hasn’t cut its output expectations, instead planning to save on its stones by moving mining elsewhere. De Beers said Monday it has managed to lop off $100 million of annual overhead costs since 2024.

The Picks List

  • A new Ebola vaccine developed at Oxford has been approved for human trials, with the first volunteers expected to receive doses within weeks.

  • Decades-old IKEA furniture has become Gen Z’s latest statement piece. Gen Z’s preference for secondhand and thrifted clothes is now extending to furniture. It’s a reminder that today’s “basic” items could become tomorrow’s collectibles. IKEA pieces that sold for just a few hundred dollars when they were first released are now fetching thousands — including lounge chairs, lamps, and shelving units. According to The WSJ, young collectors are gravitating toward these pieces because of a “combination of nostalgia, appreciation for good design, and recognition of future value.”

The Breakroom

  • Alvin and the Chipmunks are being rebooted for the next generation. Not only are they planning a theatrical release in late 2028, but they’ll also appear in digital-first, short-form content, almost like influencers, with clips and compilations of the Chipmunks reacting to cultural moments.

  • Scientists recently fitted over a dozen pigeons with tiny cameras and backpacks to study their flight behavior, and discovered the birds engage in previously unknown eye movements that help them collect information regarding their environment.

  • Warren Buffett, 95, is accelerating giving away his Berkshire Hathaway shares to family foundations, saying he plans to exhaust his holdings in about eight years.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Never Underestimate the Underdog ]]>https://thependerpulse.substack.com/p/never-underestimate-the-underdoghttps://thependerpulse.substack.com/p/never-underestimate-the-underdogFri, 03 Jul 2026 22:04:53 GMTToday’s edition was supposed to be about the Magnificent Seven. Maybe we’ll still get there. But mid-draft, I remembered something important: we have an iconic World Cup double-header coming up. Today, my beloved Cabo Verde Blue Sharks take on Lionel Messi’s Argentina. Tomorrow, our Canadian men take on Morocco.

So in that light I wanted to talk about the importance of the underdog, with a hope that at least one of these stories we’re rooting for pulls off something nobody saw coming.

Let’s get into it.

A confession, first. I didn’t come into this World Cup a soccer fan. Sports fan, absolutely. Soccer fan, casually, at best. Embarrassingly, I recently learned that Erling Haaland, one of my favourite players purely from watching the games, is apparently “very famous.” In hindsight, the seafood campaign built entirely around him should have tipped me off. So should have the parade of celebrity appearances, James Corden, Channing Tatum, take your pick. But we digress.

Fandom credentials aside, what’s always captured my attention with this tournament is the stories. Cabo Verde, which we covered a few weeks back. Jesse Marsch rebuilding Canada’s men’s program from the ground up. Ronaldo. Messi. Now Erling Haaland. But my favourite stories, always come back to the underdog.

Back in my own athletic career, I’ve played on both sides of that story, I’ve been apart of teams that were David and teams that were Goliath. I can confirm being David is a lot more fun. It reminds me of this Nike ad for the World Junior hockey championship, years ago, called “Never Underestimate the Power of the Underdog” check it out here. I downloaded the track and played it before every big game, and, if I’m honest, a few job interviews too. The mentality stuck. I’ve carried it into most things since, deservedly or not.

The thing about being an underdog is that the pressure is off. Take Germany against Paraguay: Germany came in as the four-time champion, carrying the weight that comes with it, expectations to meet, one outcome that’s simply unfathomable. Paraguay struck first, a header in the 42nd minute. Germany equalized and spent the rest of the match pushing for a winner, thinking they’d found it in extra time, until VAR called the goal off. The game went to penalties. Germany missed. Paraguay didn’t. First time in World Cup history Germany has lost a shootout.

Watch the sidelines before a match like that and you’ll see the difference. Germany looked tight, tense, playing like a team that had everything to lose. Paraguay looked joyful. So does Cabo Verde, every match, pure euphoria, pure pride of country, nothing left to protect.

Canada carries the same feeling going into Saturday’s knockout match against Morocco. Making the round of 32 was already historic, Canada’s first knockout appearance, followed by its first knockout win. But that game was against South Africa, a more evenly matched opponent. Morocco is a different level of test: ranked sixth in the world, playing with real confidence. Coach Jesse Marsch isn’t pretending otherwise. “We know that everybody’s going to write us out,” Marsch said this week, “and that’s an opportunity.”

Midfielder Niko Sigur’s comment exemplified the underdog mentality: “We’re not afraid of anybody. If we’re going to lose, we’re going to lose our way, and if we’re going to win, it’s because we’re playing our style.”

“Let’s really go for it,” Marsch said. “We have nothing to lose. Everyone’s gonna expect us to lose.”

I, for one, can’t wait.

Now, the investing parallel, because we’re investors first here at The Pulse.

When you look to investing on the broader scale, often the assumption is that the biggest institutions hold every advantage: the brand, the capital, the access. But in my old life in institutional equity sales, I watched plenty of funds with consequential AUM realize that size wasn’t always the edge people thought it was. When you have that much to protect, you start playing defense.

The defensive posture isn’t really about soccer or investing, it’s about what you’ve got to protect. Once you’re protecting a large business, you gravitate to the safe, the popular, the already-proven. And investing is fundamentally a search for mispriced probabilities. If everyone already agrees a company is the best in the market, that conviction is priced in. Certainty isn’t where the edge lives. For Paraguay, that freedom was mental. For a small-cap manager, it’s structural, but the effect is the same: fewer reasons to play it safe

Smaller managers can spend a lot of energy wishing for more, more analysts, bigger research budgets, a Bloomberg terminal on every desk. What they already have, and often undervalue, is freedom. The freedom to own tiny companies. Ignore benchmarks. Sit on an idea for three years before it works. Concentrate into their best five ideas instead of diversifying into their fiftieth. Change their minds fast when the facts change.

Nimble, like the Blue Sharks.

To be clear, our takeaway today isn’t “always bet the underdog.” It’s that constraints can create opportunity, if you’re willing to use them. For Canada, that might mean playing with nothing to lose instead of trying to match Morocco toe-to-toe. For an investor, it might mean being the small-cap manager, or the individual who can act where a $200-billion mandate can’t.

The best investments rarely come from asking “who is strongest today?” They come from asking who has the freedom to get stronger tomorrow.

That may be the real edge of being underestimated, and one of the more durable sources of outperformance there is.

Pender Events + Publications

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Nearly all of the Nasdaq’s gains in the first half of 2026 came from these 10 stocks

  • Lime, the e-bike and scooter rental backed by Uber, rose 4% after raising $167 million in its IPO

  • GFL Environmental is considering a potential take-private transaction after drawing interest from buyout firms, people familiar with the matter said. The North American waste manager has been speaking with advisers about its options, having received preliminary interest from investment firms in recent months, the people said. Any take-private would be one of the largest-ever involving a Canadian-listed company.

  • The head of BlackRock’s private credit fund is exiting after months of losses, failed loans, and regulatory probes into the beleaguered unit.

Macro Morning

  • The US added 57,000 jobs in June—far fewer than the 115,000 economists expected, though the unemployment rate fell to 4.2%. Then again, Goldman Sachs says the World Cup added about 40,000 new jobs last month.

  • 45 Japanese firms reportedly went bankrupt due to a weak yen during the first half of 2026, up 30% YoY

  • The US won’t renew its trade deal with Canada and Mexico, choosing instead to conduct annual reviews of the pact in a decision that risks adding uncertainty for companies producing goods across North America. The USMCA will remain in force for another decade provided no one country decides to exit. Opting against a longer-term renewal opens the door to years of contentious negotiations over the rules governing continent-wide supply chains and low tariff levels vital for automakers, farmers, retailers and energy companies.

  • The Trump administration won’t renew the USMCA, the US’s trade pact with Canada and Mexico.

Technology Today

  • Bloomberg reported that Meta is planning to build a new cloud venture that could bring in billions to offset its massive capex spending. One business model Meta is reportedly considering is selling access to developers, allowing them to use the AI models that already exist on the company’s infrastructure, like Meta’s Muse Spark. Another option is for the company to just sell its excess computing capacity directly to other businesses.

  • A Swedish court ruled that Google must pay Klarna $1.97 billion after the buy now, pay later firm won an antitrust case.

  • Sony will stop making PlayStation game discs in 2028 LINK - Games released before the January 2028 cutoff will still be available on disc, and Sony said the change reflects how most players already buy games, with digital downloads making up 85% of full-game software sales on PS4 and PS5.

  • The 53-year US ban on supersonic flights over land could soon lift, thanks to advances in technology.

  • ByteDance has chosen Brazil for its largest data centre outside China, in a major $39B expansion that’ll serve one of its top markets while helping comply with evolving data localisation laws. (Bloomberg )

AI of the Tiger

  • Microsoft is pouring $2.5 billion into a new subsidiary whose sole job is to get clients to use its AI products.

  • OpenAI is considering giving the US government a 5% stake in the company ahead of its IPO.

  • Companies that replaced workers with AI are quietly walking it back, and the reversal is more widespread than you’d think.

  • Trump lifts export ban on Anthropic’s most powerful AI LINK - The U.S. Department of Commerce has withdrawn the export controls it placed on Anthropic’s Claude Fable 5 model, letting the company restore global access a day after the ban ended an 18-day standoff. The fix was a single safety filter, tuned to block one technique Amazon researchers used to prompt Fable 5 into identifying software vulnerabilities, with the new classifier catching that method in more than 99% of cases and rerouting requests to Opus 4.8.

Defense Docket

  • Drone startup Quantum Systems just raised $1.2 billion in a sign of just how hot the defense tech industry is.

Crypto Corner

  • Trump filing adds urgency to crypto bill (TB)

  • Chinese exile sentenced to 30 years for $1B crypto fraud (TD)

  • Ripple and Coinbase top donors in election spending (TB)

  • French bank Crédit Agricole rolls out euro stablecoin (CD)

  • Tokenized trading cards blow past $300M (BL)

Energy Transition Today

  • City of Delhi authorities have ordered half of all government and business staff to work from home every winter (Nov to Feb) as part of new measures to tackle the capital’s notorious toxic smog. (Hindustan Times)

  • Tesla Vehicle Sales Jump 25%, Far Exceeding Estimates - The gains come in a slower-growing global market for plug-in cars.

The Dig

  • Cameco has temporarily suspended mining operations at its Cigar Lake uranium mine after Orano’s McClean Lake mill—the sole processing facility for Cigar Lake ore—shut down due to issues with its sulfuric acid plant. With limited ore storage capacity at the mine and insufficient acid available for milling, mining activities have been paused until processing resumes. The company currently expects the McClean Lake mill to restart in roughly two weeks and does not anticipate any impact to its 2026 production guidance. However, Cameco noted there is a risk that repairs take longer than expected, which could delay the resumption of mining and potentially affect 2026 production if the outage is prolonged.

  • Gold headed for its first weekly gain since May as traders dialed down their expectations of Federal Reserve rate hikes. Bullion rose toward $4,200 an ounce and was up 2.2% for the week. Soft US job numbers and lower energy prices have led investors to scale back bets on monetary policy tightening, which tends to be a headwind for non-yielding gold

  • Aluminum company Alcoa dropped 8.94% after it agreed to acquire some of mining firm South32’s assets

The Picks List

  • In this article the author Played ‘The Boys Are Back in Town on a Bar Jukebox Until they Got Kicked Out

The Breakroom

  • The Smithsonian has curated a collection of 250 objects to mark America’s 250th anniversary. Scroll through the stories behind 10 select artefacts from US history.

  • The 2026 FIFA World Cup is becoming one of the world’s biggest testing grounds for sports technology. Many of the innovations on display this year were first trialed at the 2022 World Cup in Qatar before being rolled out for future tournaments. Adidas’ connected match ball, paired with AI-powered player tracking and semiautomated offside technology, is helping officials make faster, more accurate decisions.

  • THR looks at who’s cashing in on the 2026 World Cup, and who’s coming away empty-handed.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[The Chip Wreck]]>https://thependerpulse.substack.com/p/the-chip-wreckhttps://thependerpulse.substack.com/p/the-chip-wreckTue, 30 Jun 2026 21:00:34 GMTI heard a term this week: “The Chip Wreck.”

It’s a comment referencing markets right now, which, in keeping with the broader 2026 theme, have remained volatile and constantly evolving. Semiconductor stocks, the companies that design and manufacture the chips powering everything from your iPhone to AI data centres, have been experiencing a dramatic recovery following a severe mid-month selloff that resulted in an over $1 trillion devaluation of the sector. At the worst of it, semis fell more than 7%, before renewed AI infrastructure commitments and massive overseas investment instigated a bounce.

The collateral damage, however, has been wider. The Magnificent 7 (the seven mega-cap tech stocks that have dominated market returns for years, Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla) is officially in correction territory, meaning the group has fallen more than 10% from its recent peak. Which raises the obvious question: is the tech sell-off complete?

After two intra-month pullbacks of roughly 7% and 5%, this rally seems to have momentum, with some market strategists calling for a tech-sector “everything rally.” But with investors that still heavily overweight with semis and hardware names, the actual outcome may be more complicated than a simple recovery.

Check out the CNN Fear & Greed Index, which closed in Extreme Fear territory on Friday and has since climbed to 27, now sitting at the upper end of “Fear.” The index is a sentiment gauge that runs from 0 (maximum fear) to 100 (maximum greed), drawing on seven market indicators to measure whether investors are being driven by panic or euphoria. Right now it’s showing there could be room for stocks to keep moving higher on sentiment and positioning alone, before we likely hit another consolidation period. That said, it depends on what investors decide to do with one nagging unresolved question.

Source: CNN

As we’ve discussed (probably too much), the AI revolution deserves a good portion of the credit, or blame, for this bull run. But like any great party, the music eventually has to stop, and right now there’s growing concern we’re already on the final encore.

The culprit: capex.

All these good times need financing. The cost of semiconductors now accounts for 35% of total AI capital expenditure, raising real questions about whether we’re approaching demand destruction, the point at which costs become prohibitive enough to slow spending, and with it, growth. This week, the Bank for International Settlements (BIS), which advises the world’s central banks, warned in its annual report that disappointing returns on AI investment “could trigger a sudden pullback in financing and turn the capex boom into a protracted investment bust, with potential knock-on effects on financial conditions.”

There’s already evidence of strain. Google has reportedly capped the compute it provides to Meta for running Gemini, a sign of the broader compute crunch facing even the biggest players, according to the Financial Times. The restriction has delayed some of Meta’s AI projects and pushed the company to tell staff to use tokens more efficiently: a sharp reversal from the “tokenmaxxing” culture reported earlier this year, when employees collectively used 60 trillion tokens in a single month. What once seemed like a distant fear, compute bottlenecks hampering even the best-resourced firms, now appears to be the present reality. The squeeze has also pushed AI labs to rethink pricing, with both Anthropic and Microsoft moving to pay-as-you-go models for some of their products.

Which brings us back to the question of how to pay for all of it. Here’s where the hyperscalers come in. The term refers to the handful of tech giants (Google, Microsoft, Amazon, and Meta most notably) that operate the world’s largest cloud and computing infrastructure. These are the companies building and running the data centres that make AI possible, and right now they are spending at a scale that is genuinely hard to fully comprehend. Google alone is investing as much as $190 billion (!!) in capex this year, including a deal to pay SpaceX $920 million a month (!!) for access to 110,000 additional Nvidia GPUs. Google, Meta, Microsoft, and Amazon all appear to be writing blank checks to secure enough compute … now the question is how they bridge the gap until new capacity actually comes online.

The Wall Street Journal recently highlighted this, noting that over 60% of data centres slated for completion in 2027 hadn’t even started construction as of May 2026. Supply chain snags, power shortages, and permitting delays are the main culprits, but political opposition is an increasingly common cause of postponements and cancellations.

When we look at Google’s decision to limit Meta’s Gemini access, it is a useful case study in why companies might want to hedge their AI reliance. No matter how deep your pockets or how big your company, unlimited AI access isn’t guaranteed when there isn’t enough compute to go around.

The financial consequences of this buildout are reshaping how we think about these businesses. Hyperscalers were once prized for capital-light operating models and strong free cash flow and investors paid a premium for predictable, asset-light growth. Today, they increasingly resemble infrastructure companies: capital-intensive, with longer payback periods and lower free cash flow conversion. Combined hyperscaler capex is now estimated to consume 98% of operating cash flow in 2026, forcing these companies toward debt and equity markets to fund a growing share of AI investment. The result: share buybacks have ground to a near-halt, down 90% year-over-year in Q1/26, a decade low. Microsoft was the only hyperscaler to repurchase shares last quarter at $3.4 billion, compared to $89 billion across the group in 2025 and $105 billion in 2024. Given how much capital is being redirected toward infrastructure, that’s not entirely surprising, but it matters to shareholders who have come to expect those returns.

Looking ahead, combined capex across Alphabet, Meta, Microsoft, Amazon, and Oracle is expected to hit roughly $750 billion in 2026, up 82% year-over-year, against an expected $764 billion in combined operating cash flow. These significantly thinner margins are why hyperscalers have added $180 billion in debt issuance since 2025, with Alphabet and Meta both planning secondary equity offerings. Also, there is no sign of slowing down.

Given all we have discussed, consider this: the SOX, the Philadelphia Semiconductor Index, the benchmark for chipmakers, is up +94% so far in 2026, compared to a +9% gain in the S&P 500. That’s +85 percentage points of outperformance year-to-date, on pace for the best half-year outperformance in history, exceeding the previous record set during the dot-com bubble in H1 2000 by +15 percentage points. For further context, this index has only gained more than 230% in a 14-month span once before: December 1998 to February 2000. The dot-com bubble burst the following month.

Image

The critical difference this time: Meta, Google, and Amazon actually have the cash to fund this buildout, a meaningful departure from bubbles past. These are real businesses with durable cash-generating models behind them, narrative stocks trading on momentum. That said, Apollo Global Management recently published a deck showing the Magnificent 7 starting to underperform the broader S&P 500 after years of dominance, pointing directly to surging AI and data centre capex eating into cash flow as the driver.

So the way we see it: this is the moment when opportunities elsewhere start to look a lot more interesting.

More on that this Friday.

Pender Events + Publications

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • OpenAI is reportedly delaying its public debut until next year, despite confidentially filing earlier this month. The company said, “It may be a while,” before going public because there are “things we want to do that are likely easier as a private company.”

  • Apollo Global Management released a deck showing that the Magnificent 7 are starting to underperform the S&P 500 after years of smashing the index. Apollo points to the surge in capex spending on AI and data centres cutting into their cash flow as a main cause in the drawdown.

  • Charter Communications is surging 23% (also off a 13-year low) on reports it is in discussion with SpaceX on partnering with a mobile phone offering. This would involve running SpaceX phone traffic through Charter infrastructure

  • SpaceX joins the Nasdaq-100: ETFs and index funds tracking the tech-heavy index will begin buying SpaceX shares after the close on July 6 at an under 1% weighting. The move comes less than a month after SpaceX’s June 12 IPO debut under Nasdaq’s new fast-track framework, which cut the typical wait from months to 15 trading days.

Macro Morning

  • President Trump has threatened to slap 100% tariffs on European countries that institute a digital services tax.

  • Nearly half (46 per cent) of Ontario condos are now valued at under $500,000. In 2022, amid a much hotter housing market, fewer than one in four condos fell below that threshold, according to data from the Municipal Property Assessment Corporation (MPAC)

  • Research from the London School of Economics found entry-level hiring across multiple countries has declined 14 per cent since 2019. Companies that remained remote after the pandemic were more likely to cut back on junior hiring. The researchers say remote work makes it harder for employees to learn on the job, so employers are more likely to invest in experienced workers. It’s not just young people who lose out — it also “hollows out the pipeline of future experienced workers,” the WSJ reports.

  • Iran and the U.S. traded blows over the Strait of Hormuz. Both sides alleged that the other violated the terms of the memorandum of understanding (MOU) that formed the basis of the recent ceasefire. Iran fired on a ship it said was using an unauthorized route to pass through the strait, and the U.S. retaliated with strikes on Iranian military installations. (Axios)

  • Carney says B.C. condo conversions will cost ~$1.45 billion. The prime minister defended Ottawa’s decision to jointly purchase 2,200 vacant Vancouver condos with the provincial government and convert them into affordable housing, adding that the feds would only foot 10% of the bill. Critics have called the program a bailout for developers, but Carney insists the condos are being bought at a discount and that it’s an opportunity to boost affordable housing supply. (The Canadian Press)

  • Energy Minister Tim Hodgson announced that the feds will spend $300 million, in addition to provincial funds, to retrofit the homes of low- and median-income households in B.C., Nova Scotia, Quebec, and PEI. The program will install heat pumps, improve insulation, and make other upgrades Ottawa says will lower energy bills and emissions. The feds launched a similar $2.6 billion program in 2021 but axed it two years ago after it ran out of money. (CBC News)

Technology Today

  • Formula 1 just debuted the world’s fastest camera drone at the Austrian Grand Prix. It can reach 300 kmh (186 mph) in just four seconds. Check it out racing an F1 car on the track.

  • US blocks more Chinese tech products LINK - The FCC has widened its ban on Chinese technology to block imports of older telecom and video surveillance gear from Huawei, ZTE, Hytera, Hikvision, and Dahua, with the rules taking effect in early July. The new policy extends a 2022 order that barred approvals for new equipment models, now prohibiting products that had received authorization before that order from entering the U.S. market.

  • Rocket Lab buys satellite company Iridium to go up against Starlink and Amazon’s Leo LINK\

AI of the Tiger

  • Prosecutors in a trial used ChatGPT logs as evidence. Here’s what one juror said after it ended in a mistrial.

  • South Korea unveils $1tn chip and AI investment plan LINK - South Korea has announced roughly $1tn in investments to expand the country’s chip manufacturing and artificial intelligence work, part of what President Lee Jae-myung calls the Three Mega Projects covering chip hubs, data centres, and robotics. Samsung and SK Hynix, the country’s two biggest chipmakers, are expected to build a semiconductor manufacturing hub in the south west, with other AI infrastructure hubs planned outside Seoul, where advanced factories now sit. Lee framed the plan as a matter of “survival” to revive rural economies hurt by industries clustering in Seoul, as rivals like Taiwan, China, and Japan pour money into chip factories amid the AI boom.

  • Coinbase joins the rush to Chinese AI models as Western labs face a pricing stress test LINK

  • 1 in 3 employers admit they’re replacing entry-level roles with AI—and tech and manufacturing jobs are most at risk LINK

  • Meta’s new AI turns your thoughts into text LINK- Meta has introduced Brain2Qwerty v2, an AI system that turns brain activity into text using non-invasive brain recordings, aiming to help people who lost the ability to communicate because of brain lesions. The system records brain activity with a helmet-like magnetoencephalography (MEG) scanner, then feeds the raw neural signals into an end-to-end AI model that reconstructs sentences a person is trying to type

Defense Docket

  • President Trump has sent envoys Rubio and Witkoff to Qatar to continue peace talks with Iran, amid Tehran’s denials any such talks are even scheduled. (Independent)

  • CSE publicly confirmed in its annual report that it had conducted an active cyberoperation against foreign criminals brokering fentanyl precursor chemicals, disrupting and “diminishing their ability to operate.” It also disclosed it took concurrent action against 10 of the most significant ransomware groups harming Canada and allies simultaneously.

  • A South Korean attack submarine docked in Victoria in late May. Germany’s defence minister stood beside Canada’s in Ottawa and made the case for European alignment. Both Hanwha and TKMS meet Canada’s operational requirements — PM Carney has said it “ultimately comes down to the broader benefits being offered.” The industrial lobbying campaign is unprecedented in Canadian procurement history. Decision imminent.

  • The US Army selected Anduril to integrate 17 fragmented C2 programs of record into a single converged data layer. Partners: Palantir (Foundry), Raft (data registries), plus Govini, Microsoft, Striveworks, Rune, Shift5. Falls under Anduril’s existing $20B 10-year enterprise agreement. At Ivy Mass, Team Anduril took connected devices from 10 to 2,500+ and added 17 new applications in a single demonstration. NGC2 is the Army’s answer to JADC2.

Crypto Corner

  • Bitcoin struggled to get back above $60,000 after dropping to its lowest level since October 2024.

  • Strategy may sell $1.25B of Bitcoin (BBG)

  • White House speaks with groups to push Clarity Act (CD)

  • JPMorgan urges safeguards for crypto structure rules (CD)

  • BIS warns stablecoins risk fragmenting global financial system LINK

  • UK finalizes sweeping crypto rules, raising the bar for global market standards LINK

Energy Transition Today

  • Alberta’s push for a new oil pipeline to the west coast has raised the question of whether there will be enough production to fill its expected capacity of 1 million barrels a day. Alberta Premier Danielle Smith and Carney both want to diversify exports to become less reliant on the US, but oil companies are expressing doubt about whether rapid production increases are feasible.

