Adding to software and storage

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

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