{"id":56446,"date":"2024-05-02T15:05:27","date_gmt":"2024-05-02T22:05:27","guid":{"rendered":"https:\/\/penderfund.com\/?post_type=commentaries&#038;p=56446"},"modified":"2025-09-24T16:39:04","modified_gmt":"2025-09-24T23:39:04","slug":"pender-alternative-absolute-return-fund-return-april-2024","status":"publish","type":"commentaries","link":"https:\/\/penderfund.com\/fr\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/","title":{"rendered":"Pender Alternative Absolute Return Fund \u2013 April 2024"},"content":{"rendered":"<hr \/>\n<p><strong>Highlights<\/strong><\/p>\n<ul>\n<li>The Fund added to some higher quality, high yield positions in April.<\/li>\n<li>Following a market rebound, we raised cash in the later part of the month.<\/li>\n<li>We closed our short position in Charter Communication\u2019s unsecured bonds, and our capital structure trade in CSC Holdings LLC, a subsidiary of Altice USA.<\/li>\n<\/ul>\n<hr \/>\n<p>The Pender Alternative Absolute Return Fund finished April with a return of 1.6% bringing year to date return to 4.1%<a href=\"#_ftn1\" name=\"_ftnref1\"><sup>[1]<\/sup><\/a>.<\/p>\n<p>April saw an uptick in volatility as economic data continued to push back market expectations for rate cuts from the US Federal Reserve, with just one rate cut now priced in for 2024 down from over six at the start of the year. While risk assets sold off at the start of the month, the buy-the-dip impulse was strong with high yield spreads close to unchanged on the month at 318bp Government OAS on the ICE\/BofA US High Yield Index. \u00a0The market return of -1% was the first negative month since October and entirely driven by higher government bond yields.<\/p>\n<h3>Portfolio and Market Update<\/h3>\n<p>The Fund added to some higher quality high yield positions in April as interest rate volatility impacted some issues more than others, creating pockets of opportunities. Following a market rebound we raised cash in the later part of the month. Risk premiums remain compressed especially for BB rated bonds. As recently as April 29, the ICE BofA BB US High Yield Index closed at a spread of 184bp Govt OAS, which is lower than any point over the sixteen year period from 2008 through 2023, and only 3bp above the 2024 low reached in March. This illustrates a very strong risk taking impulse in a segment of the market that is perceived to be safe.<\/p>\n<p><strong>ICE BofA BB US High Yield Index \u2013 Gov\u2019t OAS bp<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-56449\" src=\"https:\/\/media.penderfund.com\/media\/2024\/05\/ICE-BofA-BB-US-High-Yield-Index-\u2013-Govt-OAS-bp.png\" alt=\"\" width=\"600\" height=\"310\" \/><br \/>\n<\/strong><em>Source: Bloomberg\/ICE BofA<\/em><\/p>\n<p>For much of the past six months, the Fund has been able to add loans at significantly wider spreads than what was available in equivalent bond issues. \u00a0In our view, one of the reasons why loans were attractive was because the market was convinced that rate cuts were imminent and therefore preferred fixed coupon issues and duration rather than floating rate instruments like loans. The tone appears to have shifted, with market participants now embracing \u201chigher for longer\u201d resulting in a material compression of spreads for broadly syndicated loans.<\/p>\n<blockquote>\n<p style=\"text-align: center;\">\u201cWe believe that the market is not focusing on risk to the extent that it should. We continue to maintain a defensive posture and believe it is likely that spreads will widen materially from current levels at some point in 2024.\u201d<\/p>\n<\/blockquote>\n<p>In recent months, we accumulated a position in Cedar Fair LP\u2019s 5.5% 2025 bond which we believed would likely be refinanced with a loan which could look attractive relative to opportunities in the bond market. We were wrong. Cedar Fair\u2019s new term loan priced at a spread of 200bp over the Secured Overnight Financing Rate (SOFR) which was almost the exact same spread that Six Flags Entertainment Corp priced a secured bond offering in April. Cedar Fair and Six Flags are expecting to complete their merger in the coming months, meaning these two issues are effectively the same underlying credit risk. At the same spread and at a price of par we\u2019d pick a high yield bond over a loan unless we believed higher policy rates were imminent, because loans can typically be called away after 6 months at a price of par which caps upside. Falling government bond yields often coincide with wider credit spreads, which is the worst of both worlds for loans, whereas corporate bonds benefit from falling underlying yields to partially offset wider credit spreads.