  • Electricite de France said that KKR agreed to buy its renewable power businesses in the US and Canada, the latest deal in the rush to amass electricity assets for the AI boom. Financial terms of the transaction weren’t disclosed.

  • The Trump administration says it will pay Duke Energy $129 million to abandon its offshore wind project off North Carolina, which the utility says it will reinvest in gas and nuclear power projects. (New York Times)

  • The Trump administration is reportedly considering banning imports of foreign inverters that connect solar and battery projects to the grid, alleging China could use the devices to interrupt U.S. power supplies. (Reuters)

  • Montreal-based Deep Sky became the first North American company, and just the second company overall, to provide carbon removal credits via direct air capture (DAC). It stored 14 tonnes of carbon underground and gave credits to RBC and Microsoft. Most carbon capture and storage tech pulls CO2 directly from emitting sources and must be stationed near them, but DAC is able to suck it right out of the air from anywhere. This makes it extremely promising, though it remains largely unproven at scale. Deep Sky currently has a pilot facility in Alberta, but the viability of its DAC tech will really be tested when its planned $500 million Manitoba plant opens. The company claims the facility will remove 500,000 tonnes of CO2 annually when fully operational.

The Dig

  • BHP’s Next CEO Inherits Buy vs. Build Copper Conundrum - BHP Group’s outgoing chief executive tried to cement the miner’s position as the world’s largest copper producer with a failed blockbuster takeover. His successor faces the same challenge of balancing new mines and expansions with possible acquisitions that could secure BHP’s role as the top supplier of a metal needed for data centers, decarbonization and defense technologies. Brandon Craig, recently BHP’s Americas chief, says he wants to pursue both reliable and more-creative growth in copper after he succeeds Mike Henry as CEO on Wednesday. His promotion comes as copper prices trade near an all-time high.

  • The EU will set tariff-free steel import volumes at 18.3 million metric tons starting July 1, and tariffs for volumes beyond the quota was raised to 50% from 25% as part of efforts to protect the bloc’s steel industry from overcapacity, Dow Jones Newswires reported.

  • The Democratic Republic of Congo will reassign unused cobalt export rights from January to June 30 to a state-controlled entity, Reuters reported June 29, citing a notice from the country’s Authority for the Regulation and Control of Strategic Mineral Substances’ Markets.

  • Guinea plans to become a regional gold refining hub with the construction of a new refinery capable of producing 530 metric tons/year, eventually ramping up to 733 mt/y at full capacity, Reuters reported, citing Mines Minister Bouna Sylla.

The Picks List

  • The story of Pixar’s $6 billion work lunch that spawned A Bug’s Life, Monsters Inc., and Finding Nemo.

  • The city of Kingston, Ontario, has donated 1,700 Kilograms of food to a local food bank since October through an initiative that redirects parking ticket fines to address food insecurity. The city is expanding the program for another five years and will direct $80,000 annually to a vertical farm that grows produce year-round.

The Breakroom

  • The International Olympic Committee (IOC) established a US$140 million fund to pay athletes. Every competitor at the Summer and Winter Games can now apply to get $10,000, regardless of performance, as long as they follow ethics and anti-doping rules. The IOC isn’t giving out the grants directly, with national Olympic committees handling the distribution; athletes will get the cash six months after they compete. Financial constraints are almost certainly the biggest hurdle facing Olympic competitors, who often have to pay much of their own way to get to the Games and fight for limited cash available through national sports bodies, sponsorships, and other funding arms.

  • 1.5 million Canadians waited over 14 hours to receive care in emergency departments over the past two years, according to a new report — that’s a 28% increase in wait times from 2018-2019. Researchers and doctors blamed staffing shortages in emergency departments and a lack of primary care physicians

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Counting the Cost of the Beautiful Game]]>https://thependerpulse.substack.com/p/counting-the-cost-of-the-beautifulhttps://thependerpulse.substack.com/p/counting-the-cost-of-the-beautifulWed, 24 Jun 2026 21:45:23 GMTI was biking in to work this morning and couldn’t help but notice. Even before 8am, Vancouver was buzzing. Crowds were already forming ahead of what felt like the biggest match in Canadian soccer history, Canada taking on Switzerland at BC Place with first place in the Group on the line. Coming into the tournament, Switzerland was ranked 19th in the world, Canada 30th.

What I didn’t expect to see was Team Canada out for a walk on the seawall. They looked calm, unhurried, ready.

It’s one of the quiet advantages of living in a host city, a feeling I haven’t had since the 2010 Olympics, and one I’ll admit I’d somewhat forgotten. There’s something different about having world-class athletes in your city, on your seawall, before your morning coffee.

Canada lost. The dream of finishing top of the Group is gone, and with it, the prospect of additional home matches in Vancouver that economists had pegged at $70 million a game in local economic impact.

Result aside, it’s got me thinking: how much of a World Cup impact actually shows up in GDP?

The macro backdrop

Let’s go into some context. The Bank of Canada held rates at 2.25% for the fifth consecutive meeting on June 10th. This was a continued signal of caution in an economy that has quite a bit to be cautious about. Why I’m bringing this up is that this week’s we also got a May CPI print that didn’t exactly make that narrative any more attractive: headline inflation came in at 3.2% year-over-year, up from 2.8% in April and the highest reading since late 2023, driven again by gasoline prices. Strip out gas and CPI rose 2.2% year-over-year, up from 2.0% in April, a notable broadening of price pressures beyond energy.

We’ve all felt it… at the grocery store, the clothing store, and yes, FIFA tickets.

Depending on how you look at the data, you can tell a few different stories.

The Bank is threading a needle: GDP contracted 0.1% in Q1, leaving the economy in excess supply, and the Bank has flagged flexibility in both directions. A resolution in the Middle East that reopens the Strait of Hormuz could remove one of the key upside risks to inflation, easing pressure on gasoline-driven CPI and giving the Bank more room to respond to a softening economy. But if energy inflation continues to broaden into core, hikes remain on the table. The market is currently pricing a December hike, though that call could flip quickly depending on how the next few weeks unfold.

What caught my attention, as someone newly on the soccer bandwagon, is that some economists have flagged the World Cup itself as a near-term inflation risk. Hotel rates and summer airfares are already elevated, and that pressure may not be done. Even if the market is pricing a December hike, the tournament meant to boost the economy may also be nudging the data in a different direction.

Forecasts are Vast

Like any major world event, the consensus estimates aren’t exactly range-bound.

Back in early 2025, FIFA estimated the 2026 tournament will generate up to $3.8 billion in positive economic output for Canada, including $2 billion in GDP, $1.3 billion in labour income, and $700 million in government revenue. Canadian bank economists put the range at $1.5 billion to $6.5 billion in incremental GDP across the tournament. Big numbers. Big ranges.

Worth noting: even where the World Cup does deliver a real economic effect, that impact tends to be short-lived and fairly modest. Net tourism spend goes up; the resident spending bump largely doesn’t, locals redirecting their entertainment budgets from one activity to another doesn’t move the needle for the broader economy.

I saw this number today: Canada would have seen an estimated $70 million boost to local GDP for each additional match played in Vancouver had the national team advanced. It’s a big number. One that makes this afternoon’s result feel slightly more …expensive than a regular defeat.

There’s another number worth sitting beside it. Canadian governments spent just over $1 billion preparing to host the World Cup, working out to approximately $82 million per game across the 13 matches in Toronto and Vancouver. Compare that to the incremental revenue figures and the story isn’t quite as straightforward as the headline projections suggest.

The Measurement Problem

There’s another part of this worth examining: Canada doesn’t actually have the tools to know whether any of this was worth it.

Earlier this week, Ottawa funded a research hub at Toronto Metropolitan University tasked with developing better ways to measure the economic impact of sport. It’s a important initiative, but also an admission that after $1 billion spent, the government still can’t produce a clean answer on what the return profile looks like.

Federal secretary of state for sport Adam van Koeverden framed the gap plainly. Canada’s sports sector contributes an estimated $8.3 billion annually, or about 0.3% of GDP. In the UK, sport accounts for 2.6% of GDP. In Japan, 2.0%. “We know it’s lower than other countries,” van Koeverden said, “and in order to change that we really need to measure why.”

We’ve been here before. A post-mortem on the 2010 Vancouver Winter Olympics found modest gains in jobs and infrastructure, but no evidence of economy-wide impact — and crucially, the researchers didn’t have enough data to say whether even those modest benefits lasted. The conclusion was stark: “There is insufficient data to conduct a more integrative analysis to show the balance between inputs to host the Games and outputs generated from the Games.”

Sixteen years later, Ottawa is still building those tools.

If this were a publicly traded company, one with no clear read on return on invested capital sixteen years after a comparable expenditure, now writing another cheque of similar size , I’m not sure investors would be lining up. But here we are.

None of this means the World Cup was the wrong call. It means the economic case for mega-events is harder to prove than the press releases suggest.

The Taylor Swift test

You knew we had to bring up Taylor Swift somehow. But her Eras Tour is an interesting case study for what a mega-event can do to a local economy.

The economic impact of her tour was dramatic enough that the Federal Reserve took notice. The June 2023 Beige Book noted that Philadelphia’s strongest month for hotel revenue since the pandemic was driven largely by an influx of Eras Tour attendees. Cincinnati hotels hit 98% occupancy during tour dates, with room rates doubling compared to the same weekends the prior year. Two shows in Denver added an estimated $140 million to Colorado’s GDP. Six shows in Los Angeles generated $320 million in economic impact and 3,300 jobs.

Don’t sorry Canada was not immune from the Swifties. In November 2024, Swift played six sold-out shows in Toronto for 240,000 concertgoers. A subsequent briefing note to city council estimated the Eras Tour generated $282 million in economic impact over a 10-day concert period. Downtown Toronto saw a 45% week-over-week increase in spending across restaurants, hotels, clothing stores, and movie theatres. Short-term rental demand surged 163% year-over-year across the city; in the area around Rogers Centre, it was up 245%. The three levels of government collectively collected $39.7 million in tax revenue. The city reported it recovered its costs (marketing, transit, traffic management, security) during the concert period itself.

The most important number: 93% of the $152 million in direct spending came from non-Toronto visitors. It wasn’t locals redirecting their entertainment budgets; it was new money arriving in the city from elsewhere.

So what made that work when mega-events so often disappoint?

Concentrated demand, passionate discretionary spenders, and almost no displacement effect. Swifties weren’t locals skipping their usual Friday night out, they were flying in from other cities and countries, filling hotels and restaurants with spending that genuinely wouldn’t have happened otherwise. The demographic profile mattered too: the Eras Tour skewed toward younger women with high discretionary spending, a consumer cohort that, in a K-shaped economy, has held up better than most.

Toronto’s own post-mortem called the experience “an invaluable opportunity” to refine how the city hosts large-scale events and actually flagged several lessons as crucial ahead of the World Cup. The city used the concert as a dress rehearsal for the tournament.

But alas, the World Cup is a different animal. Longer, spread across multiple cities and weeks, hard to make sense of. International visitor numbers have come in below expectations, and resident spending, no matter how much Canada red is being worn, largely just moves money around within the economy rather than adding to it.

It seems like the country is still waking up to something it hadn’t felt in a while and more rarely since the pandemic.

The World Cup will generate real economic activity; that much isn’t in doubt. There will be tourism spending, hospitality revenue, a modest bump to quarterly GDP. It will also generate inflation in hotel rates and airfares, redirect local spending that was going to happen anyway, and leave a $1 billion hosting bill that no one has quite figured out how to evaluate.

The vibes may be real. But the economic impact is complicated.

In either case – Go Canada Go!

Pender Events + Publications

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Google loses $270B in market cap over concerns its ‘falling behind’ rivals in race for AI talent LINK

  • AMC shares fell over 20% after announcing plans to raise $200 million by selling stock. Funds will be used to pay down debt and for general purposes. The theatre chain is attempting to take advantage of a recent rally in the stock with shares up more than 70% so far this year and comes after a strong weekend at the box office thanks to Toy Story 5.

  • South Korea’s KOSPI stock index has now triggered 4 market-wide circuit breaker trading suspensions this year, after another ~10% crash on Monday. Korea saw zero such circuit breakers last year.

  • Transportation startup Lime, the Uber-backed company, which offers short-term electric bike and scooter rentals, is eyeing an IPO at a US$1.66 billion valuation. Analysts say that Lime’s public offering will be a litmus test for the bike-share space, which is facing higher costs and more regulatory challenges.

  • The number of stocks that have increased by more than 100% this year is exploding. “In the past year, 42 stocks in the Morningstar US Large-Mid Market Index have more than doubled, attaining triple-digit-percentage gains as of June 8. That’s more than twice the ten-year average. In the past six months alone, 12 stocks are up over 100% each. The vast majority of these gains can be attributed to the AI infrastructure boom.” (Morningstar)

Macro Morning

  • Trump’s Fears About Economy Undercut US Leverage in Iran Talks (BBG)

  • Canada’s inflation rate hit its highest level in over two years. The headline inflation rate hit 3.2% in May, which was higher than economists expected but not an enormous surprise given the surge in gas prices driven by the war in Iran. Core measures of inflation that exclude energy prices were only up 2.2% on the year, and with a deal in the works to reopen the Strait of Hormuz, gas prices are likely to keep falling. (CBC News)

  • Keir Starmer announced that he will step down as U.K. prime minister — he is likely to be succeeded by Andy Burnham, who was elected to parliament in a by-election last week.

  • Both Walmart and Amazon are pulling forward back to school shopping deals, apparently driven by parents with stretched budgets hunting for bargains over a longer period of time. “The way I used to do it, the Thursday before school we popped in the car and did it all at once,” one parent told The Wall Street Journal. “We just can’t do that anymore.” The pull-forward of seasonal shopping is part of a larger trend that’s seen Christmas, Boxing Day, and Black Friday/Cyber Monday sales starting earlier and running longer as retailers try to appeal to budget-conscious customers.

  • 12 CEOs are now making over US$200 million a year, according to a new Wall Street Journal ranking. Overall, the median CEO pay at S&P 500 companies reached a new high of $18 million last year. One company, real estate investor Welltower, paid four different executives packages worth over $100 million.

  • S&P Global said its flash Purchasing Managers’ Index shows US factory job cuts at the highest level since 2009, excluding the unique COVID pandemic shutdowns.

Technology Today

  • Trump signs order to boost quantum research LINK - President Trump signed two executive orders on Monday meant to push research into quantum computing forward and tighten security practices in preparation for the risks a post-quantum world could bring to online systems. One order calls for building a quantum computer strong enough for scientific research, tells federal agencies to plan for quantum-enabled technology, and seeks to boost domestic supply chains for quantum infrastructure and materials. The second order aims to speed migration to post-quantum cryptography by 2031, protecting systems against quantum threats that could break the encryption algorithms long used to secure private information online.

  • Meta launches its own smart glasses LINK - Meta is launching its own line of smart glasses called Meta Glasses, dropping the Ray-Ban and Oakley branding entirely while still making them with EssilorLuxottica and selling them through the same retail stores. The new glasses start at $299, undercutting the $379 Ray-Ban Gen 2 and $499 Scriber and Blazer Optics models, while keeping the same fit, battery life, camera quality, and dual-camera AI rocker button.

  • Instagram takes on Netflix with TV app LINK - Instagram is going after streaming services like Netflix and Amazon Prime Video by adding longer videos, episodic series, and Live TV to the TV app it launched last year, aiming to reach viewers in the living room. The TV app is rolling out to Samsung TVs, joining Amazon Fire and Google TVs, and is gaining channels tailored to creators and topics users like, plus the ability to cast Reels and Saved content from a phone. A dedicated section for horizontal videos is being tested to make watching on TV easier, and people can now view other users’ Stories within the app, which previously only played Reels natively.

  • Meta is ‘pausing’ employee tracking program after it let the whole company see sensitive data LINK

  • These new Amazon ads don’t just recommend products—they can make your purchases for you LINK

  • UK weighs forcing social media platforms to surface trusted news LINK

AI of the Tiger

  • SpaceX lands $6.3B compute deal with Reflection AI LINK - SpaceX has signed a $6.3 billion deal to sell computing power to Reflection AI, an open-source artificial intelligence startup that becomes the latest outside customer to tap Elon Musk’s Colossus infrastructure. Reflection gets immediate access to Nvidia GB300s, the chips used to train and run AI models, and agreed to pay SpaceX $150 million per month from July 1, 2026 through 2029, with either side able to exit on 90 days’ notice. The deal adds to SpaceX’s computing power agreements with Anthropic, Google and Cursor, which Musk’s company is now acquiring, and brings in an open-source lab as enterprises reassess relying on closed AI systems.

  • Oracle’s workforce shrank by about 13% as it bankrolls its AI buildout LINK

  • IBM said it is joining OpenAI’s Daybreak Cyber Partner Program which uses some of OpenAI’s cyber capabilities to their enterprise customers

  • A new Fraser Institute survey suggests most Canadian teachers are already dealing with AI in their classrooms, but haven’t been given the training or guidance to manage it effectively. Roughly two-thirds say they haven’t received support on how students should use AI, and formal school policies remain inconsistent. There seems to be a growing gap between how quickly AI is being adopted and how prepared the education system is to handle it.

  • In a rare joint statement, the cyber agencies from the Five Eyes intelligence partners (US, UK, Australia, Canada, New Zealand) have warned that frontier AI models are now poised to “fundamentally transform” offensive and defensive cyber capabilities. They’re urging leaders and CEOs to treat cyber resilience as an urgent, board-level priority. (RNZ)

  • Google is investing US$75 million into indie movie studio A24 as part of a new AI research partnership between the two companies. The tie-up will include building new AI tools for film production and distribution. The Google deal is a reputational risk for A24, which has made its name producing edgier films from up-and-coming directors that bigger studios typically pass on. Its creative-over-corporate approach has earned the studio a cult following, but an AI partnership with a tech giant risks undermining that original ethos. Kane Parsons, the director of the studio’s highest grossing movie ever (Backrooms), described AI as “cultural and economic rot.”

Defense Docket

  • Canada doesn’t have a defence SME problem. It has a conversion problem - That’s the headline finding from the first-ever national survey of Canadian defence SMEs — conducted by The Icebreaker and BDC, released last week to coverage in the Globe and Mail, BetaKit, and Financial Post. Six hundred and forty-two business owners. Proprietary data. The most comprehensive picture of Canada’s defence SME ecosystem ever assembled. Half of defence SMEs seeking financing in the next 12 months expect it to be difficult or very difficult to obtain. Not because of weak credit history or insufficient collateral — those are rarely cited. Because lenders face reputational and legal concerns that prompt many to avoid the sector entirely. Only a quarter of defence-heavy SMEs say their current financial institution fully meets their needs.

  • “Buy Canadian” won’t fix defence procurement until Ottawa defines “Canadian”

  • Northern Defence, a short film about Canada’s Arctic

  • Wars trigger $12bn venture capital rush into defence tech. Funding this year has already surpassed 2025 total as soaring valuations fuel fears of a hype cycle.

Crypto Corner

  • Mark Zuckerberg wants a prediction market (DC)

  • Ethereum Foundation cuts 20% of workforce (DC)

  • Ether-linked nonprofit cuts budget 40% (BBG)

  • Dems urge Republicans to hold hearing on Trump crypto ties (TB)

  • 100 Catholic leaders oppose Clarity Act over safeguards (TB)

Energy Transition Today

  • EV maker Lucid to cut about 18% of US workforce, COO Winterhoff exits LINK

  • GM installs robots at flagship EV factory after laying off 1,300 workers LINK

  • Ottawa announced plans to boost nuclear power by 50%. Energy Minister Tim Hodgson unveiled the feds’ plan to build up to 10 new Candu nuclear reactors across Canada, sell more of the Canadian-made reactors overseas, and expand the supply chain for nuclear energy. Nuclear reactors are expensive and difficult to build, but with power demand skyrocketing (we’re looking at you, AI data centres), more countries are considering investing in the renewable, emissions-free energy source. (CTV News)

  • The federal and Ontario governments are providing seven Ontario Indigenous communities with $700 million worth of loan guarantees to purchase equity in one of the four new reactors at the Darlington nuclear power plant. It’s the first-ever First Nations equity partnership in a Canadian nuclear reactor. (CBC News)

The Dig

  • Uranium and rare earth miner Energy Fuels is buying German magnet group for nearly $2 billion. The deal is part of their mine-to-magnet supply chain plans. Energy Fuels wants to produce commercial scale rare earths and recently secured a $725 million loan from the Department of Defense.

  • President Doumbouya of Guinea has banned all raw gold exports with immediate effect, with every ounce now needing to be refined locally before it can leave. (Mining.com)

The Picks List

  • Wohoo! Larry Tanenbaum‘s Kilmer Sports has reportedly invested $100 million into the PWHL alongside Detroit-based Ilitch Companies. The company also owns the WNBA’s Toronto Tempo and is a minority owner of MLSE.

  • Colorado recently announced its new “Stargazing Trail,” the ultimate road trip for night-sky enthusiasts. The trail connects 21 certified International Dark Sky destinations across the state, offering visitors unique astronomical views, stargazing experiences, and star-lit stays

  • Tennis Canada announced plans to build a new 15,000-seat stadium in Montreal, which will host future editions of the National Bank Open.

The Breakroom

  • Prices for whey protein, previously the go-to way for protein maximizers to get it in a cheap and easy format, are through the roof: “The price for whey protein concentrate 80, a highly popular additive that is 80% protein, has surged to a historic high of more than $13 a pound in the U.S., according to data from market insights firm Vesper.” (Wall Street Journal)

  • Sales of digital cameras have more than doubled in the past five years to US$5.5 billion in 2025, driven by a growing cohort of young people swapping their iPhones for old-school point-and-shoots.

  • Fox could make $250 million from hydration break ads during the World Cup, recouping more than half of the $485 million it paid FIFA for the U.S. English-language TV rights.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[The Problem With Sure Things]]>https://thependerpulse.substack.com/p/the-problem-with-sure-thingshttps://thependerpulse.substack.com/p/the-problem-with-sure-thingsFri, 19 Jun 2026 21:27:11 GMTWe are only halfway through the month and, in the wise words of Taylor Swift, there’s “a lot going on at the moment.”

The Fed is talking. IPOs are back. Short sellers are making headlines. Peace deals are being signed.

Yet somehow, the story we can’t stop thinking about here at The Pulse, other than Team Canada’s historic win yesterday, is the Cabo Verde Blue Sharks.

The Tiny Nation Nobody Expected

Cabo Verde is a country in the central Atlantic Ocean, about 600km off the western coast of Africa. It gained independence from Portugal in 1975, is made up of ten volcanic islands, and is known for its year-round warm climate, and beautiful beaches (we are thinking a Pulse site visit may be necessary to confirm…)

Cabo Verde also has ~561,000 people. That’s slightly fewer than Surrey, BC (568,000), and a bit more than Halifax, NS (440,000).

Its football federation wasn’t established until 1982. The country became a FIFA member in 1986. The first time Cabo Verde attempted to qualify for the World Cup was in 2000, ahead of the Korea-Japan tournament, and they were eliminated by Algeria in the first round.

Since then, the Blue Sharks have been deliberate. Beyond FIFA infrastructure funding and increased international exposure, Cabo Verde has built a football system capable of competing with the best on the continent, and, as of this week, the world.

When Cabo Verde made its debut at the 2026 FIFA World Cup, nobody could have predicted they would quickly become one of the tournament’s darlings.

Then the unthinkable happened.

The Tie Heard Around the World

Cape Verde had already pulled off a minor miracle to advance to the World Cup group stage. On paper, this team wasn’t supposed to be competitive.

Compared to Spain, European champions, a roster worth billions, a team that defeated Croatia, Italy, Germany, France, and England on the way to glory in the EURO 2024 final without dropping a single match, were expected to handle the minnows. The next day, Germany would dismantle Curaçao 7-1, providing the template everyone had anticipated Spain would set.

They didn’t.

Cabo Verde came with a plan. Cape Verdean football manager Bubista had promised his team would have the courage to attack, but that defending well was the priority. They executed it with the kind of discipline that takes years to build and one match to reveal. It took 14 minutes for Spain to register its first shot. By halftime, Spain although it had generated chances … had been turned away on each one.

The second half brought more of the same. Spain’s shot count climbed toward 27. Their possession approached 74%. Yet still the goals didn’t come.

