ResearchAdding to software and storage

Adding to software and storage

Jun 7, 2024

Observing the performance of the S&P 500 and Nasdaq indices likely doesn’t show the full story for 2024 as pockets of the market, such as software and small / mid-cap equities, have had relatively slow starts to the year. 

We elected to take advantage of this dynamic by increasing our net exposure and adding to a handful of names in Opportunities including Elastic (ESTC), Okta Inc. (OKTA), and Willscot Mobile Mini Holdings (WSC).

Let’s dive in.


Adding to software and storage

A cluster of troubling earnings reports (h/t Salesforce) has sent the software complex lower over the last several weeks. The market’s reaction to these reports has proven that fundamentally sound earnings growth has never been more important for investors, and we took the opportunity to add to Elastic (ESTC) and Okta Inc. (OKTA) following their quarterly results.

Elastic (ESTC) reported strong earnings with healthy cloud reacceleration and solid traction in GenAI use cases. We believe the product momentum remains strong across their three core business segments, and we took advantage of the recent volatility to make the stock a full sized position in our Opportunities strategy.

Second quarter results proved that the security breach at Okta Inc (OKTA) is likely in the rearview mirror as the company recorded a strong beat on revenue and operating income. Despite raising fiscal year guidance, we believe Okta was unfairly punished by the broader software selloff and elected to add to the company as the narrative shifts for the cybersecurity leader.

If you recall, we trimmed our position in portable storage company Willscot Mobile Mini (WSC) by ~3% in November 2023 in an effort to de-risk a holding that had organically grown into a large position in our Opportunities strategy. We believe trimming WSC was the right call given what we knew at the time; however, we elected to use the recent FTC acquisition concerns as an opportunity to add back to a company that has resumed executing at a high level. Our idiosyncratic growth thesis remains solidly intact, and we believe the recent decline offers a compelling risk/reward opportunity for investors.

The results of the trade increase our net exposure in Opportunities, and we plan to be tactical in the coming weeks as we still have cash on hand to deploy as opportunity presents. As always, let us know if you have any questions about the recent trades; we’re happy to assist.

– Your Titan Team


Disclosures:

Titan Global Capital Management USA LLC ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Please refer to Titan's Program Brochure for important additional information. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. Contact Titan at support@titan.com.

Trade communications are meant for informational purposes only. Statements made in these communications represent opinions and conjecture, and should not be construed as a guarantee of future results. Communications may contain forward-looking statements, which reflect our current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. 

References to specific stock performances are provided for historical context and are not indicative of future results. Please note that any mention of gains or losses in our trade communications reflects those at the strategy level. Actual gains or losses realized in individual client accounts may vary based on factors such as the timing of individual trades, new or recurring deposits, and the specific cost basis for each holding in a client's account. As such, the figures presented may not represent the actual gains or losses experienced by any individual client. Valuation assessments in our communications are based on internal analysis and are for informational purposes only. They should not be the sole basis for investment decisions and may differ from others' views or assessments. No warranty is made regarding their accuracy or completeness.

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