<\/p>\n<p>We believe that the market is not focusing on risk to the extent that it should. A great example of this is a bond issued by Ingles Markets Inc. which operates grocery stores highly competitive markets in the southeastern United States. Their business has been under some significant pressure lately. According to their most recent report for the quarter ending December 2023, operating income was down 38% year over year driven by lower sales, lower gross margins and higher administrative expenses<a href=\"#_ftn2\" name=\"_ftnref2\"><sup>[2]<\/sup><\/a>. The company\u2019s Class A shares closed April at a 52-week low. Despite fundamental headwinds and equity market performance the company\u2019s bond trades at very close to the tightest spread over the past year, suggesting that bondholders are effectively asleep at the wheel as risks are building.<\/p>\n<p><strong>Ingles Markets Inc 4% 2031 Unsecured Bond Spread, bp<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-56451\" src=\"https:\/\/media.penderfund.com\/media\/2024\/05\/66340d966737e-66340d9667380Ingles-Markets-Inc-4-2031-Unsecured-Bond-Spread-bp.png.png\" alt=\"\" width=\"600\" height=\"324\" \/><br \/>\n<\/strong><em>Source: Bloomberg<\/em><\/p>\n<p><strong>Ingles Markets Inc - Class A<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-56453\" src=\"https:\/\/media.penderfund.com\/media\/2024\/05\/Ingles-Markets-Inc-Class-A.png\" alt=\"\" width=\"600\" height=\"310\" \/><br \/>\n<\/strong><em>Source: Bloomberg<\/em><\/p>\n<p>The Fund closed our short position in Charter Communication\u2019s unsecured bonds in April. While we believe that US cable business will be more challenging going forward than it has been in the recent past, the bonds had repriced to yields close to where the market bottomed in October. \u00a0We believe that the company\u2019s commitment to investment grade ratings at the secured level of their capital structure will effectively force them to reduce leverage in future which should offset a weakened competitive position going forward.<\/p>\n<p>The Fund closed our capital structure trade in CSC Holdings LLC which is a subsidiary of Altice USA. While our position had mostly been market neutral and stood to benefit from a rapid deterioration of business fundamentals, with rumors of a bondholder group forming we believed that it was prudent to exit. There have been several recent instances of \u201cnon-pro rata up-tiering\u201d in large, stressed capital structures where a select group of bondholders improved their standing in the capital structure at the expense of bondholders who were not in the group. \u00a0While we believed it would be difficult for a priming transaction to occur in this case, we thought it was appropriate to remove the tail risk.<\/p>\n<p>We continue to maintain a defensive posture in the Fund and believe it is likely that spreads will widen materially from current levels at some point in 2024. While we wait for a better opportunity set, we are focused on adding value through trading and uncovering attractive carry trades in the interim.<\/p>\n<h3>Portfolio metrics:<\/h3>\n<p>The Fund finished April with long positions (excluding cash) of 147.9%. 64.4% of these positions are in our Current Income strategy, 79.7% in Relative Value and 3.8% in Event Driven positions. The Fund had a -48.0% short exposure that included -5.5% in government bonds, -28.4% in credit and -14.1% in equities. The Option Adjusted Duration was 1.34 years.<\/p>\n<p>Excluding positions that trade at spreads of more than 500bp and positions that trade to call or maturity dates that are 2026 and earlier, Option Adjusted Duration declined to 1.10 years.<\/p>\n<p>The fund\u2019s current yield was 4.5% while yield to maturity was 6.5%.<\/p>\n<p>Justin Jacobsen, CFA<em><br \/>\nMay 2, 2024<\/em><\/p>\n<p><a href=\"#_ftnref1\" name=\"_ftn1\">[1]<\/a> All Pender performance data points are for Class F of the Fund unless otherwise stated. Other classes are available. Fees and performance may differ in those other classes.\u202fStandard Performance Information for the Fund may be found here: https:\/\/penderfund.com\/solutions\/ <em><br \/>\n<\/em><a href=\"#_ftnref2\" name=\"_ftn2\">[2]<\/a> <em>Source: Ingles Markets Inc. company filing, 10-Q quarterly report.