When the final whistle blew, it was 0-0. History was made.

The Cast of Characters

At The Pulse we love a good story, especially one tied to an iconic sports moment, and the World Cup has delivered one of the best we’ve seen in years.

The underdog story is a particularly compelling one, and the cast of individuals representing this tiny island nation offers some of the most interesting storylines of the tournament. What makes it even more remarkable is that this team was built through a defining strategic choice made years ago: tap the diaspora.

The move began with Lito (Cláudio Zélito da Fonseca Fernandes Aguiar), born in Pedra Badejo on the island of Santiago. His family emigrated to Portugal when he was young, and he spent his entire playing career there, logging 224 appearances in the Primeira Liga. He could have represented Portugal. Instead, in 2002, he chose to wear the Blue Shark jersey. That decision blew open a door that the Blue Sharks have been dependent on ever since.

Take Pico Lopes. Born and raised in Ireland, his father Carlos, a cruise ship chef whose boat docked in Dublin, where he met Judy, was in the stands with her and Pico’s two brothers on Monday. His 98-year-old grandfather, who still works the land of Cabo Verde, watched from São Nicolao.

Pico was a part-time amateur who was contacted on LinkedIn and ignored the first message, it arrived in a language he doesn’t speak and he assumed it was spam. Now he has made history.

Then there’s Vozinha, Josimar José Évora Dias, to use his full name, though “Vozinha” translates kind of perfectly to “Little Granny,” a nickname his grandparents gave him as a child. He is 40 years old, born in Mindelo on the island of São Vicente. Unlike Lito and Pico, his family never left to find opportunity elsewhere. He brought the world to him instead, over a 19-year career playing across clubs in Portugal, Cape Verde, Moldova, Angola, Cyprus, and Slovakia. The definition of a journeyman.

On Monday, on the world’s biggest stage, he was the best player on the pitch.

Spain sent 27 shots his way. Vozinha made seven crucial saves to earn a shutout, and was named player of the match. Before the game, he had 45,000 Instagram followers. Today, that number had climbed to 14.2 million, more than Joe Burrow (4.2M), Lamar Jackson (3.5M), Saquon Barkley (3.4M), and Josh Allen (2M) combined.

A starting 11 that plays in eight different leagues. Twenty-six men from outside the elite. You may not always have ideal circumstances, but Cabo Verde showed us what’s possible when you make the most of the cards you’re dealt.

Consensus Is Expensive

Prediction markets had priced Spain’s victory at 92%, not because bettors were careless, but because the consensus was overwhelming. One Polymarket trader bet nearly $1 million on the outcome, expecting a tidy $87,000 profit. Instead, Cabo Verde walked away with a point and the trader walked away with a lesson.

Spain’s manager wasn’t gracious in the aftermath. “This team was clearly inferior to us,” De la Fuente told reporters.

But here’s the thing, the takeaway in sports and in markets. Odds don’t guarantee outcomes. Consensus doesn’t predict behavior. This is a distinction that matters far beyond the pitch.

Markets don’t always reward investors for identifying great companies. Often what is rewarded is identifying outcomes that differ from what’s already priced in. When everyone agrees on a winner, the agreed-upon winner becomes expensive to own, not because the underlying quality disappears, but because the expectation of quality has already been absorbed into the price.

Spain was the consensus trade. Cabo Verde was the ignored possibility. The market priced Spain as nearly certain. Reality reminded everyone that the only certainty in life is uncertainty.

Investors make this mistake constantly.

Take the Magnificent Seven. These are extraordinary businesses, once-in-a-generation cash generators, iconic brands, revolutionary management teams. That’s not the question. The question is what’s already embedded in the valuation, and whether the next seven years of compounding are already being paid for today. A stock can be a great company and a poor investment at the same time. The gap between likely and certain is where returns are made or foregon.

The Advantage of Being Overlooked

Cabo Verde couldn’t outspend Spain. They couldn’t out-talent them. So they built differently: a disciplined defensive system, a diaspora recruitment network that found Pico Lopes on a Dublin football pitch and a 40-year-old goalkeeper still playing in the Portuguese second division. They optimized for what they had, not what they wished they had.

Their squad includes players from eight different leagues. Twenty-six men from outside the elite. Bubista didn’t apologize for that. He built around it.

Great investments often work the same way. They are rarely the largest companies in the index. They are often businesses operating outside the spotlight, building capabilities the market hasn’t fully priced, serving customers in markets analysts don’t cover closely, compounding quietly in industries that don’t generate headlines. Mispriced. Misunderstood. Overlooked.

The trick, of course, is telling the difference. Not every underdog is Cabo Verde. Some are Curaçao, caught on the wrong day, against the wrong opponent, on the wrong end of a 7-1 scoreline. The work lies in figuring out which is which.

Next Up

The Blue Sharks face Uruguay on Sunday. All four teams in Group H are currently tied on one point.

Before the tournament, Cape Verdean football manager Bubista was asked whether his team feared the world’s best nations. “We feel very relaxed. There’s no fear. We’re not scared of anything.”

That’s easier to say when nobody expects you to win. It’s also, as it turns out, the most useful mindset an investor can carry into an overlooked market.

Markets are full of Spains: obvious quality, widely discussed, already priced for success. The challenge lies in finding the Cabo Verdes: the overlooked possibilities building something real in the places nobody is watching closely enough.

Because every so often, the underdog doesn’t just survive. It changes the game.

That’s where we get excited.

Pender Events + Publications

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Kalshi Eyes Public Markets as Revenue Hits $2B and Trading Volume Soars LINK

  • MDA Space is buying US-based Blue Canyon Technologies in a deal worth $874 million in an all-cash transaction - it’s biggest ever. Blue Canyon is a spacecraft and satellite component maker that is currently part of Raytheon. The deal is going to be funded entirely through debt and MDA says the deal will add to adjusted profitability in 2027.

  • Global Auto Holdings is considering a Toronto initial public offering as soon as this year. The Canada-founded firm owns car dealer franchises including the UK’s Lookers and Canada’s Alpha Auto Group, working with brands like BMW, Ford, Honda, Toyota and Audi. Global Auto has built the business through acquisitions, most recently of Mercedes Benz’s Berlin-Brandenburg branch in May.

  • The private credit withdrawal crisis is going from bad to worse.

  • How markets have performed under different Fed chairs.

Macro Morning

  • Today, the Office of the Superintendent of Financial Institutions (OSFI) announced that it is lowering the Domestic Stability Buffer (DSB) to 3.0% from 3.5% of total risk-weighted assets. This is the first change in the DSB level since June 2023 and takes effect today. In addition, OSFI is lowering the range of the DSB to 0 to 3% from 0 to 4%.

  • Canada applied a 10% import tax on imports of canned vegetables to protect domestic growers and food processors, the Department of Finance said. The so-called “safeguard measure” applies immediately from June 19 for a maximum of 200 days. But the tariff will not apply to the US, Mexico, Israel, Chile or developing countries to comply with Canada’s international trade obligations.

  • The U.S. and Iran officially signed their deal to end the war. Leaders of both countries signed a peace agreement, ending the nearly four-month-long conflict and reopening the Strait of Hormuz for oil shipments. The deal calls for an end to all hostilities, the dilution of Iran’s enriched uranium stockpile, a 60-day negotiation to reach a permanent deal on Iran’s nuclear program, and the lifting of sanctions on Tehran that will allow Iranian oil to be sold right away (widely seen as a major concession from Washington). (Associated Press)

  • ~3.4 million Albertans will receive a $100 cheque from the provincial government thanks to a surge in oil revenues from the Iran war. The one-time benefit will go to any Albertans with combined household incomes of less than $225,000.

Technology Today

  • The European Commission plans to release preliminary findings as soon as next week saying Amazon Web Services and Microsoft Azure appear to qualify as gatekeepers under the Digital Markets Act, with a final decision expected by late 2026. If designated, AWS and Azure would face interoperability requirements, curbs on customer lock-in, and restrictions on self-preferencing, with fines reaching up to 10% of global turnover, rising to 20% for repeated breaches. LINK

  • US court rules Ohio can restrict children’s use of social media LINK

  • Amazon won’t release Sam Altman biopic focused on OpenAI’s 2023 leadership crisis LINK

  • Wealthsimple is launching its own prediction markets app, Wealthsimple Predict, in partnership with U.S.-based Kalshi, marking one of the first times that real-world event trading will be offered in Canada . Wealthsimple has only received permission from Canadian regulators to offer contracts tied to economic indicators, climate events, and financial markets. The most popular markets, like politics and sports, are still banned

  • Montreal-based digital payment firm Nuvei is buying American rival Payoneer for US$2.75 billion. The deal — which is Nuvei’s first major acquisition since it was taken private in 2024 — will create a combined company with ~$3 billion in annual revenue. This is one of the largest acquisitions ever made by a private Canadian tech company, and marks a major milestone for Nuvei since it left public markets.

  • Tim Cook said that price increases for Apple products are “unavoidable” in an interview with the Wall Street Journal, citing soaring demand and skyrocketing costs for memory and storage chips driven by AI servers. According to a WSJ analysis, if Apple wanted to maintain similar profit margins for its next iPhone Pro, it could potentially raise the base price by US$200 to US$1,299 (about $1,830 Canadian). However, this calculation doesn’t account for potential upgrades to the phone’s camera, which could bump the price tag to US$1,399 (just shy of $2,000 Canadian).

  • Waymo recalled nearly 4,000 robotaxis after they kept barreling into closed construction zones. One rider said theirs blew past the cones with police in pursuit.

AI of the Tiger

  • Google copies Nvidia’s playbook to sell AI chips LINK - Google is challenging Nvidia by borrowing its own financing tactics, using financial guarantees and “circular financing” to win data-centre customers for its tensor processing units, or TPUs, according to a Wall Street Journal investigation. At the Lake Mariner cluster in western New York, Google has provided a $3.2bn guarantee, letting developers TeraWulf and FluidStack raise cheaper debt and rent thousands of TPUs to Anthropic, the same trick Nvidia used to stoke demand. Google is backstopping more Anthropic projects with this logic, including a $7bn data centre called River Bend near Baton Rouge and $1.4bn in guarantees for a computing lease in Colorado City, Texas.

  • US regulators give AI data centers a grid fast lane LINK - The Federal Energy Regulatory Commission ordered grid operators across the country to show how they will speed up the connection of AI data centers to transmission systems while keeping grids reliable and costs down. The orders went to six grid regions covering over 200 million people in 30 states, including PJM, and lay out five categories for reforms such as efficient connection studies and preventing “cost shifting” to ratepayers. Grid operators must give initial responses within 60 days, with added details on “resource adequacy” 30 days later, and the orders also push projects that pair new data centers with new power generation.

  • Space start-ups are speaking with insurers about coverage for orbital AI data centers

  • State Farm just trashed its contracts with 19,000 sales agents, thanks to a new AI-focused strategy.

  • AI image generator Midjourney has just taken a left turn with its first, very unexpected hardware product.

  • Less than two years after Google paid $2.7 billion to bring him back, one of Gemini’s co-leads is leaving for OpenAI.

Defense Docket

Crypto Corner

  • SEC proposal to scrap old stock rule benefits crypto (BBG)

  • Senators introduce resolution opposing SBF pardon (DC)

  • Illinois begins taxing crypto transactions (DC)

  • Fidelity joins Wall Street’s race to manage stablecoin reserves (CD)

  • Mexican billionaire says bitcoin is better than real estate (CD)

  • Moody’s rolls out credit ratings on Solana (CD)

Energy Transition Today

  • The end of the war could provide a boost to both the U.S. fossil fuel industry and Chinese clean energy manufacturing — energy resources some see as more stable than Middle Eastern oil and gas. (E&E News)

  • A new Solar Energy Industries Association guide to solar and land use finds panels cover less than a tenth of a percent of agricultural land in the U.S., and that golf courses and suburbs have taken over far more prime farmland. (SEIA)

  • Check out the solar-powered boat that’s intercepting garbage in the Pacific Ocean.

  • Rivian announces a vehicle-to-grid partnership with ChargeScape, joining Ford, Honda, and at least five other EV manufacturers on the platform. (Utility Dive)

The Dig

  • Goldman Sachs cut its year-end gold forecast by $500 an ounce as the Federal Reserve is no longer seen easing in 2026. The revised target of $4,900 for December implies bullion is still expected to gain ground in the second half, although less than previously expected.

  • Panama is closer to deciding whether First Quantum Minerals can reopen a giant copper mine after receiving a long-awaited audit that found the project met most of its environmental, legal, fiscal and operational obligations. The review identified areas for improvement, but auditors said the shortcomings didn’t amount to structural failures. The independent review is a key milestone as Panama weighs the future of the sprawling mine, which was closed in late 2023 amid mass protests.

  • Copper concentrate shipments from Rio Tinto’s giant Oyu Tolgoi mine have resumed after protesters blockaded a key truck route, demanding a greater share of revenue for Mongolia.

  • Former U.S. Homeland Security Secretary Kristi Noem has been tabbed for an advisory role by Vancouver-based miner NovaRed Mining, with the company citing Noem’s “exceptional leadership experience.”

  • India’s imports of thermal coal (for power plants) have fallen to a four-year low thanks to higher domestic supply and more green energy.

  • BHP Group will take a $2.3 billion writedown on its giant Jansen potash mine, after announcing the latest in a series of cost and time overruns for an expansion of the project in Saskatchewan. The world’s largest miner has routinely blown past cost estimates. It said the phase two expansion will now cost $6.9 billion, up from an earlier forecast of $4.9 billion, and start producing toward the end of 2031.

The Picks List

The Breakroom

  • This Turkish ice cream doesn’t drip.

  • Canadian NBA MVP Shai Gilgeous-Alexander is leaving Converse to join Nike.

  • Here’s why Hollywood is banking on Toy Story 5.

  • US$659 million. Budget for Universal Pictures’ Jurassic World: Dominion movie, making it the most expensive film ever shot. The dinosaur flick surpassed Disney’s Star Wars: The Force Awakens, which cost $640 million to make

  • For the first time, a patient has been treated with a radical therapy designed to “reprogram” cells to make them act young again. The trial is sponsored by biotech firm Life Biosciences and will treat glaucoma patients with the goal of manipulating three genes in a way that regenerates neurons in the optic nerve, thus stemming or reversing the disease’s effects.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Fraud, Fear, and Fundamental Value]]>https://thependerpulse.substack.com/p/fraud-fear-and-fundamental-valuehttps://thependerpulse.substack.com/p/fraud-fear-and-fundamental-valueWed, 17 Jun 2026 18:51:14 GMTIt’s happening again. Sound the alarm. There is another short report out.

On June 16, Jehoshaphat Research released a short report on Gildan Activewear (TSX:GIL), yes the massive apparel manufacturer behind every tournament, conference, and concert t-shirt you’ve ever owned. Look at your own closet. You’re probably a Gildan stakeholder without knowing it.

The stock dropped roughly 19% in a single day, erasing approximately $3 billion in market cap. Jehoshaphat alleged “channel stuffing” incentivizing distributors to order more product than demand warrants, and claimed Gildan used off-balance sheet receivables factoring to obscure rising days sales outstanding, in order to mask a weaker organic revenue profile.

Gildan management responded by stating their public disclosure is accurate and comprehensive, while simultaneously reiterating fiscal 2026 guidance. Analysts have largely defended the company as well. As of this writing, the stock has already recovered about 5%.

But it got me thinking about the broader history of short reports in the Canadian equity landscape, and what, if anything, they actually tell us.

The anatomy of the modern short report

For context, a quick refresh on short-selling mechanics: essentially an investor borrows shares, sells them, then repays the loan by returning shares, ideally purchased at a lower price after the thesis plays out.

Now the short report is the public-facing weapon of choice for many short selling market participants. The short report is a research document designed to move the stock, often on the same day of release. It is based on expensive research, not simply “vibes” and when done right can cause absolute market mayhem.

Looking to today’s most recent examples, the same author is responsible for Gildan’s not so good very bad week as well as goeasy’s closer to catastrophic year.

In case you missed it: Jehoshaphat released a report on goeasy in the fall of 2025. For those blessed to have not been following the company (see stock chart below), goeasy is a non-prime lender specializing in loans and lease-to-own products for borrowers who can’t access traditional banks. The report alleged that the company was using “workout tools” excessively to suppress reported arrears, and that a build-up in interest receivables masked a far worse underlying credit profile than management was disclosing.

goeasy initially called the report “false and malicious.” But in March 2026 the company issued a material update acknowledging substantial writedowns in its LendCare unit and restating financial results for 2024 and 2025. The stock is now down approximately 75% over the past year. When a non-prime lender with management turnover at both the CFO and CEO level faces a forensic credit report, the ground is sometimes not as solid as the press release suggests…

The gold standard: Sino-Forest

If goeasy illustrates a complicated outcome, Sino-Forest (TSX:TRE) (throwback!) is the textbook case.

In June 2011, Muddy Waters Research published a report alleging that Sino-Forest, then a TSX-listed commercial forest plantation operator in China with a market cap north of $5 billion, had been fraudulently inflating its assets and earnings for years. Carson Block called it a “multibillion-dollar Ponzi scheme” with “substantial theft.” Shares collapsed 82%. Investor John Paulson sold his entire stake at a $720 million loss.

Then, Sino-Forest launched an independent PricewaterhouseCoopers investigation, which … didn’t help the situation. What happened next? Well…. The RCMP opened a criminal inquiry. The Ontario Securities Commission followed. And to make matters even worst, in March 2012, the company filed for bankruptcy.

By 2017, the OSC found that Sino-Forest and four individuals, including former CEO Allen Chan, had committed fraud. Yikes.

Muddy Waters got it exactly right. The short thesis was the story.

When short sellers get it wrong

Keep in mind however, not every short report is Sino-Forest.

Nuvei is one I have a soft spot for, it was a favourite during my time in equity sales. The company is a global fintech providing payment processing, merchant services, and acquiring for businesses of all sizes; essentially the engine behind the scenes that allows merchants to accept payments from customers.

In late 2021, Spruce Point Capital Management published a report on Nuvei, at the time, the largest tech IPO in TSX history, alleging a cover-up of business failures, lack of organic growth, and connections to individuals linked to alleged fraud and Ponzi schemes. The stock fell as much as 55%.

Interestingly, Spruce Point had just successfully shorted Lightspeed Commerce months earlier, which (alas) gave the report immediate credibility.

Nuvei’s board called it “a self-serving attempt to inflict damage on the company.” They weren’t wrong. The fundamental thesis didn’t hold. In November 2024, Nuvei completed a go-private transaction at US$34 per share, a 56% premium to its unaffected pre-deal price. Still a significant discount to its all-time high around US$170, but not the fraud story Spruce Point implied.

Shopify is an even cleaner example. In 2017, Citron Research’s Andrew Left argued that most of Shopify’s 500,000 merchants weren’t real businesses, just people sold “get rich quick” schemes, and that Shopify was an $11 billion fraud waiting to be exposed by the FTC. Shares fell roughly 11%. If you covered that short the same day, you made a nice trade. If you held the thesis, you were eventually short one of the greatest wealth-creation stories in Canadian tech history.

A framework for reading short reports

So, what can we learn from all of this? Other than a fascinating history lesson? After you’ve lived through enough of these, the outcomes tend to sort into three buckets:

1. Fraud was real - Sino-Forest. The short thesis was accurate, the losses were permanent, and the report served a genuine market function. These are rare, but they matter enormously.

2. Problems existed, but the outcome was overstated - goeasy. Real credit deterioration, real restatements, but a company that still exists and may yet recover. The short correctly identified a wound; whether it was fatal is still yet to be seen.

3. Short thesis largely failed - Nuvei, Shopify. The report created a temporary dislocation between price and value. For long-term investors paying attention, that’s not a cautionary tale, it’s an opportunity.

Category three is where things gets interesting. Aggressive short reports can exploit valuation anxiety, governance imperfections, guilt-by-association, and investors’ instinctive fear of loss, without actually impairing the long-term value of the business. When the market temporarily confuses noise for signal, fundamental investors who’ve done the work get to buy better companies at better prices.

More information is always better than less. Even bad short reports make the market smarter, they force management to defend their disclosures and analysts to sharpen their models. The trick is learning to sort the signal from the noise before the dust settles.

Short reports aren’t going anywhere, especially in frothy markets. We’ll be watching.

Pender Events + Publications

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Since a strong debut on Friday, SpaceX hasn’t stopped climbing: Shares are up 49% since they first hit the public market. The company’s roughly $3 trillion valuation has put it on track to become the world’s fourth-largest, surpassing Amazon and Microsoft—on just its third day of trading. SpaceX is using that momentum to make moves: Today, the company announced it agreed to buy Cursor, a “vibe coding” startup, for a staggering $60 billion. The acquisition will help xAI (which is part of SpaceX) compete with AI coding tools from rivals like OpenAI and Anthropic (Musk has acknowledged xAI lags behind in coding).

  • Yum! Brands announced that it agreed to sell Pizza Hut in a pair of deals worth roughly $2.7 billion. Private equity firm LongRange Capital will acquire most of the business for about $1.5 billion, with the potential for an additional $75 million earnout by 2030, while Yum China will purchase Pizza Hut’s operations in mainland China for roughly $1.2 billion. Yum expects to close the transaction in Q3, and will incur an estimated $85 million in one-time expenses related to the sale.

  • Robinhood announced that it’s cutting 10% of its workforce.

Macro Morning

  • The Wall Street Journal reports that the US-Iran interim peace deal will let Iran immediately start selling oil. Details of the framework agreement between the US and Iran have emerged and it includes the ending of the war, a promise to reach a final agreement within 60 days, for the US to lift the naval blockade and for Iran to allow passage through the Strait of Hormuz, and importantly the promise that Iran will never produce nuclear weapons. The agreement is meant to be signed this Friday. Meanwhile, here’s a look at how the war has permanently changed the global economy.

  • America’s 401(k)s had both their best and worst year ever in 2025. A new report from Vanguard out today found that the average total 401(k) savings-rate hit a record 12.1% in 2025, and average returns reached almost 20%—largely thanks to the stock market’s tear last year. But 2025 also set a less exciting record: 6% of Vanguard’s nearly 5 million 401(k) participants made hardship withdrawals in 2025—the highest share ever—up from 5% in 2024. (The median withdrawal amount, however, did decrease).

  • China just recorded its first YoY drop in retail sales since 2022, while fixed asset investment also contracted by a worse-than-expected 4.0%. (WSJ)

  • New GoFundMe data shows that over 15,000 fundraisers have been launched in Canada for “essential needs” like bills, groceries, and housing payments in the first five months of 2026. Since 2020, there’s been a 274% increase in these types of cost-of-living fundraisers.

  • Housing starts, an estimate of new residential construction, tanked 15.4% in May to 1.177 million—nearly 300,000 units fewer than what economists expected.

  • Canadian home sales increased 5% from April to May according to the latest data from the Canadian Real Estate Association. Home prices dipped 0.1% over that time and the average selling price is now around $702,079 which is the highest level in 2 years. Compared to last year, home sales and home prices are still down. The average price of a Toronto home is down 4.6% from last year and in Vancouver it is down 2.2%. CREA says that momentum is slowly building in the housing market and “activity is now picking up.”

Technology Today

  • Meta’s CTO admitted in an internal memo this week that the company did an “atrocious job” rolling out its AI reorg, per a new Wired report—leading morale to tank. And the planned fixes essentially amount to more social events and better snacks. Meta is trying to transform into a leaner, AI-first workforce, and it’s showing us the biggest hurdle: keeping its remaining employees from revolting.

  • A $24,000 robot is training for Everest - The engineer behind the project, a 23-year-old named Pablo Berlanga Boemare, claims 97% of Earth is currently unreachable by wheeled or tracked robots—and wants to change that in hopes that roving machines can eventually help monitor remote, hard-to-reach wilderness for conservation efforts. He’s targeting an October summit of Everest, if the venture raises $500,000 by then. “But this is not just a stunt,” he insists. “It’s a hell of an engineering challenge.”

  • Prime Minister Starmer has announced the UK’s own social media ban for under-16s, going further than Australia’s world-first by extending Britain’s restrictions to also cover gaming and livestreaming sites. (No. 10)

AI of the Tiger

  • What’s SpaceX doing with its sweet new IPO valuation? Cashing in on its option to buy popular AI coding agent Cursor—for $60 billion.

  • OpenAI’s losses just exploded nearly 8X Link - OpenAI’s net loss attributable to the company jumped from $5.09 billion in 2024 to $38.53 billion in 2025, according to audited financial documents independently verified by the Financial Times. Converting from a non-profit to a for-profit triggered a $41.55 billion loss from changes in fair value, pushing the net loss to $60.35 billion before $21.82 billion was removed via noncontrolling interests

  • ChatGPT’s market share slips below 50% for first time Link

  • Microsoft faces shareholder lawsuit over masking AI costs and slowing Azure growth Link

  • DeepSeek’s $7B raise signals a new front in the AI war Link

Defense Docket

  • New Scientist reports that a senior figure in Ukraine’s defence industry confirmed a test near Bakhmut approximately two years ago: ten AI-driven quadcopter drones were sent toward the front lines, activated “Terminator mode” — and killed Russian soldiers with no human involvement at the terminal stage. There is currently no international ban on fully autonomous lethal weapons. The UN has called for one. Ukraine’s own government prohibits AI in the final stage of target engagement — though it used it anyway, in a test that apparently worked.

  • Following the Airlogix + Sentinel R&D drone JV announced at CANSEC, Russian foreign ministry spokesperson Maria Zakharova called Canada a “warmonger” and vowed to publish “the addresses of all Canadian production facilities participating in the drone deal.” Russia’s ambassador said Canada was trying to profit from the conflict. Sentinel CEO Kath Intson: “The Canadian DND and Sentinel deal will proceed as planned.” Defence Minister McGuinty: “We’ve seen this before.”

  • German rocket builder Isar Aerospace secured a Series D bringing total funding to ~$1.3B CAD. Maritime Launch Services signed an LoI to pursue orbital launches from Canso, NS — and DND has already signed a $200M sublease for a dedicated pad. Isar’s two-stage Spectrum rocket: 1,000 kg to LEO. Launch window attempt: June 15–21 from Andøya, Norway. If they succeed there, Canada could see its first orbital launch attempt by 2027–28.

Crypto Corner

  • Royal Bank of Canada tapped former StoneX Digital CEO Brian Mulcahy to lead digital-asset strategy in its global markets business. The move comes as RBC is diving deeper in the asset class and expanding its presence in US financial markets.

  • Binance prepares for EU exit with license in limbo (BBG)

  • Race to turn AI into commodity spurs crypto boom (BBG)

  • BlackRock launches new Bitcoin ETF (TB)

  • Coinbase to launch tokenized stock trading and options (DC)

  • US watchdog urges FDIC to coordinate crypto oversight (CT)

Energy Transition Today

  • Ottawa is in talks with Chinese EV makers to build vehicles in Canada. Industry Minister Mélanie Joly is in China for the next few days, where she will be meeting with four EV makers, including BYD and Chery, about a possible Canadian investment. Joly has invited Chinese companies to produce EVs at Canadian plants, but has so far insisted that the cars must use Canadian parts, adhere to Canada’s labour standards, and that the joint venture must be majority Canadian-owned. (Globe and Mail)

  • A federal judge rejects the Trump administration’s attempt to shut down clean energy developers’ challenge to five federal policies that are slowing solar and wind projects, finding the developers are likely to win the legal fight. (E&E News)

  • Carbon removal group Frontier announces $915 million in carbon-removal purchases from buyers including AI developer Anthropic — a welcome boost as the industry struggles. (Axios)

  • BloombergNEF anticipates 27% of new vehicles sold this year will be electric, with that share rising to 52% by 2035, as the emergence of lower-cost models and increasing gasoline prices drive consumers toward EVs. (BloombergNEF)

The Dig

  • More central banks than ever expect to increase their gold reserves. In a survey of 74 central banks, 45% said they plan to buy in the coming year, the biggest-ever share in data collected by the World Gold Council and YouGov since 2018. Just one said it planned to cut holdings. The pace of gold buying by central banks sped up in the first quarter, even as Turkey, Russia and Azerbaijan began offloading metal

  • South Korea and Saudi Arabia agreed to explore minerals supply chain cooperation covering mining, refining and processing, Platts reported, as published on S&P Global Energy Core. Platts is part of S&P Global Energy

  • Global aluminum prices fell 11% from their 2026 peak in response to the tentative US-Iran peace deal, but analysts expect supply restoration to take significant time, Platts reported, as published on S&P Global Energy Core.

The Picks List

  • At almost 93 years old, Italian sprinter Emma Maria Mazzenga is the fastest female nonagenarian on the planet. She proudly holds multiple world records. Scientists recently decided to study what makes Emma so extraordinary. After all, most people aren’t setting sprinting records into their 90s. What they discovered was remarkable: in several key ways, Emma’s body functions more like that of someone decades younger. Researchers found her ability to process oxygen rivals active women nearly half her age. Even more impressive, her mitochondria perform more like those found in healthy people in their 20s. Emma’s muscles also maintain unusually strong connections to the nerves that tell them when to move, a system that usually deteriorates with age.

  • Generation Circus hosted a “rebellion against ageism” this weekend as part of their Over 50 Showcase, where performers between the ages of 50–96 showed off their trapeze, hula hoop, juggling, clowning and dance skills.

The Breakroom

  • When Leah Wilson saved an injured baby crow from the street, she didn’t realize she would be adopted by the whole flock—until the thank-you gifts came pouring in.

  • 15.4°C - That’s the highest June temperature ever recorded on the Antarctic Peninsula earlier this month, a full 20°C (36°F) above the usual early winter average.

  • The era of the luxury handbag may be ending. WSJ reports: “A less optimistic take circulating online is that luxury handbags are played out and oversaturated. Social-media feeds are flooded with images of once-scarce bags like the Hermès Birkin and the Chanel Classic Flap, which has killed some of the magic.”

  • The Knicks won their first NBA title in 53 years on Saturday, and the city felt it—measurably. Oura (the Knicks’ official ring partner) pulled anonymized data from its users in NYC during Wednesday’s Game 4 (the 29-point comeback that became the largest in Finals history). It found the city’s heart rate spiking in real time, peaking at 3.7 bpm above baseline right before the buzzer, then a measurable hangover the next morning: New Yorkers slept an average of just 6.63 hours and saw recovery metrics drop across every stage of sleep. And that was just Game 4, so we can only imagine what Saturday’s game did to the city’s resting heart rate.

  • The end of a legacy - After 74 historic years, CBC will no longer broadcast Hockey Night in Canada. Starting next season, the national broadcaster will not carry NHL games after failing to renew its sublicensing agreement with Rogers Sportsnet, the league’s Canadian rightsholder. CBC plans to replace the Saturday night hockey block with a new program focused on Canadian athletes competing in events featured at the Olympics.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Beyond the Soloist]]>https://thependerpulse.substack.com/p/beyond-the-soloisthttps://thependerpulse.substack.com/p/beyond-the-soloistFri, 12 Jun 2026 19:46:07 GMTIf today’s SpaceX IPO tells us anything, it’s that markets have drifted a long way from everything conventional investing wisdom told us to expect. Some are sounding the alarm, but the market isn’t listening yet. Meanwhile, the warning lights are coming on one at a time, and they’re worth reading in sequence.

The first light flickers on at the index providers themselves. A single new listing was enough to send the committees that govern the world’s major benchmarks into an identity crisis. Nasdaq rewrote its rules to admit mega-cap IPOs in just 15 trading days, down from a three-month minimum, and FTSE Russell cut its wait to five, while S&P Dow Jones Indices rejected its own proposal to relax the criteria, keeping SpaceX out of the S&P 500 until at least mid-2027. When one company’s debut forces the gatekeepers to debate, and in some cases rewrite, what justifies inclusion at all, something fundamental is shifting.

The second light is concentration. The ten largest companies in the S&P 500 now account for just over 39% of the index. The benchmark sold to investors as instant diversification has quietly become a concentrated bet on a handful of names.

Yahoo Finance

The third light is the one investors sometimes forget to check: the labels. Technology, as a sector, accounts for another 39% of the index. That those two numbers match is no coincidence, they’re largely the same names. And even that figure understates things: Amazon is classified as a Consumer company, never mind that AWS is the profit engine of the whole enterprise. Tesla carries the same label, despite Elon Musk’s standing argument that autonomous driving and EV leadership make it a technology company first. The clear conclusion: the index’s true tech exposure runs well past what the official sector weights admit, and the official number already looked excessively concentrated.

One light is a glitch. Two is a coincidence. Three, and the whole panel is blaring, and at that point, the right response isn’t to keep travelling along the same route and hope for the best. It’s to ask whether the route still makes sense at all.

Take Me Back

In the early 90s, the S&P 500 looked like a far more representative cross-section of the U.S. economy. The 10 largest companies by market cap (IBM, Exxon, General Electric and Philip Morris, etc.) made up roughly 19% of the index. Leadership was spread across multiple sectors, and no single industry dominated overall returns.

Google Finance

That began to change during the technology boom. By the end of 2000, the top 10 accounted for roughly 23% of the index, with concentration peaking during the year at about 27%, driven by the rise of companies such as Cisco, Microsoft and Intel. As we aspiring market historians know, the subsequent unwind was sharp, and the early-2000s reset ushered in a period where concentration declined as energy and consumer stocks came back to dominate.

Google Finance

But before we leave the 90s entirely, sit with that fact for a moment: 27%. At the height of the dot-com era, the time period every market watcher uses as the cautionary tale, the top 10 commanded barely two-thirds of the weight they hold today. The balance has shifted dramatically in just the past decade: today’s 39% is roughly double where the top 10 stood ten years ago. And the weight has run ahead of the earnings. In 2025, the top 10 stocks represented roughly 41% of the index’s total weight but were expected to generate only about 32% of its earnings, a gap that has widened meaningfully since 2015, when weight and earnings contribution were closely aligned. The largest companies remain highly profitable, but market value concentration has increasingly outpaced fundamental profitability.

Concentration risk is at an all-time high. Correlations are shifting in ways that expose the limits of traditional models. And simply owning more securities no longer creates a meaningfully more diversified portfolio. Many investors believe an S&P 500 fund offers wide diversification, yet roughly $39 of every $100 invested flows into just 10 companies, creating a feedback loop in which passive inflows disproportionately support the largest stocks, increasing their weights and reinforcing performance leadership regardless of fundamentals. This is also why SpaceX’s inclusion in some indices already matters so much: the moment it enters the Nasdaq-100 and Russell benchmarks, an estimated $22–27 billion in passive money must buy it, not because anyone weighed the fundamentals, but because the rules say so.

The narrowing of the S&P 500 reflects a structural shift: a handful of technology and AI-driven giants now dominate the index’s composition, performance and risk profile. The current leaders do in most cases have solid fundamentals (profitability, competitive advantages, growth trajectories) but the concentration of market value in a narrow group introduces a new kind of risk. The disconnect between weight and earnings contribution, the outsized influence of individual stocks, and passive inflows amplifying both underscore our new reality: what appears to be broad diversification increasingly functions as a concentrated allocation to a single thematic outcome.

For investors, this evolution demands a recalibration of assumptions. The index has been a resilient benchmark, but its top-heavy structure warrants a closer look. Today’s markets are not the ones we were taught in our intro to finance classes, and new markets call for new solutions.

For decades, portfolio construction felt relatively straightforward: equities provided growth, bonds provided stability, and diversification meant balancing the two. That composition played reliably for a generation. But today, investors face a more daunting question:

How do you build a portfolio capable of navigating multiple market environments without relying on a single source of return?

The answer may look less like assembling a larger portfolio and more like conducting an orchestra.

When the Music Changes

Over the past five years, a structural shift has reshaped global markets, a transition from a decade of predictable, low-cost liquidity into an environment defined by volatility, dispersion, and macro-driven uncertainty.

Persistent inflation partially eroded the safe-haven role of fixed income. Extreme market concentration rewarded a narrow set of technology names and punished everything else. And the once-reliable inverse correlation between stocks and bonds, the baseline assumption behind the 60/40 portfolio, broke down at precisely the moments investors needed it most.

In a low-rate world, the 60/40 portfolio performed as designed: equities grew the portfolio, fixed income cushioned the drawdowns. But as rates rose sharply from 2022 onward, the script flipped. Bonds fell in lockstep with equities. In some periods, fixed income became the volatility and equities provided the relative stability. The categories investors had learned to rely on began behaving like each other.

Layer onto that the concentration problem we’ve just walked through, a top 10 that commands 39% of the S&P 500, well beyond even the dot-com peak, and the picture sharpens. An investor buying a broad index fund isn’t buying the market; they’re buying a thesis, heavily weighted toward AI and large-cap technology. Add long-duration bonds to that mix, and the portfolio is doubling down on the same underlying interest-rate sensitivity, not diversifying away from it.

This is the environment liquid alternatives were built for. Multi-strategy investing has become increasingly essential precisely because it is designed to thrive on the volatility, dispersion, and macro-driven rotation that have defined the 2021–2026 period. Where traditional portfolios require calm and stable correlations to perform, a multi-strategy approach seeks to generate returns because of the turbulence … not in spite of it.

True diversification today can no longer be assembled from traditional sources alone.

More Instruments Don’t Create Better Music

Earlier, we said the answer looks less like assembling a larger portfolio and more like conducting an orchestra. Here’s what we meant.

Think about what makes a great classical performance great. You remember the melody, the emotion, the way the piece made you feel. An exceptional solo may have stood out, or a single instrument that cut through at exactly the right moment. But mostly, you sit back and let the experience wash over you. The complexity disappears into the music.

That is what well-executed multi-strategy investing feels like from the outside.

An orchestra doesn’t achieve greatness by adding more violinists. It achieves it through the deliberate combination of distinct instrument families, each with its own sound, range, and purpose. In a multi-strategy fund, the instruments are the individual funds themselves: each capable of performing independently, but most powerful when orchestrated together. The conductor reads the room (the macro environment, the market’s tempo) and makes adjustments in real time. When volatility spikes, the percussion carries. When conditions calm, the strings re-emerge.

What the portfolio manager is ultimately trying to create is a smooth listening experience. No single instrument dominates at the wrong moment. No section plays out of tune while the others hold the harmony. When one strategy isn’t performing at its expected level, the conductor shifts emphasis, bringing other sections forward until the original is ready to lead again. It is a true team effort, directed by a single, disciplined hand.

But here is the critical insight: an orchestra performs differently depending on the music.

A Beethoven symphony demands something entirely different from a piece by Vivaldi. The instruments are the same. The music hall is the same. What changes is the composition, and how each section responds to it.

Markets work the same way. The environment that rewards large-cap growth stocks may be entirely different from one that rewards small caps, real assets, or defensive strategies. Conditions rotate. Correlations shift. What worked in the last cycle may actively work against investors in the next.

Yet most portfolios are built as though the music never changes. Today, investors face a convergence of challenges that make single-strategy dependence more risky than ever:

• Extreme concentration risk in passive and large-cap equity

• Persistent uncertainty around interest rates and inflation

• Geopolitical instability with no clear resolution

• Faster and more unpredictable market rotations

The challenge isn’t predicting which movement comes next. The best conductors don’t predict, they respond. The challenge is building a portfolio capable of performing beautifully, no matter what comes next.

A quick word before we go further. The Pulse doesn’t usually do product features, but Pender built a fund around precisely the problem this piece describes, and walking through how it’s constructed is the clearest way to show what conducting an orchestra actually looks like in practice. So consider what follows equal parts illustration and disclosure: yes, it’s ours, which is also why we know it best.

Meet the Sections: Pender’s Three-Pronged Strategy

Like any great orchestra, the Pender Alternative Multi-Strategy Growth Fund is built around distinct players, each responsible for a specific role, each capable of carrying the performance when the moment calls for it, and each most powerful when playing in concert with the others.

PenderFund

The Strings: The Compounders Pender Small Cap Opportunities Fund, Pender US Small/Mid Cap Equity Fund Allocation range: 0–60%

Every great orchestral performance is anchored by the strings. They carry the melody. They provide continuity. They create the foundation upon which the rest of the ensemble performs. While the brass may command attention and the percussion may punctuate key moments, it is often the strings that give the performance its character and direction.

Within the Pender Alternative Multi-Strategy Growth Fund, that role belongs to Pender’s small-cap equity strategies.

For more than two decades, Pender has built its investment culture around uncovering businesses that are overlooked, misunderstood, or simply too small for much of the investment industry to notice. While markets often focus on today’s largest companies, Pender’s equity team has consistently searched where competition is lower, inefficiencies are greater, and the opportunity to identify future compounders is often highest.

This expertise is expressed through the Pender Small Cap Opportunities Fund and the Pender US Small/Mid Cap Equity Fund, strategies dedicated to identifying businesses capable of growing their intrinsic value over years, not quarters.

Small-cap investing rewards patience, discipline, and deep fundamental research. It requires investors to look beyond short-term market narratives and focus instead on management quality, competitive advantages, capital allocation, and long-term business value creation. These are areas where the Pender equity team has spent years refining its process and developing its edge.

The result is a collection of businesses that form the melodic core of the portfolio: companies with the potential to compound capital over full market cycles while providing exposure to opportunities often unavailable in traditional large-cap benchmarks.

Just as an orchestra relies on its strings to carry the performance forward, the Growth Fund relies on Pender’s small-cap expertise as its primary engine of long-term capital appreciation.

The Brass: The Alternatives Pender Alternative Select Equity Fund | Pender Alternative Special Situations Fund Allocation range: 0–60%

If the strings carry the melody, the brass carries the conviction. Powerful, dynamic, capable of cutting through market noise with force, and equally capable of pulling back when the performance demands restraint.

Pender’s alternative equity strategies occupy this role. The Select Equity Fund brings an active, sector-rotating lens to North American equities, concentrating capital where the opportunity is richest and stepping back when it isn’t. The Special Situations Fund goes further, using long/short positioning, event-driven setups, and special situation opportunities to generate returns that traditional long-only investing often cannot access. Together these funds can profit from both sides of a trade, isolate specific catalysts such as a merger, a restructuring, a mispricing and express a view directly, without carrying the full weight of broad market exposure.

In environments where dispersion is high and single-stock differentiation matters more than macro direction, the brass section leads. It adds range and dimensionality to the portfolio that no amount of additional long-only exposure can replicate.

The Percussion: Market Neutral Pender Alternative Arbitrage Plus Fund Allocation range: 0–30%

Ask any musician what holds an orchestra together and they’ll point to the percussion section. Not the most visible. Not the most celebrated. But remove it, and the whole performance loses its footing.

Pender’s market-neutral strategy, built around merger arbitrage, is the percussion of this fund. It keeps time regardless of what equities are doing. Its returns are structurally uncorrelated to broad market direction, tied instead to the outcome of specific corporate events: announced deals and other catalysts with defined timelines and contractual payoffs. The strategy enhances those returns through the disciplined use of leverage, amplifying what is by nature a low-volatility, spread-based approach. When equity markets are volatile, when the brass is adjusting and the strings are waiting for their moment, the percussion holds the beat.

Its purpose is not to generate the fund’s highest returns. Its purpose is consistency, dampening volatility, reducing drawdowns, and ensuring the overall portfolio never loses its rhythm.

The Conductor: Active Tactical Allocation

What separates a world-class orchestra from a collection of talented soloists isn’t the quality of the individual players. It’s the conductor, the person with the full composition in front of them, reading the room, adjusting the balance in real time, knowing when to bring each section forward and when to let another carry the weight.

In the Pender Alternative Multi-Strategy Growth Fund, that role belongs to Greg Taylor, Pender’s Chief Investment Officer and a portfolio manager with over two decades of experience. Greg joined Pender specifically to lead this kind of integrated, multi-strategy mandate, bringing a track record for identifying opportunities while applying disciplined risk management at the portfolio level.

The fund’s strategy weights are not fixed. Allocations to Alternatives, Compounders, and Market Neutral strategies each carry wide bands and shift tactically based on Greg’s macro outlook, combined with the bottom-up views of the underlying portfolio managers. When the environment favors aggressive compounding, the strings are brought forward. When volatility and dispersion dominate, the brass leads. When uncertainty is the only certainty, the percussion anchors.

This is not a static portfolio dressed up as active management. It is an adaptive composition, designed to sound different depending on what the market demands, and to adapt regardless.

The Music Has Been Telling Us Something

This is not a fund built for a hypothetical future market. It was built for this one.

To understand why the timing matters, it helps to look at where markets actually stand, rather than where we hope they might be heading.

Despite years of inflationary pressure, fractured trade relationships, sanctions, geopolitical conflict, and rising deficits, markets have largely shrugged off each disruption without materially resetting valuations. It increasingly feels as though markets have become decoupled from economics. The old rules of cause and effect that we once so heavily relied on seem to have stopped applying. “This time is different” has quietly become the dominant psychology.

However, overvaluation alone rarely triggers a reset. If history is any indication, expensive can stay expensive for a very long time. The danger isn’t the price tag. The danger is what’s holding it up.

Artificial intelligence, the thesis underwriting much of today’s market concentration, contains an uncomfortable underlying tension. The productivity boom it promises requires enormous energy consumption, raising power costs for everyone. It demands capital expenditure at a scale that must ultimately be passed through to consumers. And its most visible near-term effect is the displacement of workers at a pace the economy has not had time to absorb, a slow bleed on consumer capacity that doesn’t show up in quarterly earnings until it does, suddenly and all at once.

The macro picture compounds this. Supply-side pressure is pushing inflation upward while demand-side weakness is weighing on consumption. Costs rising as spending power falls is not a soft-landing scenario. It is a compression.

Yet markets continue to look past it. The music plays on, the tempo holds, and most portfolios remain positioned as if the conductor will never reach the song’s final note.

This is precisely the environment the Pender Alternative Multi-Strategy Growth Fund was designed for. None of what we’ve described is short-term noise, and the window for traditional portfolio construction to “work again” may stay closed far longer than investors expect. Waiting for conditions to normalize carries its own risk.

The orchestra is assembled. The hall is ready. The only question is whether your portfolio is still built around a single soloist.

File:Cincinnati Symphony Orchestra Wikivoyage FTT.jpg
©Quincena MUsical-Iñigo Ibáñez

Pender Events + Publications

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • SpaceX starts trading on the Nasdaq today in what’s priced to be the largest IPO ever. The rocket launch/internet satellite/social media/AI chatbot company set its share price at $135 and expects to raise $75 billion in its public debut, after which its estimated value will land at roughly $1.77 trillion. SpaceX could immediately be worth more than Tesla, as well as Meta and Berkshire Hathaway. The hottest IPO ever has huge demand. BlackRock is reportedly on the books for at least $5 billion worth of shares, while sovereign wealth funds including Saudi Arabia’s Public Investment Fund have placed orders for stakes of $1 billion or more. Altogether, about 1,000 institutional investors want a piece of the IPO.

  • Blackstone is in discussions with Canada’s H&R REIT about a potential acquisition, according to people with knowledge of the matter. That follows takeover negotiations last year involving H&R, Blackstone, TPG Inc. and Crestpoint Real Estate Investments Ltd. falling apart, said the people, asking not to be identified because the discussions are private. H&R has spent several years moving its portfolio away from struggling office and retail holdings and increasing its exposure to apartment and industrial assets in the US and Canada.

  • Toronto-based startup Beacon Software raised US$225 million at a $1.4 billion valuation. Beacon is what’s called an AI-rollup company, which means it acquires software firms, introduces AI into their operations, and then holds onto them indefinitely as their value grows.

  • Koho just became Canada’s newest unicorn. The fintech raised $130 million in its latest funding round, valuing the company at ~$1.3 billion. Shopify co-founder (and professional racecar driver) Tobi Lütke was one of the investors to join Koho’s cap table in the funding round. The company is in the final stage of getting a federal banking licence, which Koho’s CEO says will allow it to compete directly with the Big Six banks. (BetaKit)

Macro Morning

  • ECB raises interest rates for first time in nearly three years. Europe’s central bank, one of the most important in the world, hiked rates from 2% to 2.25% yesterday, becoming the first major central bank to do so since inflation accelerated as a result of the war in Iran. The US Federal Reserve, however, is expected to keep rates steady when it meets next week. While President Trump has frequently called on the Fed to cut rates, observers say that the central bank may be more likely to raise them to combat rising energy prices.

  • Ottawa unveils $3.2 billion food security program. The new federal food strategy includes a $1 billion investment over the next decade to build food terminals and hubs, which sell produce to independent grocers at prices that allow them to compete with big chains. The overarching goal of the plan is to increase grocery competition and produce more food in Canada. The country currently imports half of its food from the U.S. and gets between 72% and 88% of its fresh produce from other countries. (CBC News)

  • Canada Post will end home delivery for 485,000 more houses across the country, which will move to community mailboxes starting next year.

  • The Supreme Court ruled that shareholders can’t sue investment funds under the 1940 Investment Company Act.