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Highlights The Fund added to some higher quality, high yield positions in April. Following a market rebound, we raised cash in the later part of the month. We closed our short position in Charter Communication\u2019s unsecured bonds, and our capital structure trade in CSC Holdings LLC, a subsidiary of Altice USA. The Pender Alternative Absolute [&hellip;]<\/p>\n","protected":false},"featured_media":70405,"template":"","meta":{"_acf_changed":false},"fund-type":[45,46],"class_list":["post-56446","commentaries","type-commentaries","status-publish","has-post-thumbnail","hentry","fund-type-pender-liquid-alternative-funds","fund-type-pender-alternative-absolute-return-fund"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Pender Alternative Absolute Return Fund \u2013 April 2024 - PenderFund Capital Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/penderfund.com\/fr\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/\" \/>\n<meta property=\"og:locale\" content=\"fr_CA\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Pender Alternative Absolute Return Fund \u2013 April 2024\" \/>\n<meta property=\"og:description\" content=\"Highlights The Fund added to some higher quality, high yield positions in April. Following a market rebound, we raised cash in the later part of the month. We closed our short position in Charter Communication\u2019s unsecured bonds, and our capital structure trade in CSC Holdings LLC, a subsidiary of Altice USA. The Pender Alternative Absolute [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/penderfund.com\/fr\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/\" \/>\n<meta property=\"og:site_name\" content=\"PenderFund Capital Management\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/penderfund\/\" \/>\n<meta property=\"article:modified_time\" content=\"2025-09-24T23:39:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/09\/PAARF.png\" \/>\n\t<meta property=\"og:image:width\" content=\"850\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Estimation du temps de lecture\" \/>\n\t<meta name=\"twitter:data1\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/\",\"url\":\"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/\",\"name\":\"Pender Alternative Absolute Return Fund \u2013 April 2024 - PenderFund Capital Management\",\"isPartOf\":{\"@id\":\"https:\/\/penderfund.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/09\/PAARF.png\",\"datePublished\":\"2024-05-02T22:05:27+00:00\",\"dateModified\":\"2025-09-24T23:39:04+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#breadcrumb\"},\"inLanguage\":\"fr-CA\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"fr-CA\",\"@id\":\"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#primaryimage\",\"url\":\"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/09\/PAARF.png\",\"contentUrl\":\"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/09\/PAARF.png\",\"width\":850,\"height\":400},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/penderfund.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Commentaries\",\"item\":\"https:\/\/penderfund.com\/commentaries\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Pender Alternative Absolute Return Fund \u2013 April 2024\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/penderfund.com\/#website\",\"url\":\"https:\/\/penderfund.com\/\",\"name\":\"PenderFund Capital Management\",\"description\":\"Forward thinking. Finding value.\",\"publisher\":{\"@id\":\"https:\/\/penderfund.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/penderfund.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"fr-CA\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/penderfund.com\/#organization\",\"name\":\"PenderFund Capital Management\",\"url\":\"https:\/\/penderfund.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"fr-CA\",\"@id\":\"https:\/\/penderfund.