Technology Today

  • Scientists are refining the design of NASA’s Habitable Worlds Observatory to maximise its ability to detect signs of life on Earth-like exoplanets.

  • Nearly 40% of data center projects in development this year are at risk of facing significant delays, according to an April Financial Times analysis of data provided by satellite group SynMax. Lack of access to sufficient power was cited as a leading reason for the delays, as well as labor and other supply shortages. An even more recent analysis by Goldman Sachs published in May found that as little as 50% of data center capacity scheduled to come online in the next two years is on track to do so on time amid delays and shortages.

AI of the Tiger

  • OpenAI is reportedly considering major price cuts as competition with Anthropic gets sharper. The company is reportedly looking at lowering token prices as a reminder, tokens are what AI firms use to charge customers for using their models. OpenAI CEO Sam Altman recently said costs had become “a huge issue,” adding that the company wants to help users get more value for less money.

  • DoorDash is launching a new AI chatbot that lets users order food, groceries and restaurant bookings using text prompts, photos or recipe links. The feature, called Ask DoorDash, is designed for people who know they’re hungry but do not have the emotional strength to scroll through all the menus. Instead users can describe what they want, upload a grocery list, share a recipe, or ask for a table at a specific time. DoorDash is joining a wider AI push in food delivery and shopping, with Uber Eats and Instacart also adding AI-powered assistants

  • Jeff Bezos opened up about a new artificial intelligence project. Prometheus, the startup where he’s co-CEO alongside former Google executive Vik Bajaj, said it raised $12 billion at a $41 billion valuation from investors including the Amazon co-founder himself. Bezos told media outlets that Prometheus, which launched in November and has no ties to Amazon or his space firm Blue Origin, is developing what it calls an “artificial general engineer,” or an AI to work on the engineering side of physical products. The details are still mum, but Bezos suggested Prometheus AI models could develop and refine prototypes for everything from jet engines to buildings to consumer electronics to medical devices. This, Bezos said, would reduce the time it takes for human engineers to complete complex projects.

  • Red Lobster CEO Damola Adamolekun said this week he wants to make the chain “the most AI-forward restaurant company that exists,” with plans for AI-generated performance reports, sales forecasting, and employee scheduling. No word yet on whether the AI plans to bring back Endless Shrimp—but since that promotion helped push the company into bankruptcy… I’d think maybe not?

Defense Docket

  • A court has sentenced former president Yoon Suk Yeol to 30 years for sending drones into North Korea in an attempt to provoke a Pyongyang reaction and aid his failed martial law bid (for which he’s already serving a life sentence). (Korea Times)

  • The Taiwanese coast guard has vowed to expel China-based vessels that recently “harassed” foreign merchant ships, while the military has conducted its first live-fire test of US-supplied HIMARS rockets along its China-facing shore. (TaiwanNews)

  • Trump canceled strikes on Iran, citing progress on deal. Thursday began with the president posting to Truth Social that the US would be striking Iran “VERY HARD TONIGHT,” but in the afternoon, he made another post saying the two countries were close to a deal, the time and place of the signing would be announced shortly, and the strikes were canceled. A spokesman for the Iranian Foreign Affairs Ministry told the Tasnim news agency that no agreement had been finalized. Last night, a US official said that the military shot down two Iranian one-way drones that were targeting commercial ships transiting the Strait of Hormuz

  • Trump names former SEC chairman as permanent spy chief. About a week after picking controversial housing official Bill Pulte to replace Tulsi Gabbard as acting director of national intelligence (DNI), President Trump said he was nominating Jay Clayton, the current US attorney for the Southern District of New York and the former head of the SEC, to serve in the role permanently. The president had been under pressure to nominate someone else after his appointment of Pulte—who has no intelligence credentials—was met with bipartisan criticism. Earlier on Thursday, the House voted to reject the reauthorization of a critical surveillance tool, FISA, with many Democrats saying they wouldn’t vote for it as long as Pulte was serving as DNI. The program is set to expire today if it’s not extended

Crypto Corner

  • Following its recent price tumble, about 50% of all circulating bitcoin supply is now trading at a loss for the first time since 2022.

  • Bernstein calls FIFA World Cup a ‘watershed moment’ for prediction markets, projects $5-10B consumer volume surge. The firm projects that the tournament will fuel a $5 billion to $10 billion surge in consumer volume. Major platforms like DraftKings, Robinhood, and Coinbase are aggressively positioning their products to capture this massive sports betting handle. [Read more]

  • Citigroup to offer tokenized shares of private companies for wealthy and institutional clients. This rollout extends the bank’s push into tokenization, a sector it projects could hit $4 trillion by 2030. [Read more]

Energy Transition Today

  • The U.S. got more electricity from solar than it did from coal in May. The figure for May denotes the fourth-lowest monthly share that coal has ever seen, only slightly greater than the all-time low of 11.7% observed for April. From 1984 until 2010, coal was America’s largest source of energy. However, as the fossil fuel continues to fall out of favor, that share has been almost cut in half in the last five years alone

  • Brian Martucci has a great story about the potential for farmers to use wind power to produce cheaper, more reliable fertilizer

  • As election season heats up and energy affordability concerns mount, some Democrats are questioning the wisdom of ambitious climate and decarbonization policies and showing more openness to new fossil-fuel projects. (New York Times)

  • New York’s Public Service Commission is now formally seeking input on the best way to build 4 gigawatts of new nuclear power, as directed by Gov. Hochul. (E&E News)

  • The U.S. is expected to generate about 19% more solar power this summer than it did during the season last year, while coal generation is likely to slip by 2%, according to the U.S. Energy Information Administration. (Utility Dive)

The Dig

  • Venezuela deployed troops against illegal groups controlling gold deposits in the country’s Bolivar state, Reuters reported, citing local residents and human rights activists.

  • Gold may be struggling to live up to its safe-haven reputation, but there’s another metal that’s having a much better year. Average tin prices have doubled since 2003 to about $49,000 per tonne, driven by demand for solder, the tin-first alloy used to connect components on circuit boards in AI servers, semiconductors, and other computing equipment. Supply constraints have amplified the rally, with nearly three-quarters of global production concentrated in just three countries. Tin options volumes more than doubled year over year in the first four months of 2026, while trading activity in Shanghai has surged. The metal has even joined silver and copper as one of the market’s favorite “internet metals,” as traders bet that AI-driven demand for tin is only getting started.

The Picks List

  • The World Cup 2026 is officially underway. For the 45% of Americans who have “no interest at all” in the international tournament, don’t worry — there’s only 102 matches left

  • America’s soccer problem - Americans’ relationship with soccer doesn’t quite make sense. They like to play it — by some accounts it’s the third most popular sport in the U.S. — but they don’t really care about it on a professional level, at least not when it’s played in their own country. Instead, Americans are passionate about European football. Oddly, it’s not for lack of star talent. Americans are actually very good at exporting top tier players, writes Gabriel Debenedetti in Bloomberg Weekend. Nine of the US Men’s National Soccer Team’s starting lineup plays soccer in Europe, often for elite teams. But the home front hasn’t caught up.

  • JM Smucker says it sold $1 billion worth of Uncrustables in FY2026. Over the last two decades, annual sales of Uncrustables have skyrocketed, rising 162% from a reported ~$76 million in 2006 to ~$199 million in 2016... then jumping another 403% across the next 10 years to hit a whopping $1 billion in the last fiscal year. Since the crimped discs have attracted support from the likes of Travis Kelce and Lil Yachty — and Smucker completed its 900,000-square-foot megafactory, dedicated solely to manufacturing Uncrustables, in November 2024

  • Quebec became the first province to ban the sale of energy drinks to people under 16, passing a law in the National Assembly yesterday that will come into effect in six months.

The Breakroom

  • Check out a ESPN ranking of the 105 jerseys you may see on display at the 2026 World Cup… if you’re in the 13% of Americans who say they’re definitely tuning in.

  • £64.2 million. Prize money at Wimbledon this year, a record high for the tennis tournament and a 20% increase from last year. The boost comes as players have threatened to boycott the tour until they get a greater share of the revenue from tournaments. Only ~15% of Wimbledon’s total revenue is allocated to prize money.

  • In ancient Greece, killing a dolphin could get you killed. Dolphins were sacred to Apollo and Poseidon, so harming one was treated like a religious crime on the level of killing a person. My only question is, why was this protocol ended???

  • An English gentleman is in hot water after he grabbed a seagull out of the air and punched it to death after it stole his pastry. Um…

  • Ryanair is being investigated over charges that require parents to pay extra to sit with their children on flights.

  • Noel Gallagher has criticised plans for the World Cup’s first-ever halftime show, arguing football doesn’t need a concert spectacle.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Quality Over Quantity]]>https://thependerpulse.substack.com/p/quality-over-quantityhttps://thependerpulse.substack.com/p/quality-over-quantityWed, 10 Jun 2026 23:28:02 GMTContinuing with our short-form mid-week editions of The Pulse, today we’re highlighting a piece that came out of our market research: KKR’s 2026 Mid-Year Outlook (link here). As we’ve discussed in previous Pulses, some of the most interesting information comes straight from the source, the capital allocators themselves, and with more than $750 billion under management across private equity, credit, infrastructure and beyond, few sources are bigger than KKR. So today we’re walking through our key takeaways from the report and how we’re thinking about them in the context of our own investment process at Pender.

Let’s get into it!

  1. The Divergence Conundrum. Starting off strong: the entire piece is built around an idea we’ve discussed multiple times, our favourite shape of the moment, the K-shaped economy. KKR takes it further, calling it “K-Shaped Everything.” Their argument: investors still frame bifurcation through inequality or consumer spending, but the divergence now spans growth, inflation, earnings, labour markets, housing, and even access to productivity itself. Two data points stood out. Since February 2020, the bottom 40% of earners have experienced roughly 65 basis points more cumulative inflation than the headline rate, while the top 20% have experienced about 75 basis points less. And energy now absorbs 17.4% of pretax income for the lowest income quintile versus just 2.7% for the highest. KKR’s read is that this dispersion is set to widen further, and persist longer than many investors expect.

  1. The IPO supercycle. The IPO market remains the topic du jour. KKR projects roughly $160 billion of U.S. IPO volume in 2026 and about $360 billion globally, with several large private companies that could quickly become index constituents. That’s projected to push their capital markets liquidity indicator to ~4.7% of U.S. nominal GDP by year-end, back inside the normal 4–6% range, but up sharply from the 1–3% years that forced investors to chase a narrow set of AI and growth proxies. KKR highlights that the scarcity premium that supported recent momentum names is fading. Equity supply/demand is less favourable than it was a year ago, even as credit technicals remain supportive.

  1. The cycle continues, but it’s a quality market now. KKR’s base case is that the current cycle keeps running because the global productivity boom persists longer than expected, and their models suggest markets have moved from undervalued to fully valued, but not yet overvalued, with earnings growth in a higher nominal GDP environment remaining robust. The takeaway was that investor shouldn’t count on further multiple expansion. From here, earnings have to do the work.

  1. AI concentration is real, beware the 2027 cliff. The report notes that AI-related stocks drove ~60% of Q1 2026 S&P 500 EPS growth. KKR remains constructive, but their Earnings Growth Lead Indicator has begun signaling slowing momentum into the back half of 2027, and their 2027 EPS estimate of $355 sits below consensus. We liked their framing here: the market can handle a high multiple while earnings keep compounding, but will be “much less forgiving if earnings merely flatten.”

  1. International offers compelling entry points. KKR specifically called out Japan and Korea as conviction calls, driven by corporate governance reform, rising buybacks, and earnings upside potential in both 2026 and 2027. The report highlights that 70% of the Korean market still trades below book value, versus 40% in Japan and under 7% in the U.S. We like the read-throughs for our Pender Global Small/Mid Cap Fund.

  1. Last, but perhaps most importantly: KKR recommends to stay long quality, and not relying on passive beta to do the work. KKR reiterates that high-ROE, stable-earnings, low-leverage companies remain the place to be, quality stocks trade at a 22% relative premium and the trend is intact. Our takeaway: broad passive beta is likely to do less of the heavy lifting from here. Stock selection, and knowing what you own, matters more.

So where does that leave us? In a market this bifurcated, the winners won’t be the portfolios that stay passive. They’ll be the ones that can rotate, leaning into quality where it’s cheap, stepping back where it’s crowded, and letting genuine stock selection do the work the index no longer will. That’s the case for active management, multi-strategy investing, and strategies that don’t all move together. How do you actually build that?

Good question, and the answer involves an orchestra.

But, that’s a story for Friday’s edition.

Pender Events + Publications

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • SpaceX IPO hits 4x oversubscription Link - SpaceX’s record initial public offering has drawn nearly four times the demand it set out to raise, pulling in over $250 billion in orders against the $75 billion target at a $1.8 trillion valuation. Pricing is expected Thursday with shares set at $135, and analysts say long-only funds have placed sizable orders, though demand could still shift since large institutional investors often submit their orders late.

  • Global AI debt issuance to top $500 billion in 2026, Morgan Stanley says Link

  • Apotex Health Corp. is targeting C$24 per share at the top of its C$20 to C$24 range for a C$1.3B Toronto IPO, which would be Canada’s largest IPO since 2021

  • Columbia study finds private credit ratings inflated by 2-3 notches: Assets with private ratings are twice as likely to incur credit losses as publicly rated debt at the same grade, masking systemic investment risk. Life insurers now hold $481B in privately rated assets and would need $4.5B in additional capital if ratings were aligned with actual performance.

  • Some of America’s top universities are about to get one of the biggest venture capital paydays in history. SpaceX’s upcoming IPO is expected to deliver billions of dollars in paper gains to schools ranging from Stanford to the University of North Carolina, with some institutions having tied more than 10% of their endowments to Elon Musk’s rocket company.

  • OpenAI files confidentially for IPO Link

  • Wealthsimple is offering the chance to access IPOs at their launch price. Users of the platform can request access to purchase shares in companies going public, including SpaceX this week. Other platforms, like Questrade, offer similar products

Macro Morning

  • As expected, Canadian central bankers held rates steady at 2.25% in an attempt to balance the risks of weak growth and higher inflation. For the moment, the Governing Council seems very comfortable leaving rates unchanged. In the words of Governor Macklem, “Economic weakness combined with rising inflation is a dilemma for monetary policy.” Moreover, the Canadian economy faces significant risks in the coming months, which could push monetary policy to respond aggressively in either direction

  • Indonesia’s central bank has unexpectedly raised rates again in an attempt to defend the rupiah, which continues to hit new lows against the dollar. (Reuters)

  • Canada’s trade surplus widened in April to C$2.7 billion, the largest since January 2025, when Trump returned to office and began threatening tariffs. The change was driven by higher exports of crude oil, cars and light trucks, according to Statistics Canada. It’s the second straight monthly trade surplus.

  • Falling home prices are about to box in a chunk of Toronto homeowners. A new Bank of Canada financial stability report estimates 9% of borrowers in the Toronto region won’t qualify to refinance or switch lenders in 2027 if home prices stay this low. Nationally, that figure is 4%. The problem is shrinking equity: typical Toronto home values now sit 33% below their March 2022 peak, leaving owners owing too much relative to what their place is worth. That blocks the usual escape hatches like pulling out equity, stretching amortization, or shopping around for a better rate. Drop prices another 10% and the Toronto share jumps to 12%. Toronto’s mortgage delinquency rate has already climbed 57% year-over-year, well ahead of the national pace

  • Only around 4 in 10 couples combine their finances into a joint account these days, according to a new survey from Fidelity. Roughly 1 in 5 keep everything totally separate, up from 1 in 10 just eight years ago.

Technology Today

  • Thoma Bravo declares the SaaSpocalypse over as AI becomes a software tailwind: Founder Orlando Bravo says 50% of new revenue across the firm’s $35B portfolio now comes from AI and agentic tools, with software stocks already staging a recovery.

  • Meta launches $115 million data center job guarantee Link

  • Apple kicked off WWDC, which meant a slew of announcements for features that are coming to its devices later this year (usually around mid-September). While many of these were quality-of-life updates and small releases, Apple did finally unveil the new Siri and Apple Intelligence refresh. Other major updates include: Liquid Glass, Loading and transfer times: iPhone and iPad apps should load up to 30% faster, Android and Windows users can contribute to Shared Albums on iCloud, You will be able to create and edit images using Apple Intelligence and There’s a whole lot of features aimed at teens and kids.

  • The US fertility rate has fallen about 23% since 2007—a decline researchers have struggled to explain. Until now, apparently. A new working paper from the National Bureau of Economic Research has a theory: The iPhone did it. The researchers concluded that the iPhone accounts for 33%–52% of America’s overall fertility rate decline among women aged 15–44.

AI of the Tiger

  • Anthropic unveils Claude Fable 5 Link- Anthropic has released Claude Fable 5, a public version of its Mythos model that the company previously held back over safety concerns, now fitted with built-in safeguards to stop deliberate misuse and security breaches. Unlike Mythos, which stays limited to select organisations, Fable 5 goes to enterprise customers and paid subscribers, with barriers that block responses on cybersecurity, chemistry and biology while still handling software engineering and scientific research.

  • GM joins race to build batteries for AI data centers LINK - GM is entering the energy-storage market for AI data centers and industrial sites, developing a new sodium-ion battery chemistry through a partnership with startup Peak Energy that will integrate the cells into its grid-scale products. No automaker outside China has announced plans to build sodium-ion cells, which swap out key materials to make batteries cheaper and less prone to overheating, though they must be larger and heavier to store the same electricity

  • OpenAI wants its biggest data center yet, paid for by Nvidia LINK - OpenAI is in talks to lease a planned 10-gigawatt data center in Ohio, built on federal land in Pike County by SB Energy, the developer majority-owned by SoftBank, according to The Information. The full buildout would cost at least $500 billion, with OpenAI signing a 20-year lease, its largest infrastructure commitment yet, while Nvidia would serve as guarantor for both the lease and the project financing. The first phase, at 800 megawatts, is expected by 2028, on a site that previously housed a uranium enrichment facility, though negotiations are still ongoing and the plans could change.

  • Google announces Gemini 3.5 Live Translate for instant voice-to-voice translation LINK

Defense Docket

  • Defence startup VC funding has already hit $14.6B in 2026 — eclipsing the full-year record of $9.6B set in 2025. Just six years ago, the number was $1.6B. The shift is structural, not cyclical: Anduril’s $5B Series H alone at a $30.5B valuation anchors the surge, with Mach Industries ($300M at $1.8B), Shield AI ($2B), and Saronic ($1.75B) filling out a roster of newly minted unicorns. Applied Aerospace & Defense just went public on the NYSE at a $3.25B valuation — raising $650M. The exit landscape is maturing.

  • Ottawa-based startup, founded by Eliot Pence (ex-Anduril), has C$21M seed (led by Georgian) + C$50M internally committed + C$500K NRC contract. Building a delta-wing ACP (Autonomous Collaborative Platform) for RCAF’s Northern mandate: short/unimproved runway takeoff, Arctic range, heavy weapons load, satellite-linked ground supervision. Moving into a 35,000 sq ft Ottawa facility June 1. Subscale prototype target: 18–24 months

  • Calian + Cohere, two Ontario firms are partnering to deploy Cohere’s North platform (secure enterprise AI) through Calian’s defence training and mission support infrastructure. Use cases: mission planning, training assessments, workflow optimization. Extended through Calian VENTURES to give Canadian SMEs access. Cohere emphatically confirmed it is not working with Palantir — “Palantir is not a customer or partner.”

  • General Petraeus is warning that $54.6B in autonomous warfare spending — a 24,000% year-over-year increase — won’t produce an effective fighting force without doctrine, training, and force structure. Less than 2% of the autonomous warfare budget is directed toward doctrine and integration. “A drone without doctrinal concepts for employment is not a weapons system — it is an asset on a spreadsheet.” The bottleneck isn’t money or hardware. It’s the institutional machinery that turns both into capability

Crypto Corner

  • $2.3B - That’s how much the Trump family has made from crypto ventures since 2024, according to a Reuters investigation. That’s more than any other US-listed crypto firm.

  • ‘Stuck in distribution’: Bitcoin slips below $63,000 as analysts warn rallies are being sold, not bought. This defensive trend is further compounded by persistent outflows from U.S. spot ETFs. [More]

  • Solana Institute CEO says CLARITY Act must shield open-source developers [More]

Energy Transition Today

  • The leader of one of Canada’s biggest oil companies criticized a government push for a large carbon-capture project and carbon tax in exchange for an oil-sands pipeline. A recent federal-provincial pact aimed at advancing the Pathways project failed to address key regulatory hurdles to investment in Alberta’s oil sector, Cenovus Energy CEO Jon McKenzie said. Without such investment, “neither the Pathways project nor the west coast pipeline really make any sense,” he said

  • BYD says EVs may soon take 80% of China’s new car market. China’s largest EV maker thinks the country’s shift to electric still has room to run, even though EVs have already roared in recent years to account for more than half of the country’s new car sales in 2025. On Monday, BYD Executive VP Stella Li told CNBC that China’s market could “very quickly” push close to 80% EV penetration, helped by new technology in the space and a growing wave of electric options. That would be another significant leap for a nation that the International Energy Agency says has already grown at an “extremely rapid” pace in the last five years.

  • Rivian Is Gaining Ground on Tesla With New Midsize SUV . On Tuesday, Rivian announced that it’s officially starting to deliver its new R2 mid-size SUVs to customers. The move could push the EV maker from the premium end of the market into a more mainstream one that can compete with Tesla as well as traditional auto brands, thanks to its price. The model now available costs $57,990, but the company is rolling out a slew of others, including a version that will arrive in the summer of 2027 for just below $45,000

The Dig

  • US total coal production is expected to fall 1.9% to 518 million short tons in 2026, down 10 million st from 2025 levels, the US Energy Information Administration

  • Steve Schoffstall, managing partner and head of exchange-traded funds at Sprott Asset Management LP, discusses ex-China rare earth markets, their challenges and opportunities.

  • South Africa aims to launch its database of mining and prospecting rights, which companies will use to apply for licenses, by March 2027, Bloomberg News reported.

The Picks List

  • Colossal Biosciences claims it hatched 26 chickens using a silicone-based membrane system that mimics an egg. The design succeeded where previous artificial eggs failed by allowing gas exchange in the embryo while keeping moisture in and contaminants out. You may remember Colossal as the company that claimed to “de-extinct“ the ancient dire wolf last year by rewriting grey wolf genes and transferring them into embryos. It’s now trying to bring back extinct bird species, including the dodo. It’s doing so in the name of restoring the Earth’s dwindling biodiversity — a mission many scientists doubt.

The Breakroom

  • Serena Williams was victorious in her first professional tennis match since 2022, teaming up with Canadian teenager Victoria Mboko for a doubles win at the Queen’s Club Championships. The 44-year-old plays again tomorrow in the quarterfinals.

  • LeBron James has been named “Athlete of the Century” by TIME, which released its inaugural list of the 100 most influential people in sports on Tuesday. Basketball was the most well-represented sport, with 14 people including James, Stephen Curry, Victor Wembanyama, A’ja Wilson, Caitlin Clark, Mavericks president Masai Ujiri and ESPN insider Shams Charania. Soccer was a clear second, with Lionel Messi, Cristiano Ronaldo, Erling Haaland and Trinity Rodman leading a group of eight players, alongside FIFA president Gianni Infantino.

  • Used Toyota RAV4 hybrids are selling above their original sticker prices: Iran war-driven gas prices above $4/gallon have sent demand for hybrids surging, while a production gap between RAV4 generations left dealers with under five days of inventory. Some 2024 and 2025 models are listing used vehicles for $6,000+ above MSRP, more than a brand-new 2026 version.

  • After 144 years, Barcelona’s iconic Sagrada Familia church will finally inaugurate its new central tower during the pope’s visit today (Wed), marking 100 years since the death of the structure’s famed architect (Gaudí).

  • The City of Toronto quietly bought over 3,500 tickets for its six FIFA World Cup matches and has been reselling them at an undisclosed markup as a “revenue generation strategy.” The city has sold all but 70 of the tickets and has already turned a profit. Between Toronto and Vancouver, over $1 billion in taxpayer money will be spent to host 13 matches. The fact that Toronto has resorted to scalping tickets to “ensure a return on its investment” doesn’t inspire confidence that there will be a real economic benefit from the tournament.