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/06\/PenderFund-Cap-Man-Logo_English.png\",\"contentUrl\":\"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/06\/PenderFund-Cap-Man-Logo_English.png\",\"width\":850,\"height\":250,\"caption\":\"PenderFund Capital Management\"},\"image\":{\"@id\":\"https:\/\/penderfund.com\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/penderfund\/\",\"https:\/\/www.instagram.com\/penderfund\/\",\"https:\/\/www.linkedin.com\/company\/penderfund-capital-management\/\"]}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Pender Alternative Absolute Return Fund \u2013 April 2024 - PenderFund Capital Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/penderfund.com\/fr\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/","og_locale":"fr_CA","og_type":"article","og_title":"Pender Alternative Absolute Return Fund \u2013 April 2024","og_description":"Highlights The Fund added to some higher quality, high yield positions in April. Following a market rebound, we raised cash in the later part of the month. We closed our short position in Charter Communication\u2019s unsecured bonds, and our capital structure trade in CSC Holdings LLC, a subsidiary of Altice USA. The Pender Alternative Absolute [&hellip;]","og_url":"https:\/\/penderfund.com\/fr\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/","og_site_name":"PenderFund Capital Management","article_publisher":"https:\/\/www.facebook.com\/penderfund\/","article_modified_time":"2025-09-24T23:39:04+00:00","og_image":[{"width":850,"height":400,"url":"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/09\/PAARF.png","type":"image\/png"}],"twitter_card":"summary_large_image","twitter_misc":{"Estimation du temps de lecture":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/","url":"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/","name":"Pender Alternative Absolute Return Fund \u2013 April 2024 - PenderFund Capital Management","isPartOf":{"@id":"https:\/\/penderfund.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#primaryimage"},"image":{"@id":"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#primaryimage"},"thumbnailUrl":"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/09\/PAARF.png","datePublished":"2024-05-02T22:05:27+00:00","dateModified":"2025-09-24T23:39:04+00:00","breadcrumb":{"@id":"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#breadcrumb"},"inLanguage":"fr-CA","potentialAction":[{"@type":"ReadAction","target":["https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/"]}]},{"@type":"ImageObject","inLanguage":"fr-CA","@id":"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#primaryimage","url":"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/09\/PAARF.png","contentUrl":"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/09\/PAARF.png","width":850,"height":400},{"@type":"BreadcrumbList","@id":"https:\/\/penderfund.com\/commentaries\/pender-alternative-absolute-return-fund-return-april-2024\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/penderfund.com\/"},{"@type":"ListItem","position":2,"name":"Commentaries","item":"https:\/\/penderfund.com\/commentaries\/"},{"@type":"ListItem","position":3,"name":"Pender Alternative Absolute Return Fund \u2013 April 2024"}]},{"@type":"WebSite","@id":"https:\/\/penderfund.com\/#website","url":"https:\/\/penderfund.com\/","name":"Gestion de capital PenderFund lt\u00e9e","description":"Forward thinking. Finding value.","publisher":{"@id":"https:\/\/penderfund.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/penderfund.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"fr-CA"},{"@type":"Organization","@id":"https:\/\/penderfund.com\/#organization","name":"Gestion de capital PenderFund lt\u00e9e","url":"https:\/\/penderfund.com\/","logo":{"@type":"ImageObject","inLanguage":"fr-CA","@id":"https:\/\/penderfund.com\/#\/schema\/logo\/image\/","url":"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/06\/PenderFund-Cap-Man-Logo_English.png","contentUrl":"https:\/\/penderfund.com\/wp-content\/uploads\/2025\/06\/PenderFund-Cap-Man-Logo_English.png","width":850,"height":250,"caption":"PenderFund Capital Management"},"image":{"@id":"https:\/\/penderfund.com\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/penderfund\/","https:\/\/www.instagram.com\/penderfund\/","https:\/\/www.linkedin.com\/company\/penderfund-capital-management\/"]}]}},"_links":{"self":[{"href":"https:\/\/penderfund.com\/fr\/wp-json\/wp\/v2\/commentaries\/56446","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/penderfund.com\/fr\/wp-json\/wp\/v2\/commentaries"}],"about":[{"href":"https:\/\/penderfund.com\/fr\/wp-json\/wp\/v2\/types\/commentaries"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/penderfund.com\/fr\/wp-json\/wp\/v2\/media\/70405"}],"wp:attachment":[{"href":"https:\/\/penderfund.com\/fr\/wp-json\/wp\/v2\/media?parent=56446"}],"wp:term":[{"taxonomy":"fund-type","embeddable":true,"href":"https:\/\/penderfund.com\/fr\/wp-json\/wp\/v2\/fund-type?post=56446"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}