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]]><![CDATA[Houston, we have an IPO.]]>https://thependerpulse.substack.com/p/houston-we-have-an-ipohttps://thependerpulse.substack.com/p/houston-we-have-an-ipoFri, 05 Jun 2026 23:48:26 GMTAfter years of false starts and venture capital life support, the IPO market is finally rising from its slumber, and it’s not going gently into that good night. Instead, investors have been met with a concentrated pipeline of companies so large they make previous tech listings look like a candle next to the sun. May we introduce you to SpaceX, Anthropic, and OpenAI, the big three, all heading for public markets within months of each other. This isn’t just a big IPO season. It might be the biggest in history.

The engines are lit and we are ready for takeoff.

NASA Astronauts Liftoff on SpaceX Rocket in First Privately Funded Launch – The Wire Science

History doesn’t echo is rhymes

Let’s take a minute and look back a few years. It’s the 1980s, we have just been graced with Ghostbusters, The Terminator, Indiana Jones, and Back to the Future. The original Macintosh has just launched, and the local arcade is absolutely thriving. Duran Duran dominates the airwaves while Bon Jovi, Van Halen, and Metallica sell out arenas.

At the same time, the average U.S. IPO raised roughly $26 million. Small enough to fit in the trunk of a DeLorean, but the seeds of something much bigger were already being planted.

Fast forward a few years. It’s the dot-com peak. Amazon is selling books on the internet. Pets.com is selling dog food the same way (less successfully). The average IPO has climbed to ~$151 million, and Wall Street is throwing money at anything with a “.com” at the end of its name.

But as Nelly Furtado once wisely asked: “Why do all good things come to an end?” The bubble burst. Pets.com folded. Boo.com folded. WorldCom folded. Billions evaporated overnight, retail investors got caught holding the bag and the public appetite for tech listings … well it flatlined, for decades.

Private capital came in like the Mighty Ducks, swooping in as the unlikely hero nobody expected. Companies stayed private longer, raised bigger rounds, and kept pushing their public debuts further and further out. By the 2020s, the average company was waiting 14 years after founding before going public, nearly double the 8-year average from the decade before

The result? A coiling slinky. Years of deferred listings, private valuations reaching all time highs, and pent-up investor demand have set the stage for what analysts are calling the 2026 “supercycle.”

Looking to where we are today, the numbers are staggering. SpaceX is targeting a $1.77 trillion valuation. OpenAI and Anthropic were recently valued at $852 billion and $965 billion, respectively. Combined, these three companies are worth more than every IPO launched during the entire dot-com era from 1995 to 2000 … put together!

So let’s meet the cast.

1. SpaceX

“Great moments are born from great opportunity.” – Gordon Bombay

The IPO that has dominated every financial headline for the past month. Space Exploration Technologies Corporation (SpaceX) was founded by Elon Musk in 2002 with a simple enough mission: build reusable rockets, democratize access to space, and eventually make humanity multiplanetary. Twenty-three years later, it operates the Falcon 9, runs the Starlink satellite internet constellation, and is about to attempt the largest public market debut in history.

As an aside if you want to learn more about SpaceX and the origins of Tesla, I’d check out the (original) Elon Musk biography, published in 2015)

Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future

The company filed on May 20 and set a fixed price of $135 per share with no range and it plans to sell 555,555,555 shares (yes, specifically) to raise ~$75 billion at a $1.77 trillion valuation, with trading set to begin on Nasdaq on June 12. For context, that’s roughly triple the previous record, Saudi Aramco’s ~$26 billion raise in 2019.

Notably this would be the largest IPO in history, coming in roughly triple the previous record, Saudi Aramco’s ~$26 billion raise in 2019.

Let’s talk numbers. SpaceX generated $4.7 billion in Q1 2026, up just 15% year-over-year. It also lost $4.3 billion in the same quarter, up 700% from a year prior. The company is currently spending roughly twice what it makes, while growing six times slower than Nvidia. At 95x trailing revenue, the valuation includes a claimed total addressable market of $28.5 trillion … larger than the entire GDP of Europe.

For context: Meta went public at 28x sales with 88% revenue growth. Google went public at 10x sales with 234% growth. SpaceX is asking for a multiple ten times higher than Google’s, while growing seven times slower.

However!

Starlink is a genuinely cash-generative business and a critical backbone of internet connectivity across remote regions, conflict zones, and classified U.S. government operations. Today SpaceX remains a successful satellite company. But in its filing, the company does state it wants to and we quote “build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.” Which…

Best '80s Movies About Aliens, Ranked

That being said, a successful IPO would accelerate Starlink’s constellation density, making it harder for China or Russia to compete or disrupt. The classified Starshield variant deepens those strategic ties further. But concentrating this much infrastructure, a near-monopoly on commercial launch, a global satellite network, and now AI through xAI, in one person’s hands has also raised concerned regarding systemic risk. Only time will tell.

A few quirks worth noting. SpaceX is reserving 30% of shares for retail investors, three times the typical IPO allocation, Musk isn’t just selling equity, he’s selling belonging to something. The underwriting fees are being negotiated at less than 0.75%, a rate last seen when GM went public post-bailout under intense political scrutiny.

But don’t worry, the bankers are still getting paid, 0.75% of $75 billion is ~$500 million, split 23 ways across Goldman, Morgan Stanley, and a supporting cast of banks. A fun fact I found on my internet wanderings, allegedly Goldman won the lead mandate by sliding into Musk’s DMs on X... oh the times they are a changing. In addition, Jamie Dimon is personally selling SpaceX to high-net-worth clients, himself! Also some index providers (LSEG’s FTSE Russell and the Nasdaq) have amended their rules to allow SpaceX’s inclusion within two weeks of listing, meaning passive funds face near-immediate buying pressure the moment it lands.

Gordon Bombay was right. The opportunity is here. Whether SpaceX is ready to seize it is another question entirely.

Moving on…

2. Anthropic

The San Francisco AI company best known for your favorite LLM Claude confidentially filed for an IPO on Monday, targeting a listing as early as October at a potential $1 trillion+ valuation, following a $65 billion funding round that valued the company at $965 billion. Valuation details are expected later this year, likely after the dust settles from SpaceX’s June listing.

There are a few things that make this future listing particularly interesting:

First, the hedge. Anthropic’s announcement included the caveat that the filing “gives us the option to go public after the SEC completes its review.” That’s an unusual public off-ramp to leave yourself. It signals either caution about market conditions, or the flexibility to quietly pull the deal if SpaceX takes up too much available capital and leaves the investors appetites full.

Second, the race. First-mover advantage is real and well-documented, in industries where multiple competitors go public in a cluster, the first one out typically wins. Later listings get the skeptical investors, the thinner wallets, and the worse comps. The cautionary tale is Lyft and Uber in 2019: Lyft went first, stumbled badly, and poisoned sentiment for Uber two months later. Anthropic knows this playbook. That’s why it filed before OpenAI, even as Sam Altman publicly shrugged off the competition.

Third, the bubble in the room. Anthropic is heading to market precisely as enterprise AI spending is hitting a wall. We have reached peak AI euphoria , the “my taxi driver won’t stop talking about it” level. Cheaper open-source models are increasingly competitive with Claude for many use cases, and corporate budget owners are starting to ask harder questions about what they’re actually getting for their spend. If customers start trading down, Anthropic’s revenue story gets a lot more complicated at exactly the moment investors are scrutinizing it most closely.

There is certainly concern in the market that the company is cashing out at a frothy valuation, financing an unsustainable burn, and recycling cash back into their cloud provider investors slightly concerning circular formation. The heavy Google and Amazon stakes in Anthropic create what looks … a bit like a hyperscaler flywheel… Anthropic gets compute priority, Big Tech locks in model access and cloud revenue, and the integrated stack becomes increasingly difficult for anyone to replicate. Including China. Which brings us to the geopolitical angle.

After a public conflict with the Pentagon that briefly threatened its government contracts, Anthropic has pivoted toward positioning itself as the world’s responsible AI company, think Vatican appearances, AI safety advocacy, and pushing for U.S.-led export controls that would make it harder for Chinese rivals to use model distillation to close the capability gap. Whether that’s genuine conviction or genius positioning, the effect is the same: Anthropic is embedding itself into the architecture of U.S. AI policy just as it heads to public markets.

3. OpenAI: The Wildcard

Lead by Sam Altman, following an Elon Musk lawsuit OpenAI now has a clear path to an IPO, potentially as early as September, which in theory could it ahead of Anthropic in the queue (lets us remember the first mover advantage).

ICYMI OpenAI is the OG LLM provider. ChatGPT didn’t just launch a product in 2022, it launched a new age. It remains one of the most-used applications on the internet, and the brand recognition alone is worth billions.

As a reminder, ChatGPT remains one of the most-used applications on the internet. But Altman’s willingness to work closely with the Pentagon has made OpenAI the DoD’s preferred AI partner which has massive upside in terms of contract revenue, but also a potential brand liability at home and abroad as the lines between consumer AI and military AI blur.

The other wrinkle is structural. OpenAI is mid-transition from a nonprofit to a for-profit entity, a conversion that has drawn scrutiny from regulators, former employees, and the basis of Musk’s legal action. Investors considering the IPO will need to get comfortable with a governance structure that is still finding its shape.

Back to the Future: Facebook 2012

Before we wrap up, let’s revisit a cautionary tale that many of us may remember all too well: Facebook’s 2012 IPO.

When the company went public, sector valuations had been inflating for months and investors were piling into proxies just to get a seat at the table. Sound familiar? In the lead-up to SpaceX’s listing, the UFO ETF, a basket of space sector stocks, is up 70% year-to-date. Space stocks have re-rated from an average of 13x sales to 17.5x sales in just a few weeks, most of it riding the halo effect of SpaceX euphoria.

But as we know the Facebook IPO was not all sunshine and Meta rainbows. Following its listing, the stock dropped 50% in three months. The fallout didn’t stay contained, social media peers fell 12% on average, and unprofitable names like Groupon and Zynga felt the worst of it, down over 60% in some cases. The party ended, quickly and violently.

There was one survivor worth noting: LinkedIn fell only 3%. Why? Durable revenue, a path to profitability, and a business model that didn’t rely entirely on hype. Quality, as it turns out, is what determines who survives the unwind.

As we look ahead, the hard questions demand answers. How do we differentiate numbers from narrative? Euphoria from realism? Spaceships from bottle rockets?

The question for SpaceX, Anthropic, and OpenAI isn’t whether they can generate IPO excitement, they obviously can, and they have. The question is whether their fundamentals can hold up the valuations once the narrative high wears off and the market starts asking for proof.

History doesn’t repeat. But it does rhyme. And right now, it’s starting to sound very familiar.

We’ll find out June 12.

Pender Events + Publications

  • Upcoming webinar: Credit markets are sending mixed signals. While equities rallied in April, credit lagged - highlighting a growing divergence that we believe is worth paying attention to. With narrow market breadth and signs of increasing risk, selectivity matters more than ever. In our upcoming webinar, Portfolio Manager Justin Jacobsen will share how the Pender Alternative Absolute Return Fund is navigating these crosswinds - from staying defensive to finding opportunities in areas like data centre bond issuance. Join us on June 10 - register now to secure your spot: https://bit.ly/4nEwgZ5

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • S&P rejects fast-track index entry for SpaceX and other mega-IPOs: Unlike Nasdaq and FTSE Russell, S&P will keep its 12-month seasoning period and profitability requirements, meaning SpaceX won’t be S&P 500-eligible until at least June 2027.

  • US$1 trillion. Assets now invested in Vanguard’s S&P 500 exchange-traded fund (ETF), the first ETF to pass the trillion-dollar threshold. The Vanguard ETF, known by its ticker VOO, has quadrupled in size since 2022, driven by demand from investors who want exposure to soaring U.S. tech stocks.

  • Blackstone caps redemptions at 5%: The $79B BCRED limited withdrawals for the first time after investors sought to pull 10%, a reversal from last quarter when senior executives used personal cash to fund the full 7.9% requested. Cliffwater also capped at 5% after investors sought 17%.

  • Tommy Hilfiger and Calvin Klein parent PVH plunged 20.26% after cutting its full-year outlook and warning that the Iran conflict would weigh on sales

  • PE and private credit firms sitting on $632B in aging dry powder: Buyout and credit funds raised in 2020-2022 are struggling to deploy capital as high valuations and deal scarcity push investment periods toward expiration. 40%+ of dry powder is over 2 years old, 15 points above the five-year average.

  • After just three short years, Tim Hortons is shutting down the credit card program it launched in partnership with Neo Financial come this October.

Macro Morning

  • Four Republicans voted in favour of a war powers resolution that would end the military intervention in Iran, joining Democrats in a rare rebuke of President Trump’s foreign policy. The resolution is unlikely to pass the Senate, but it does represent a symbolic and legal step to prevent further military action in the region. Meanwhile, the militant group Hezbollah has rejected a U.S.-mediated ceasefire deal that both the Israeli and Lebanese governments agreed to. (BBC News)

  • US jobless claims rose to a four-month high last week, but economists say it doesn’t mean layoffs are rising.

  • The federal government has ordered the Canadian Radio-television and Telecommunications Commission (CRTC) to review its controversial policy that would force foreign streamers like Netflix to spend 15% of their Canadian revenue on local content. The legislation was expected to be a major source of friction in upcoming U.S. trade negotiations, while streaming companies argued that the new rules would simply force them to raise prices for Canadian customers. (Bloomberg News)

Technology Today

  • A new antenna system wants to change the ocean’s wireless dead zone. Engineers from the University of Florida think they’ve fixed the ocean’s connectivity problem with a new antenna system that transmits signals up to 700 meters underwater on just 10 watts of power. The new system’s use cases range from naval operations to environmental monitoring—anywhere underwater robots can do autonomous work without having to surface.

  • For the first time in the US by public vote, a city voted to ban datacenters.

  • Kalshi is reportedly creating a “Bloomberg terminal” for highly active prediction-market traders.

  • A new report from the Entertainment Software Association says that almost 70% of Americans play an hour or more of video games each week—and the age range is surprising.

AI of the Tiger

  • Android adds fake AI call detection LINK Android is rolling out fake call detection this month to fight AI deepfake impersonation scams, arriving globally in Phone by Google on Android 12+ devices and starting with Pixel phones, switched on by default. The feature works as a “digital handshake between devices,” where a contact calling you through Phone by Google sends a silent confirmation signal that verifies the call is actually coming from their phone.

  • Companies Are Using Reddit to Manipulate ChatGPT and Google AI Search LINK

  • Jane Street plans to build and finance its own data center: The trading firm is in early talks with tech, crypto, and finance firms about a 100-200 MW facility on top of an existing Dallas data center and CoreWeave partnership. Jane Street is targeting a 10x capacity increase, which could train internal AI models.

  • Airbnb CEO Brian Chesky plans to start a new AI lab: Chesky is in the early stages of funding the new AI venture, which will develop its own AI models with a focus on user interaction and design. He will remain CEO of Airbnb and will not serve as chief executive of the new lab.

  • Prime Minister Mark Carney released the long-awaited federal AI strategy that includes funding for homegrown startups, AI literacy training for Canadians, and more AI infrastructure investments through the feds’ new sovereign wealth fund. One line item that stood out: The government will “provide access to trusted AI agents for every post-secondary student.” (CBC News)

  • Some of the biggest names in AI just signed a letter to Congress, saying there is an “urgent” need for laws that regulate AI’s use to make biological weapons. See who signed it here.

Defense Docket

  • Canada and the Five Eyes intelligence alliance issued a warning that China is using fake job recruiters on LinkedIn to extract intel from Western government officials.

  • The Kremlin has responded to the Ukrainian president’s open letter proposing direct leader-level peace talks on neutral turf, instead noting Zelensky “can come to Moscow any time.” Meanwhile, the US is reportedly halting Patriot sales to Germany out of concern it could be seen as “escalatory” by Moscow. (Politico)

Crypto Corner

  • World Cup crypto scams target soccer fans (DC)

  • Fannie Mae-backed bitcoin mortgages arrive (DC)

  • Stripe, Visa, Mastercard among backers of stablecoin platform (CD)

  • Goldman Sachs teams with Apex for tokenized real estate fund (CD)

  • Charles Schwab launches Bitcoin futures trading (BM)

  • Alexander Browder just became the youngest-ever target of Putin’s sanctions, for exposing how Moscow used a ruble-pegged stablecoin to process $93B in illicit cross-border payments. He’s the son of Bill Browder, the financier who’s spent 15+ years driving Magnitsky human rights sanctions to hold Putin accountable

Energy Transition Today

  • A new report from the United Nations’ research arm finds that by 2030, data centers’ global electricity demand could be equivalent to that of the sixth-largest power-consuming country. (Axios)

  • The Iran war and resulting global fossil fuel shortages have inspired people around the world to install solar panels and batteries at their homes to avoid outages and sky-high power prices. (Bloomberg)

  • Chinese solar manufacturers look to expand into battery production as panel sales slow and prices sink. (Reuters)

The Dig

  • Researchers at MIT say they’ve cracked a way to help the US stop relying on China for lithium refining—by making it cheaper to tap into the existing abundance of lithium in hard rock minerals. To replace the traditionally energy- and waste-intensive process, the researchers developed a closed-loop method to dissolve the rock into the useful forms of its parts, which include lithium for batteries, alumina for smelters, and silica for cement. The researchers have already spun out a company, Rock Zero, to commercialize the technology.

  • Sunshine Silver Mining & Refining Co. closed 27% above its $13.50 IPO price in its debut Thursday, raising $270M in an upsized offering for a $2.42B valuation

The Picks List

The Breakroom

  • $54,000. Lifetime cost of owning some large dog breeds in Canada last year, according to a new report from Rover, up 17% from 2024. Smaller dogs proved to be the value investors’ choice, costing an average of $17,000.

  • Nova Scotia is launching a new school program this fall that will teach students in grades 7 to 12 all about the province’s seafood industry, part of an effort to get more young people interested in fishery careers.

  • A Yahoo/YouGov poll from earlier this year found that fear of appearing cringe has stopped more than half of Gen Z from expressing themselves freely online. One 24-year-old interviewed by the Guardian reports going to clubs where no one’s dancing: “Everybody is afraid of being recorded.” As if to warn other young adults of the danger of earnestness, there’s even a subgenre of content called CringeTok devoted to making audiences wince at people who are (in their eyes). Mental health experts now classify “cringe” as a new kind of shame. “We’re not adapted to live where millions of eyes are on us,” one social psychology professor told the Guardian.unbearably enthusiastic.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Deal or No Deal?]]>https://thependerpulse.substack.com/p/deal-or-no-dealhttps://thependerpulse.substack.com/p/deal-or-no-dealWed, 03 Jun 2026 21:28:51 GMTThe Pulse was quiet for a couple of weeks. The M&A market was not.

We’ve been watching it closely, and there has been a lot to pay attention to. Total deal value in Q1 hit $1.2 trillion, that’s a 27% year-over-year increase and the strongest start to a year since 2021. But here’s what’s really interesting: the number of deals actually fell 15% to roughly 11,400 transactions, an 11-year low. More money. Fewer deals. Strange… Maybe not.

Math Lady - Wikipedia

At first blush you may feel like the woman above … but upon further examination there is a clear narrative behind these numbers. What’s going on here is concentration. Q1 saw 22 transactions worth more than $10 billion each, totaling nearly $500 billion, a 47% jump year-over-year and the strongest mega-deal quarter on record. What better way to classify this than our favorite letter here at The Pulse – let is call it the K-shaped M&A market. In this environment, deal counts are shrinking, deal values are surging. Full-year 2026 M&A is now projected at $5.4 trillion, up sharply from $3.77 trillion in 2025.

Now your next question may be what’s driving this dynamic? I was at least taught that markets do not cater to Alphabet Aerobics. Well, it comes down to three major factors: AI (you knew it was coming), a stabilizing rate environment, and a US regulatory backdrop that’s more deal-friendly than it’s been in years. Oh and we should also mention private equity is back in the mix too, sponsor-backed M&A hit a record $320 billion in Q1, up 41% year-over-year.

I Gotta Feeling — Somebody’s Watching These Deals

A few transactions from the past couple of weeks that caught our eye.

First of all, Tilman Fertitta, the owner of the Houston Rockets, the Golden Nugget, and seemingly half of Houston’s restaurants, is buying Caesars Entertainment for roughly $5.7 billion. Now despite its prominence on the Vegas strip as well as in the movie The Hangover Caesars had been struggling: its stock was down about 40% in the year before takeover interest first surfaced in February. Adding 52 casinos and resorts to Fertitta’s portfolio is a big swing, but also a rare chance to buy a marquee brand at a discount and fold it into a bigger ecosystem.

Second, Barry Diller’s People Inc. made a $12.4 billion offer for MGM Resorts, a company where it already holds a 26.1% stake. Diller’s pitch to shareholders: MGM owns 40% of the Las Vegas Strip, which is iconic, irreplaceable real estate. Pair that with digital media and you have, in his words, a “perfect hedge in a world that is changing so unpredictively fast.”

Then there’s Berkshire Hathaway agreeing to buy homebuilder Taylor Morrison for $6.8 billion, which certainly deserves some attention. Most importantly to highlight is that this was Greg Abel’s first major deal as Berkshire’s leader, and Buffett made a point of staying out of it. “I never talked to the CEO,” he told CNBC. “He has launched.”

The thesis behind the transaction is as follows: Taylor Morrison did $7.8 billion in revenue last year with nearly 13,000 home closings. Abel plans to combine it with Clayton Homes into a unified residential platform. Analysts called it a vote of confidence in the long-term outlook for homebuilding, and the US housing market is still estimated to be underbuilt by roughly 7 million units. It’s also worth flagging that Berkshire isn’t alone in this view; Tokyo-based Sumitomo Forestry recently closed a $4.5 billion deal for Nevada homebuilder Tri Pointe. Adding to the influx of transactions in the market.

What Now?

The backdrop for deals remains constructive: capital is abundant, management teams are getting more comfortable transacting, and there’s a growing sense of urgency to move while the regulatory window is open. That said, Q2 has thrown a lot at markets. Geopolitical tensions, particularly around the US-Israel-Iran situation have introduced volatility and likely caused some larger cross-border deals to pause. If visibility improves and de-escalation continues, there could be potential for pent-up activity to accelerate fast. But only time will tell.

For the rest of 2026, we are keeping our eye on a few themes: AI-driven consolidation, financial services M&A picking up; and whether the private-public valuation gap, where private sellers are still anchoring to 2021 peak prices finally closes. When it does, the deal pipeline behind it could be substantial.

And then there’s the other side of the story that’s also been building gradually, then suddenly. The IPO market is heating up, SpaceX. Anthropic. OpenAI. The IPO market may finally be open for business and there is a lot to examine there… but we will leave that to Friday’s long form! See you then.

Pender Events + Publications

  • Upcoming webinar: Credit markets are sending mixed signals. While equities rallied in April, credit lagged - highlighting a growing divergence that we believe is worth paying attention to. With narrow market breadth and signs of increasing risk, selectivity matters more than ever. In our upcoming webinar, Portfolio Manager Justin Jacobsen will share how the Pender Alternative Absolute Return Fund is navigating these crosswinds - from staying defensive to finding opportunities in areas like data centre bond issuance. Join us on June 10 - register now to secure your spot: https://bit.ly/4nEwgZ5

  • Missed the PCOF webinar? The replay is now available. Parul Garg, Associate Portfolio Manager, and Richa Nair, CIM, MBA, Director of Business Development and Investor Relations, walk through how market dislocations are widening the opportunity set in stressed and distressed credit and how disciplined credit selection can uncover asymmetric returns. “We buy in an open market, we sell in an open market, our position is market-to-market.” In the replay, you’ll hear: Where the most pronounced dislocations are emerging across public credit markets. How volatility is creating asymmetric risk/reward and high conviction opportunities. The role of active trading and fundamental credit work in generating alpha. Watch the full replay: https://bit.ly/4vpT8Ox

  • New Podcast - In this episode, Aman Budhwar, Portfolio Manager of the Pender US Small Mid/Cap Equity Fund spoke with Laura Baker, Associate Client Portfolio Manager to discuss several key themes of the Fund. Topics included: How active management can capitalize on overlooked and misunderstood businesses. The valuation disconnect between mega caps and the small/mid-cap universe. “The key objective as most fund managers would say is to outperform the market over long periods of time with the protection on the downside. We don’t just say that as a statement, we actually live by that.”

  • Introducing the Pender Alternative Multi-Strategy Growth Fund - a new strategy that goes beyond traditional long-only equity markets targeting the best risk reward. Leveraging Pender’s small cap compounders, our alternative equity and market neutral strategies, the Fund aims to deliver differentiated growth through diversified equity return streams with minimized volatility. Learn more: https://bit.ly/4ucLhTY

Market Snacks

  • Tim Hortons is hiring 10,000 workers as it prepares to open 80 locations across the country this year. The company says it will cut down its reliance on temporary foreign workers, which make up nearly 4% of its workforce.

Macro Morning

  • Canadian economic data may be volatile as the government works to change the economy, Carney said in response to last week’s gross domestic product report that showed a technical recession. “This government’s been in the process of laying the foundations for a stronger, more resilient, more independent Canadian economy,” Carney said. “As we do all that, the data is going to be uneven.”

  • Canada’s housing market has plunged into one of its sharpest-ever corrections. Canadians say it hasn’t gone far enough. Benchmark prices have fallen by about 20% nationally since 2022. That should be welcome news for first-time buyers – but about 55% of Canadians want home prices to fall further, with that figure jumping to 69% among 18- to 34-year-olds, according to a Nanos Research Group poll for Bloomberg News.

  • The Bank of Canada’s second-in-command cautioned against concluding the economy is in a recession, despite data that showed it shrank for a second consecutive quarter. “Two quarters of annualized contraction in GDP does meet one definition of a recession. But simply the fact that you have to put the term ‘technical’ in front of it sort of tells you that you need to really look past that one indicator,” Senior Deputy Governor Carolyn Rogers told a parliamentary committee on Monday. Real gross domestic product dipped by 0.1% on an annualized basis during the first three months of the year, Statistics Canada said last week, following a 1% contraction in the fourth quarter

  • The US and Mexico just wrapped their first bilateral round of US-Mexico-Canada (USMCA) trade talks, with DC pushing for a full rewrite bringing tougher rules on autos, steel, agriculture, and “economic security” (China-friendly loopholes). Both Mexico and Canada, meanwhile, want something closer to a simple 16-year extension of the status quo. The next round is in DC on June 16–17. (CBC)

  • The White House is pushing for new rules on auto production that would require at least 50% US components for vehicles manufactured in the North American trade zone, Prime Minister Mark Carney confirmed. Canadian-made vehicles already hit that threshold, on average, Carney told reporters, but many Mexican vehicles do not.

  • Ottawa reportedly sent an envoy to Venezuela and is considering reopening its embassy in the country.

  • After two long years of labour disputes, national strikes, and billions in losses, ~55,000 Canada Post workers voted to approve a new five-year contract from the Crown postal service. The new deal includes wage increases for the next five years, a new model for weekend delivery, and better benefits. (CBC News)

Technology Today

  • “Citizens will be on their best behavior, because we’re constantly recording and reporting everything that is going on” — Oracle co-founder Larry Ellison issuing a warning on the erosion of privacy LINK

  • Apple’s MacBook Neo is winning over a new generation of buyers LINK

  • GoPro says there is “substantial doubt” about its future as sales and cash reserves plunge LINK

  • 85%. Share of the Canadian cloud computing market that is controlled by Amazon, Alphabet, and Microsoft, according to a new report. The reliance on the three U.S. Big Tech firms has prompted Ottawa to invest more in sovereign cloud infrastructure, though researchers argue the transition will be a difficult one because of device compatibility issues.

  • Spotify is launching a feature that will read you articles from publications like The Atlantic and Vogue

AI of the Tiger

  • Florida becomes first state to sue OpenAI over child safety risks Link - Florida has filed the first state-level lawsuit against OpenAI and CEO Sam Altman personally, treating ChatGPT as a defective product and seeking civil penalties along with a court order blocking data collection from children under 13. Attorney General James Uthmeier’s complaint brings 10 counts including product liability, negligence, and fraudulent misrepresentation, citing the April 2025 FSU mass shooting where the gunman exchanged over 270 messages with ChatGPT about weapons and campus locations.

  • Meta captures employee emails for AI training Link - Meta is logging how its employees work on their computers through a program called the Model Capability Initiative, feeding the data into AI training across more than 200 apps and websites, according to internal documents seen by Reuters. Meta says the tool is installed only on US devices and analyzes interaction behavior rather than message substance, but workers report data usage spikes that burned through a month of home internet in days, suggesting continuous uploading.

  • As part of its new AI strategy, the federal government will launch an investment fund focused on backing promising Canadian AI startups, per The Globe and Mail. The full AI strategy is expected to be announced later this week. The Canadian Tech Growth Fund will focus on making smaller investments in startups in return for equity stakes, while the new sovereign wealth fund will be tapped to make pricier investments in larger AI companies.

Defense Docket

  • Ontario formally positions defence as a core industrial priority, with a new 10‑year strategy focused on scaling domestic manufacturing, advancing dual‑use technologies, expanding exports, and integrating supply chains. We view this as incremental support for Canadian defence-exposed names, particularly E&C companies, via increased activity across industrial buildout, specialized facilities and supply chain infrastructure. The framework aligns with broader defence tailwinds—including ~$81.8B of incremental federal spending over five years—but remains high‑level with no project-level visibility yet. - link

  • French authorities have seized a Russian tanker in the Atlantic suspected of shadow fleet activities. Meanwhile, Putin has launched another 600 missiles and drones in his latest overnight attack on Ukrainian cities. (France24)

  • Iran has launched ballistic missiles and drones at US-linked targets in Kuwait and Bahrain overnight, prompting return US strikes on Iran’s Qeshm Island. Air defences intercepted most Iranian projectiles, but it was enough to spike oil prices. (BBC)

  • Silicon Valley Defense Group (SVDG) released its annual NatSec100, an annual pulse check on the overall health of the emerging defence technology ecosystem in the US. The top 100 received $4.3B in US federal obligations in FY25 (+22% YoY); $16B lifetime (+36%). 38 new entrants made this year’s list. Tectonic reports that SVDG teamed up with J.P. Morgan this year, with a big focus not only on helping Silicon Valley connect with defence, but also on helping institutional capital better understand how to deploy later-stage capital into these defence tech companies.

  • Drones made in Canada could be headed for the battlefield in Ukraine, thanks to a new corporate partnership between Canadian and Ukrainian drone makers. National Defence says the drones will be made by the Ukrainian company Airlogix and Canadian drone maker Sentinel R&D, which is based out of Hamilton, Ont.

Crypto Corner

  • Bitcoin fell below $70,000 for the first time since April 8 as the digital asset faced a slew of headwinds, including spot bitcoin ETF outflows.

  • US sanctions Iran’s top crypto exchange in push for deal (BBG)

  • Premier League clubs could face legal action over deals with crypto firms (FT)

  • Charles Schwab sets 2027 for crypto trading (BM)

  • SEC makes crypto strategic priority through 2030 (CT)

  • Robinhood will move forward with its acquisition of the Toronto-based cryptocurrency company WonderFi, after receiving the final regulatory approval from the CIRO.

Energy Transition Today

  • EVs are getting more affordable worldwide — except in the U.S. LINK

  • The Emirates Nuclear Energy Company (ENEC) has signed a five-year strategic cooperation agreement with the Department of Government Enablement – Abu Dhabi, represented by the Mawaheb Talent Hub, to create a structured framework for training and employing UAE nationals in the civil nuclear energy sector. The partnership aims to qualify at least 100 Emiratis with various educational backgrounds, with Mawaheb providing candidate lists and facilities for workshops, assessments, and interviews, while ENEC will develop and fund training programs and support trainees financially. Successful participants will be integrated into ENEC’s workforce and subsidiaries.

  • States like New Jersey, Minnesota, and New York are exploring building nuclear reactors to satisfy the skyrocketing energy demand caused by data centers and widespread electrification. But nuclear reactors are enormously expensive: Two recently built in Georgia cost $35 billion combined, which was more than double the original budget. What’s more, Georgia’s nuclear project ended up running seven years behind schedule. If that’s any indication of how long it takes for new reactors to come online, we could be at least a decade away from nuclear-powered data centers. In addition, a majority of Americans also don’t want the data centers in their backyards.

The Dig

  • Uranium producer Urenco USA said it would boost capacity in its American enrichment facilities to offset uranium bans in Russia.

  • Copper topped $14,000 a ton and aluminum advanced to its highest in more than four years as optimism over demand and supply constraints outweighed concerns over the unresolved conflict in the Middle East. Base metals have made a strong start to June, fueled by bets on tighter global supply. Aluminum availability is under pressure as the US struggles to resolve its war with Iran, while copper traders are bracing for a crunch tariff decision by the Trump administration.

  • The U.S. administration announced adjustments to Section 232 tariffs on aluminum, steel, and copper, effective June 8, 2026. The changes expand the 15% reduced tariff category to include agricultural equipment and certain residential HVAC products, while maintaining elevated tariff structures (up to 25–50%) on core metals and derivatives. The policy also lowers the domestic content threshold from 95% to 85% to qualify as “entirely” U.S.-made and adds new derivative products (e.g., steel racks, aluminum plates) to the tariff scope.

  • “The miners were stunned at the accuracy of the document, which included details on a privately held iron ore miner.” - That’s a line from Australia’s business daily, reporting the mining industry’s shock during earlier negotiations that seemed to suggest China’s authorities had somehow gained precise, confidential details of internal company operations, to get the upper hand.

The Picks List

  • Here is a link for the moment when 14-year-old Shrey Parikh of San Bernardino, California, became the 2026 Scripps National Spelling Bee champion. The title came down to just the third Spell-off in Bee history, where Shrey correctly spelled a record-high 32 words in 90 seconds. His winning word was: “bromocriptine.”

  • What’s the best-selling book series of the 21st century? Harry Potter (obviously)

  • Serena Williams’ return to professional tennis is now official. The 23-time major champion, who turns 45 in September, will compete in doubles at this month’s HSBC Championships in a potential tuneup for Wimbledon.

  • Stephen Curry signed a 10-year shoe contract with Chinese company Li-Ning. The deal will also include athleisure, a full golf line and the ability for Curry to sign other athletes under his brand in the future.

  • Toronto police confiscated more than $3.5 million worth of counterfeit soccer jerseys and other fake merchandise, the largest such seizure in Canadian history. Authorities will surely be cracking down harder on dupe merchants ahead of the World Cup.

The Breakroom

  • For a limited time, participating bakeries in Winnipeg, Calgary, Toronto, and Montreal will be serving up slices of the KD Mac & Cheesecake — a cheesecake made with that inimitable Canadian delicacy we all know and love: Kraft Dinner cheese powder.

  • The drink of the summer might just be water. The internet, and specifically TikTok, is calling it ‘stacked water,’ which is just regular water with a mix of added health boosters, including kitchen staples like lemon water, honey, flax and chia seeds, but also supplements like Vitamin C, creatine, and probiotics. There’s no shortage of companies working to help optimize your water, from Blume (electrolytes and probiotics), to Arrae (protein, electrolytes), to Athletic Greens (vitamins and minerals). I appreciate the ability of social media to reinvent even the most unexpected everyday things.

  • A bettor at DraftKings Sportsbook won $1.71 million on a $2,500 four-leg futures parlay after the Spurs beat the Thunder to win the Western Conference. The first three legs of the massive wager (+68,528 odds) that had already hit: U.S. men’s hockey to win Olympic gold, Michigan to win the men’s college basketball title and the Knicks to win the Eastern Conference.

  • Martin Scorsese becomes the latest — and most unlikely — Hollywood voice for AI Link

  • Uber has released its annual Lost & Found Index, diving deep into the items left behind in rides across Canada last year. As always, phones, wallets, and bags are the most commonly forgotten personal items, but they are far from the most interesting. Some unusual things found in backseats last year included an aquarium fish, a full set of goalie pads, a single bed leg, an old smoke alarm, and a 15-pound frozen turkey.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[The Business Behind the Met Gala]]>https://thependerpulse.substack.com/p/the-business-behind-the-met-galahttps://thependerpulse.substack.com/p/the-business-behind-the-met-galaFri, 08 May 2026 23:41:31 GMTAs promised, it’s the first second Friday of May, which means it’s time to talk about the Met Gala and this time in long form. Can I get a huzzah!!

Take Me Back

Every first Monday in May, the steps of the Metropolitan Museum of Art in New York City become the most closely watched runway on the planet. For those of us who celebrate, we anxiously await the arrival of celebrities clad in tens of thousands of dollars worth of haute couture. It’s a spectacle. We love it.

The Met Gala is, technically speaking, a charity fundraiser for the Costume Institute. But that description has grown increasingly less important when compared to the scene the event has become over the past three decades. Today’s Met Gala is ripe with conspiracy theories, online forums, and fan pandemonium as the internet collectively loses its mind on the first Monday of May.

For context, the Costume Institute Benefit, which eventually came to be known universally as the Met Gala, began in 1948 as a midnight supper organized by fashion publicist Eleanor Lambert. (I now finally have my answer to the classic icebreaker: dead or alive, who would you have dinner with? Eleanor Lambert’s midnight feast, obviously.)

For its first several decades, the gala occupied a dignified but relatively low-profile corner of New York’s social calendar. That was until it became a global phenomenon commanding the attention of hundreds of millions of people worldwide. So how exactly did that happen?

The Tipping Point

I’m always amazed by the prevalence and versatility of Tipping Point theory. You may recognize it from Canadian writer Malcolm Gladwell’s debut book, The Tipping Point: How Little Things Can Make a Big Difference, published in 2000, that’s how I first came across it. But once you’ve been exposed, you start to see tipping points everywhere.

Gladwell defines a tipping point as “the moment of critical mass, the threshold, the boiling point.” The book seeks to explain the mysterious sociological changes that mark everyday life, how ideas and products and messages and behaviors spread like viruses (too close to home given the hantavirus situation right now but lets not dwell on that…) The examples include the sudden rise in popularity of Hush Puppies shoes in the mid-1990s and the steep drop in New York City’s crime rate after 1990.

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Look around as you make your way through your day and you’ll see it everywhere. Labubus (I still don’t get it). The return of low-rise jeans (my god). Athleisure (more on board with this one). What the youth are calling “the rise of Y2K” which, personally, I could do with staying in its original era. Social trends have a critical threshold, and once crossed, an idea, product, or behavior can spread like wildfire.

Gladwell describes three “agents of change” in any tipping point epidemic, and all three are worth understanding, because they are critical to the Met Gala story.

Connectors are people who know large numbers of people across an array of social, cultural, professional, and economic circles. They link the world together by making introductions across boundaries that most people never cross.

Mavens are information specialists, people we rely on to connect us with new information. They accumulate knowledge, especially about markets and culture, and know how to share it with others.

Salespeople are the persuaders. Charismatic, with powerful negotiation skills, they have that “Je ne sais quoi” quality that makes others want to agree with them, something that goes beyond what they actually say.

In the story of the Met Gala’s cultural emergence, the ultimate agent of change is none other than Anna Wintour.

The Anna Wears Prada

It was actually Diana Vreeland, the legendary fashion editor, who first moved the Gala to the Met and introduced the annual themes that gave the event its now-signature structure. But the critical shift, the tipping point, arrived with Anna Wintour’s assumption of chairmanship in 1995.

Wintour, then editor-in-chief of Vogue and a figure whose name had become synonymous with fashion authority, brought something to the event that Vreeland couldn’t: a sophisticated understanding of celebrity culture, a media apparatus of extraordinary reach through Condé Nast, and an almost surgical instinct for the leverage points of cultural power.

(For a deeper dive into Anna Wintour’s world, I highly recommend Business Wars’ series Vogue, one and Forever “)

Under Wintour’s leadership, the Met Gala was remade from the ground up. The guest list shifted decisively toward Hollywood celebrities, pop stars, and eventually global cultural icons. This wasn’t accidental. It was a deliberate design to maximize media impact and donor appeal simultaneously.

The effect was the creation of a brand new cultural phenomenon that served both institutional and individual interests in ways that purely charity-based or purely celebrity-based events simply couldn’t achieve by themselves.

Former Met Gala planner Stephanie Winston Wolkoff described Wintour as “militant” during the event, insisting that every detail be executed to exacting standards. But beyond the logistics, Wintour used the Met Gala as a stage for something larger, the repositioning of fashion as a whole to become a pillar of influence.

With time the theme-driven dress code was the unlock. It transformed guests from attendees into performers. This shift from passive attendance to active participating was perhaps more than any other single factor, what has made the Met Gala the cultural juggernaut it is today. When guests perform a theme, they don’t merely attend an event, they embody it. And in embodying it, they invite interpretation, commentary, and analysis in ways that conventional gala attendance never could.

With that comes eyes, attention… and capital.

Show Me the Money

The financial impact of this transformation has been extraordinary. In 2013, the event raised $9 million. By 2022, that figure had climbed to a record $17.4 million. By 2025, a single evening raised $31 million. The cumulative contribution to the Costume Institute surpassed $200 million following the 2019 event alone. This year’s gala has already broken last year’s $31 million record, reportedly bringing in $42 million.

The ticket price, which stood at $30,000 per individual in 2014, climbed to $50,000 by 2023, then $75,000 in 2024, and has now reached $100,000 per individual in 2026, with table sales costing $350,000. These tickets are not available for public purchase, nor even for the extraordinarily wealthy. Guests must be personally invited by the museum and approved by Wintour’s office. The guest list is capped at approximately 650 to 700 people, making it one of the most deliberately restricted gatherings, and coveted invites. The exclusivity is all part of the appeal, it’s a goal, a signal, and a prize.

The commercial dimension goes well beyond ticket prices. By 2023, a software company called Launchmetrics found that the Met Gala generated nearly double the “media impact value” of the Super Bowl, at $995 million.

Isn’t that wild? The Met Gala, notionally a museum fundraiser with 650 attendees, outperforms the Super Bowl when it comes to brand amplification. For the fashion houses, luxury labels, and technology companies associated with the event, this is not charity it is among the most efficient media investments out there.

The Costume Institute benefits. The brands benefit. Wintour’s empire benefits. The guests benefit through association. And the digital audience, which numbers in the tens of millions, is what makes all of it possible.

Special K… Shaped Economy

You knew we’d get here. The K-shaped economy has become something of a recurring theme at The Pulse, and the Met Gala of course has read throughs.

Here is the structural irony at the heart of the event: the Met Gala almost certainly could not sustain its cultural authority if it weren’t watched. The watching, the consumption of its imagery, the analysis of the looks, the debate about the themes, the social media engagement that generates nearly a billion dollars in media impact value, is performed almost entirely by people who could not possibly afford to attend.

A $100,000 ticket is, for most people, an economic impossibility. And yet the people who generate the event’s commercial value through their attention are, in economic terms, the people most categorically excluded from participating in it as anything other than an audience.

This is another striking example of the critical importance of the attention economy, where no longer is value generated by those who produce… but rather those who watch.

Anna Wintour, being the business icon she is, was quick to take advantage of this dynamic. Starting in the 2020s, the Met Gala began explicitly incorporating social media influencers into its guest list, acknowledging, openly, the structural dependency of the event on digital audience engagement. By bringing inside the museum people whose primary function was to translate the event’s exclusivity into social media content for mass audiences, the organizers formalized the relationship between the exclusive celebrity interior world of the gala and the exterior world of mass consumption that sustains its cultural power.

No single figure illustrates this shift more perfectly than Emma Chamberlain. If you’re not familiar, Chamberlain is a YouTuber and influencer who rose to fame in her teens making self-edited videos from her bedroom … about as far from the Met Gala’s inner chambers as you can imagine. She now hosts the Met Gala red carpet coverage for Vogue. More remarkable still, she is consistently ranked among the best-dressed guests of the evening with her looks discussed and dissected with the same intensity as any Hollywood A-lister. Chamberlain is not an anomaly. The internet’s most engaged audiences don’t just want to watch the insiders anymore, they want to see someone who came from their world standing at the center of it.

Emma Chamberlain's Mugler 'Living Canvas' Look At The 2026 Met Gala - Red Carpet Fashion Awards
Vanity Fair

It’s Mall Madness

One other K-shaped trend I couldn’t help but notice at this year’s Met: the prevalence of what I’ll call “mall brands.”

Both ZARA and Gap not only made appearances at this year’s Met Gala, they were behind two of the most talked-about outfits of the evening. Over the past year, luxury labels like Gucci and Dior have seen sales slow, while mall brands have surged in popularity, working to elevate their offerings and attract high-profile designers.

ZARA dressed Bad Bunny in a custom black tuxedo and outfitted Stevie Nicks in a blue gown designed by the acclaimed British designer John Galliano. Gap dressed Kendall Jenner in a flowing, Greek-inspired cotton gown by GapStudio, designed by red-carpet designer Zac Posen.

While ZARA and Gap aren’t the first mall brands to appear at the Met Gala, it’s significant just how much their designs turned heads, and how they’re using this moment to reshape consumer perception.

This also brings me to a conversation our investment team has been having about the Canadian retail consumer landscape. As we’ve discussed previously in The Pulse, Aritzia remains the Canadian mall darling, but there have been questions over the years about the sustainability of its growth, both North and South of the border. Well, once again, the brand has proved the skeptics wrong with its earnings report this week. Comparable sales increased 28%, ahead of the street’s 20% consensus estimate, and even more impressive when stacked on top of 19% growth last year. The retailer’s forecast points to further acceleration, with the next quarter’s revenue expected to grow 36–39%. Aritzia’s “Everyday Luxury” positioning appears to appeal to consumers regardless of the letter shape of the current economic environment. Shares are also trading near a record high, up 140% over the past year.

The mall brands on the Met carpet and Aritzia’s record quarter are not one offs, they are the same story. In this K-shaped economy, the brands that win are the ones that make everyday consumers feel like they have a seat at the table, even if the table costs $350,000.

Let’s Talk 2026

This year’s Met Gala dress code was “Fashion Is Art”. Paintings, sculptures, artifacts, and photographs from across the Met’s collection have been paired with garments that relate to those works. Very meta, and utterly delightful for anyone who sits at the intersection of fashion and art nerd.

I wasn’t entirely sure what to expect. There have been some magnificent themes in recent years… and a few flops. But this year delivered.

Beyoncé was in attendance this year. She hasn’t appeared at a Met Gala in a decade, and this year she hosted it. The big surprise was also her plus one, she was accompanied by her daughter Blue Ivy Carter. Heated Rivalry stars (IYKYK) Connor Storrie and Hudson Williams made their Met Gala debuts. And then there was Eileen Gu, in a dress by Iris van Herpen constructed from 15,000 glass balls, with a tiny hidden machine that spewed bubbles — surrounding her in a cloud as she walked the carpet.

Image may contain Madonna Aaron Weinstein Anne Bogart Adult Person Wedding Clothing Glove Face and Head
Vanity Fair
Eileen Gu, wearing a short dress covered in clear balls. Bubbles are visible behind her.
Vanity Fair
Connor Storrie, wearing a black and white sleeveless shirt with a high collar and a long sash, and black pants.
Vanity Fair

The theme … iconic. The looks … symphonic.

But this would not be The Pulse without something for investors to pay attention to, which brings me to my final point.

Takeaways from the First Monday of May

The Met Gala is a lot of things, a museum fundraiser, a fashion circus, an internet spectacle, a PR machine. But it’s also a clear window into a few dynamics worth paying attention to.

1. The tipping point is a real and investable concept.

Anna Wintour didn’t just create a great party. She built a cultural institution by understanding precisely which levers to pull: celebrity, exclusivity, media amplification, and theme.

There are Wintours in many industries, the builders who understand the mechanics of tipping points and have the platform to manufacture them and for investors being about to identify them is critical.

The question to ask about any brand, product, or company is not just “is it good?” but “does it have a Wintour?”

2. The K-shaped economy creates asymmetric attention dynamics.

The Met Gala is a useful mental model for how value is increasingly generated in a bifurcated economy. The people producing cultural capital are not the same as the people consuming it, and the gap between the two groups is widening. For investors, this dynamic shows up most clearly in the luxury sector, where the top tier continues to perform despite macroeconomic headwinds, and in the attention economy, where platforms that aggregate mass engagement (regardless of the economic profile of that audience) are increasingly the chokepoints of commercial value.

3. The “mall brand” story is real

The appearance of ZARA and Gap at this year’s Met is a signal. Consumers across the economic spectrum are renegotiating their relationship with luxury , seeking the feeling of elevated fashion without the price point. Brands that can credibly occupy the space between accessible and aspirational are capturing real market share. Take Aritzia’s 28% comparable sales growth on top of last year’s 19%. These are business models working as designed both the good times and the uncertain ones.

4. Attention is the scarce resource, and the Met Gala is a masterclass

The $995 million media impact value figure is worth paying attention to. It reflects a today’s reality: in an increasingly fragmented media landscape, coordinated cultural moments that generate unified attention are rare and highly valuable. The brands that understand how to or attach themselves to those moments will be able to take advantage of the eyes that come with it. The Met Gala’s media value surpassing the Super Bowl’s is not because fashion beats football, though it might… it’s because the event has been architecturally designed to generate maximum engagement from a minimum of attendees. That design principle, concentrated exclusivity generating mass engagement, is worth understanding well beyond the walls of a museum fundraiser.

Every first Monday in May, the Met Gala reminds us that the most valuable things in a modern economy aren’t always the most obvious ones. Not the ticket. Not the dress. The attention. In a K-shaped world, the real edge goes to whoever controls the room … and whoever understands why the rest of us can’t stop watching.

Pender Events + Publications

  • New Podcast: In our latest podcast episode, Associate Portfolio Manager, Laura Baker, sits down with our Chief Investment Officer, Greg Taylor, to unpack what’s really driving today’s market dynamics -- from concentration risk to the growing importance of active management. As Greg puts it: “You think you bought a nice balanced index fund, but it’s really concentrated on a few factors. If those factors go the other way, it can really hurt your returns.” In a market shaped by powerful narratives and passive flows, understanding what you actually own (and why) has never been more important. Check out the full episode here: https://bit.ly/4dV4PHu

  • Podcast: Laura Baker, Associate Client Portfolio Manager and Toufic Boubez, Venture Partner at Pender Ventures, explore the rise of AI and what it really means for productivity, competitive advantage, and the next capital cycle. “You could bully a large language model to agree with you that two plus two equals five if you give it the right prompt and you’re persistent enough because it doesn’t have an actual understanding, a world-view understanding.” Topics covered: The difference between prediction and true “understanding” in today’s AI systems, Why agentic AI could be a step-change in how work is executed, The shifting role of humans from execution to orchestration and judgment. Listen to the full conversation: https://bit.ly/3Q27uFf

  • Podcast: What Is Digital Ownership? A Guide to Tokenization - In this episode of the Pender Podcast, Laura Baker, Associate Client Portfolio Manager, unpacks Tokenization with Sebastien Davies, Partner at Primal Capital. Key Takeaways: How digital ownership is evolving across asset classes. Where institutional adoption is starting to take hold. What still needs to be solved for tokenization to scale - Tune in here: https://bit.ly/4bZzJNs

  • In the latest episode of the Pender Podcast, Associate Client Portfolio Manager, Laura Baker speaks with CEO and Portfolio Manager, David Barr, about what they’re seeing across the small-cap landscape today. “…We’ll continue to take advantage of these short-term opportunities right now to get the positions on businesses we really like and continue to assess the framework.” Tune in for a discussion on navigating today’s environment and why the current uncertainty could be setting the stage for the next cycle in small-cap investing: https://bit.ly/46RPO4W

Market Snacks

  • GameStop CEO Ryan Cohen Banned From eBay After Flexing His Meme-Stock Muscle LINK

  • Famed Big Short investor Michael Burry says today’s market feels like “the last months of the 1999-2000 bubble.”

  • Planet Fitness is down ~30% after lowering guidance and cancelling planned price hikes due to slower member growth.

Macro Morning

  • The US added 115,000 jobs, which is was much better than the 65,000 expected. The previous month’s job gains were also revised higher. With the US economy holding strong despite things like tariffs and higher inflation

  • Canada unexpectedly lost 17,700 jobs. Economists were looking for 10,000 new jobs. Full-time employment plunged by 46,700 positions while part-time jobs increased 29,000. The unemployment rate spiked to 6.9% which is the highest since October and up from 6.7% at last reading.

  • Health authorities are monitoring the Americans who recently returned from the MV Hondius, the cruise ship at the center of the outbreak that caused three deaths and left several others sick. While serious precautions are being taken, the WHO has stated that the hantavirus is less transmissible than Covid or the flu.

  • Canadians aged 25 to 39 were twice as likely to live at home with their parents in 2021 compared to the same age group in 1991, according to a new report from Statistics Canada. In 1991, 8.2% of Canadians in this age cohort lived with their parents, a share that grew to 16.3% by 2021. The increase was most acute in the country’s priciest housing markets, Toronto and Vancouver, where the rate of millennials living with their parents was 26.1% and 19.3%, respectively.

  • A U.S. court ruled that Donald Trump’s 10% global tariffs are not legal, but blocked them only for the plaintiffs in the case — they will remain in place for everyone else while an expected appeal by the administration runs its course. (CBC News)

Technology Today

  • Apple nears production of AirPods with cameras LINK - The cameras aren’t made to take photos or video but instead capture visual information in low resolution that users can ask Siri about, such as meal ideas based on ingredients, or turn-by-turn directions. The new AirPods will resemble the AirPods Pro 3 but with longer stems and a small LED light showing when visual data is sent to the cloud, possibly launching alongside the upgraded Siri in September.

  • Google unveils Whoop-like screenless Fitbit Air LINK

  • Disney looking to make a unified ‘super app,’ report says LINK

  • Gmail’s “Help me write” feature will now sound more like you—and can “automatically insert relevant information” from your email and Google Drive.

  • Amazon plans to start offering Ozempic pills at kiosks, as well as same-day delivery.

AI of the Tiger

  • ChatGPT’s ‘Trusted Contact’ will alert loved ones of safety concerns LINK

  • AI free-trial abuse is becoming a costly problem for startups, Stripe says LINK

  • Elon Musk faces criminal probe in France as prosecutors escalate X’s AI Investigation LINK

  • Anthropic says its new AI model is too dangerous to be released to the public. But Mythos’s real danger is not what you think. link.

  • Anthropic announced that Claude for Excel, PowerPoint, and Word are now generally available, while Claude for Outlook is in public beta. The AI can

  • AI startup DeepSeek could be valued at ~$50B in its first external funding round, a 5x jump from estimates circulating just last month! (WSJ $)

  • Snap and Perplexity just ended their $400 million deal to integrate AI into the social media platform.

Defense Docket

  • The US and Iran are again trading blame after Iran targeted (but apparently didn’t hit) three US destroyers, while the US claimed hits on Hormuz targets across Qeshm Island, Abbas port, and elsewhere. President Trump is dismissing it all as “just a love tap”, urging Iran’s regime to sign a deal. (BBC)

  • Paris has moved its carrier strike group to the Red Sea amid talks of a potential international mission to secure the Strait of Hormuz post-ceasefire. (Independent)

Crypto Corner

  • Coinbase logs second straight quarterly loss as crypto trading momentum fades LINK

  • Binance says Treasury sent letter over monitorship (BBG)

  • Wall Street firms post dozens of crypto jobs (BBG)

  • JPMorgan says bitcoin is gaining over gold (TB)

  • JPMorgan says Strategy’s bitcoin buying could reach $30B (TB)

  • Amazon teams with Coinbase to let AI pay with stablecoins (DC)

Energy Transition Today

  • Tesla is recalling its cheaper Cybertruck because the wheels might fall off LINK

  • Canada is debating how to allocate its new 49,000-vehicle quota for Chinese-made electric vehicles entering at a lower tariff rate. Officials are considering caps for manufacturers to prevent any single company, such as BYD or Tesla, from dominating the quota, people familiar with the matter told Bloomberg News. The government aims to ensure a variety of brands have access. Within five years, Ottawa plans to reserve half the quota for vehicles under C$35,000 (about $25,600).

  • Honda is reportedly shelving plans to build a $15 billion electric vehicle complex in Alliston, Ontario, a project that would have been the largest foreign investment in Canada’s history. The facility was planned as a key hub for Honda’s North American EV production, churning out 240,000 EVs per year, but construction plans were paused last year for a two-year period. Honda is now making that suspension indefinite.

  • Ontario has paved the way to build what could be the world’s largest nuclear power plant, with the Crown corporation in charge of the province’s electricity market signing a cost-sharing pact with nuclear energy firm Bruce Power valued at ~$300 million. Dubbed Bruce C, the plant will be Ontario’s first new large-scale nuclear project in 30 years. With a proposed nuclear capacity of up to 4,800 megawatts, the station could power as many as 4.8 million homes.

The Dig

  • Sherritt International halted joint venture activities in Cuba after President Donald Trump expanded US sanctions on the Caribbean country. The Canadian mining company, one of the island’s largest foreign investors, said it’s taking steps to repatriate employees in Cuba. Losing Sherritt represents a heavy blow for Cuba, which is in a deep economic crisis.

  • Gold extended gains as optimism over a potential US-Iran peace deal pushed down oil and gas prices, tempering fears that inflation will limit the scope for interest rate cuts. Bullion traded above $4,700 an ounce after jumping 3% on Wednesday. Falling energy prices weighed on bond yields, while the dollar fell to pre-war levels — both are tailwinds for gold.

The Picks List

  • Adidas released a new World Cup campaign on Thursday — a five-minute film titled “Backyard Legends” that stars Timothée Chalamet, Lionel Messi, Bad Bunny, Trinity Rodman and more.

The Breakroom

  • A hacker ran me over with a robot lawn mower LINK

  • The 30th WNBA season begins tonight, with all 15 teams taking the floor across this weekend’s 11-game slate. The big one is Saturday’s matchup between the Wings and Fever in Indianapolis, which features the last four No. 1 overall picks in Indiana’s Caitlin Clark and Aliyah Boston and Dallas’ Paige Bueckers and Azzi Fudd.

  • On Monday, May the Fourth (be with you), Lucasfilm sprang a surprise in the Season 1 finale of the animated Maul—Shadow Lord: a Star Wars Day duel decades in the making. For the first time ever, the Shadow Lord met the Dark Lord, as Maul crossed sabers with Vader in a double dose of Darths. For more on Vader vs. Maul, click here.

  • Tin Can, a startup that makes “new-school landlines” for kids, launched a program for parents, schools, and organizers to make bulk purchases of their Wi-Fi-enabled plug-in phones at a reduced cost. The program aims to capitalize on the product’s surging popularity. Sporting funky, retro designs, Tin Cans work like a VoIP service. They make free calls to other Tin Cans and emergency services, and parents can add on access to approved outside numbers for a monthly fee. Available in Canada for $135, the phones have a speakerphone feature, speed-dial buttons, and an answering machine. But most importantly, they don’t have a screen.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

]]><![CDATA[Maybe She’s Born With It… Maybe It’s the K-Shaped Economy]]>https://thependerpulse.substack.com/p/maybe-shes-born-with-it-maybe-itshttps://thependerpulse.substack.com/p/maybe-shes-born-with-it-maybe-itsWed, 06 May 2026 20:09:36 GMTWe have just passed the “First Monday of May” the day all of us (I’m sure) count down to all year. The biggest fashion event of the year. The Met Gala.

It was iconic. We have more thoughts but those are being saved for the Friday edition of The Pulse. This week we’re trying something new: quick takes. Shorter, sharper, mid-week. Here’s the first one.

Source: Vogue

Aside from the fashion, I spend an unreasonable amount of time thinking about the makeup of the Met long after the carpet ends. And like any good investor, globally important cultural moments get me thinking about the companies behind them. This one had me going straight to Estée Lauder (EL US), which also happens to be a top 10 holding in the Pender US Small/Mid Cap Equity Fund.

For anyone not deep in the beauty world, Estée Lauder Companies is one of the largest prestige beauty conglomerates on the planet, with a portfolio of 20+ brands spanning skincare, makeup, and fragrance, including La Mer, MAC, Clinique, and Tom Ford Beauty.

Who We Are – The Estée Lauder Companies Inc.
Source: Estee Lauder

I’ve followed EL for years, it was actually one of the first stocks I ever bought. But beyond the ticker, Estée Lauder herself was one of the first businesswomen I really looked up to, and someone who made me realize that even the most aspirational dreams are possible.

Estée started with a handful of products and a relentless belief in the power of word-of-mouth, living by the motto “Telephone, Telegraph, Tell a Woman.” She invented the “Gift with Purchase” concept, personally handed out samples at counters, and attended the opening of nearly every new store, staying a week to train her beauty advisors herself. She even hand-picked the brand’s signature pale turquoise packaging, convinced it conveyed luxury while matching any bathroom. In 1946 she officially launched the company, and a year later landed their first major order, $800 from Saks Fifth Avenue. The rest is history.

Ok. I promised quick takes. Moving on.

EL’s Earnings & The K-Shaped Economy (Again)

What really got me thinking about EL this week was that the company reported earnings, beating Street expectations and raising FY’26 guidance.

Estée Lauder’s third quarter of fiscal 2026 was defined by a significant recovery in profitability and a successful pivot toward high-growth digital channels. While top-line organic growth was ~2%, the company delivered an expansion in operating margins to 15% driven by its “Beauty Reimagined” strategy. The quarter was also marked by a stark contrast between double-digit growth in high end fragrance and flat results in traditional skincare and makeup segments.

Sound familiar? It should, because it’s the same story we keep coming back to: the K-shaped economy.

As a reminder, consumer behavior in 2026 has been increasingly split in two:

  • Top of the K: High-income consumers keep spending freely on premium and luxury goods

  • Bottom of the K: Middle- and lower-income consumers are pulling back, trading down, or hunting for value

This isn’t a beauty-specific trend. It’s showing up across luxury, retail, travel , everywhere. But Estée Lauder is one of the more interesting case studies because they’re actively playing both sides of the split.

At the top: Fragrance brands like Le Labo, Kilian Paris, and Tom Ford grew ~10% in Q3. La Mer ranked #1 in luxury skincare on Tmall during major shopping events. Core luxury consumers are largely price-insensitive, EL has been raising prices ~5% annually with no meaningful demand impact.

At the entry point: The Ordinary continues to gain share by delivering solid products at accessible prices.

The takeaway isn’t just about Estée Lauder specifically … it’s about what this earnings report confirms about the broader environment: the companies winning right now aren’t betting on one type of consumer, or one type of product to serve all consumers. They’re building for both ends of a bifurcated market.

The K-shape isn’t new, but it’s also not temporary. It’s looking like dare I say, “the new normal” and the brands that figure out how to serve the top and the bottom, without diluting either, are the ones worth watching.

More on the Met (and the makeup) Friday. See you then.

Pender Events + Publications

  • New Podcast: In our latest podcast episode, Associate Portfolio Manager, Laura Baker, sits down with our Chief Investment Officer, Greg Taylor, to unpack what’s really driving today’s market dynamics -- from concentration risk to the growing importance of active management. As Greg puts it: “You think you bought a nice balanced index fund, but it’s really concentrated on a few factors. If those factors go the other way, it can really hurt your returns.” In a market shaped by powerful narratives and passive flows, understanding what you actually own (and why) has never been more important. Check out the full episode here: https://bit.ly/4dV4PHu

  • Podcast: Laura Baker, Associate Client Portfolio Manager and Toufic Boubez, Venture Partner at Pender Ventures, explore the rise of AI and what it really means for productivity, competitive advantage, and the next capital cycle. “You could bully a large language model to agree with you that two plus two equals five if you give it the right prompt and you’re persistent enough because it doesn’t have an actual understanding, a world-view understanding.” Topics covered: The difference between prediction and true “understanding” in today’s AI systems, Why agentic AI could be a step-change in how work is executed, The shifting role of humans from execution to orchestration and judgment. Listen to the full conversation: https://bit.ly/3Q27uFf

  • Podcast: What Is Digital Ownership? A Guide to Tokenization - In this episode of the Pender Podcast, Laura Baker, Associate Client Portfolio Manager, unpacks Tokenization with Sebastien Davies, Partner at Primal Capital. Key Takeaways: How digital ownership is evolving across asset classes. Where institutional adoption is starting to take hold. What still needs to be solved for tokenization to scale - Tune in here: https://bit.ly/4bZzJNs

  • In the latest episode of the Pender Podcast, Associate Client Portfolio Manager, Laura Baker speaks with CEO and Portfolio Manager, David Barr, about what they’re seeing across the small-cap landscape today. “…We’ll continue to take advantage of these short-term opportunities right now to get the positions on businesses we really like and continue to assess the framework.” Tune in for a discussion on navigating today’s environment and why the current uncertainty could be setting the stage for the next cycle in small-cap investing: https://bit.ly/46RPO4W

Market Snacks

  • Sonos shares climbed after the audio brand reported revenue had jumped 8%. But of particular note was its statement that it was filing for tariff refunds totaling $40 million. Sonos made the refund disclosure during its fiscal second quarter earnings call, though Chief Executive Officer Tom Conrad said the timing of when the refund would be received is “uncertain.”

  • GameStop is trying to buy eBay, a company around four times its size. In an extremely awkward interview, GameStop’s CEO, Ryan Cohen, was pressed on how he would finance the deal.

  • Elon Musk settles with the SEC for $1.5 million after years-long dispute over his Twitter investment LINK

  • Palantir lifts annual revenue forecast on robust US government demand LINK

Macro Morning

  • Iran attacked the United Arab Emirates on Monday for the first time in almost a month as the weeks-long stalemate between the US and Iran showed signs of devolving into conflict again. The UAE said its air defense systems engaged with 12 ballistic missiles, three cruise missiles and four drones fired from Iran at different parts of the Gulf country. Alerts in the UAE came hours after a tanker owned by Abu Dhabi National Oil Co. was said to have been fired upon by Iranian drones near the Strait of Hormuz. And an oil terminal part owned by Vitol Group was said to have been attacked in the port city of Fujairah

  • Ottawa announced $1.5 billion to support businesses hurt by tariffs. Businesses that manufacture and export products containing steel, aluminum or copper will be eligible for low- and zero-interest loans from the Business Development Bank of Canada as part of a $1 billion tariff relief program. The existing Regional Tariff Response Initiative is also getting an extra $500 million to help support impacted businesses. (CTV News)

  • Alberta separatists said they submitted more than 300,000 signatures on their petition demanding an independence referendum. 177,732 signatures are needed to prompt the province to consider holding a referendum on the issue, something Premier Danielle Smith has said she’ll do if enough signatures are collected. Elections Alberta still has to verify the signatures and legal challenges to the constitutionality of the referendum are working their way through the courts. (Edmonton Journal)

  • The Canadian Cattle Association (CCA), an industry group representing the country’s beef producers, is warning that a free trade deal with South America’s Mercosur bloc could flood Canada’s market with beef from Brazil and Argentina, undercutting domestic ranchers.

  • Mark Carney named Former Supreme Court justice Louise Arbour as Canada’s next governor general. (CTV News)

  • Canada posted a trade surplus as oil and gold exports rose.

Technology Today

  • Apple explores Intel and Samsung for US chips LINK Apple is in early talks with Samsung and Intel to make chips in the US, hoping to secure backup options if TSMC cannot keep up with its demand for main chipsets in its devices.

  • iOS 26.5 Finally Adds End-to-End Encrypted RCS Between iPhone, Android LINK

  • The creator of Roomba is back with a furry robot companion LINK

  • A college student is suing a dating app that allegedly used her TikTok videos to target men in her dormitory LINK

  • Roblox hit its lowest point since 2024 after a rotten earnings report showed it was losing users… and management sees even less Robux coming in the future

  • A new livestream auction platform is now one of the most-downloaded shopping apps on the US App Store, above Amazon and eBay. Sellers on Whatnot crank out 5 million listings a day, with offerings ranging from sports cards to stolen goods and fresh seafood

AI of the Tiger

  • Loblaw signed a deal with Canadian AI firm Shakudo to use the platform to build AI tools.

  • White House considers tighter regulation of new AI models Link- The Trump administration is weighing an executive order that would set up a working group of tech executives and officials to review new AI models before release, a sharp turn from its earlier hands-off stance on the technology.

  • Brockman discloses $30 billion OpenAI stake Link - OpenAI president Greg Brockman testified Monday that his equity stake in the company is worth close to $30 billion, while also revealing financial links to Sam Altman through investments in Altman-backed ventures and his family office.

  • DeepMind UK staff unionize over military AI deals Link- Google DeepMind workers in London have voted to unionize, asking the company to recognize the Communication Workers Union and Unite the Union as joint representatives in a push to stop the AI lab from supplying its tech to the US and Israeli militaries.

  • Meta deploys AI to detect underage users Link - Meta is rolling out AI age-detection technology to Facebook users in the U.S. for the first time, along with 27 European Union countries and Brazil, as part of new measures announced during a child safety trial. Parents in the U.S. on Facebook and Instagram will get a notification linking to a blog post explaining how to check and confirm their teens’ ages, sent to all users Meta has identified as a parent.

  • Microsoft’s new research finds an AI ‘paradox’ holding companies back Link

  • Data centers at sea: Oregon’s Panthalassa nets $140M led by Peter Thiel for wave-powered AI Link

  • Image AI models now drive app growth, beating chatbot upgrades Link

  • Anthropic launched new AI agents tailored for handling financial services tasks, part of the company’s push into the finance sector.

Defense Docket

  • The Logic reports that a gold rush mentality is forming around defence tech in Canada due to promises of billions in additional federal spending: “Amid the excitement, however, investors and entrepreneurs warn that defence tech — with its long timelines and massive capital needs — isn’t a natural fit for the traditional VC playbook.” US data from Pitchbook validates this challenge: Government capital is now structural. Office of Strategic Capital, In-Q-Tel, and Defense Innovation Unit are acting as co-investors and validators, not just background support.

  • As NASA moves towards establishing a permanent presence on the moon, a Canadian company is hoping to solve one of the biggest challenges for astronauts in deep space – accessing drinkable water. The challenge aimed to identify innovative companies that could develop technologies “to purify moon water for human deep-space missions.” The Canadian Strategic Missions Corporation (CSMC) was recently awarded $400,000 in grant funding after it won the Aqualunar Challenge, led by the Canadian Space Agency in partnership with Impact Canada.

  • Canada didn’t just “evolve” into a service-based economy. We systematically dismantled our status as a global peer to become a branch plant for the United States… CSIS Public Report 2025… A look at Canada’s plan to boost the military with skills training… Kepler’s CEO on Canada’s space ambitions… Arctic Strategies and KPMG Canada collaborate to advance

Crypto Corner

  • The first Canadian dollar-backed stablecoin issued by a financial institution is officially trading on three blockchains after receiving approval from the Alberta Treasury Board. The token, called CADD, is the creation of Calgary-based company Tetra. Tetra received backing from Shopify, Wealthsimple, and National Bank to get CADD off the ground

  • Coinbase cuts 14% of staff citing AI LINK - The reorg flattens the company to five layers below the CEO and COO, lets leaders manage more than 15 direct reports, and asks managers to contribute more work themselves rather than just oversee others.

Energy Transition Today

  • The Tesla Semi all-electric Class 8 truck is now in production, and it could finally deliver the diesel-free revolution that shippers are looking for. all the details.

  • The CEO of Portuguese firm EDP Renewables says it will keep the U.S. as its largest investment market despite abandoning offshore wind plans in the country: “The big bet in the U.S. will be on solar and battery energy storage.” (Reuters)

  • Microsoft is reportedly weighing whether to delay or even abandon its 2030 target for powering data centers with clean energy, as the firm tries to remove hurdles that could hold it back in the race to power the computing facilities. (Bloomberg)

  • Virginia regulators allow Dominion Energy to pay a reduced rate for excess power produced by customers’ rooftop solar recommendations, though not quite as low as what the utility requested. (Richmond Times-Dispatch)

The Dig

  • The feds announced it would invest $20 million in a project to build North America’s first cobalt sulfate refinery.

  • Japan agreed to boost cooperation on critical minerals with Australia and Vietnam, further bolstering global efforts to reduce dependence on China for strategic raw materials, Platts reported, as published on S&P Global Energy Core.

The Picks List

  • Last year, Elon Musk’s companies spent $600 million doing business with… other Elon Musk-led companies: xAI spent $430 million on Megapacks (giant rechargeable battery systems) from Tesla. SpaceX spent $143 million on Tesla vehicles. And Tesla shelled out $4.8 million for security services to Musk’s personal security company

The Breakroom

  • LeBron James is 41 years, 4 months and 6 days old, which is roughly the same age as both head coaches in his next series. He’s six months younger than Los Angeles’ JJ Redick (41 years, 10 months, 11 days) and two months older than OKC’s Mark Daigneault (41 years, 2 months, 12 days). James averaged 23.2 points, 7.2 rebounds and 8.3 assists against the Rockets en route to winning his 42nd playoff series, which is more than all but six NBA teams.

  • May is set for some exciting new music, and prediction markets* are pricing in a 60% chance that Ariana Grande will have a song reach the top of Spotify’s charts in the month, a 44% chance Taylor Swift will have a song go to No. 1, and a 19% chance that Lana Del Rey does.

  • Fox Sports is hiring an official “World Cup Watcher” for the upcoming FIFA World Cup. For US$50,000, one individual will be selected to watch every single second of all 104 matches in a custom-built glass box in Times Square where passersby can observe them.

Please read important disclosures at www.penderfund.com/disclaimer.

Standard performance data for Pender Funds can be found at www.penderfund.com/solutions/

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