Kinsale Capital (KNSL) Moves to Sell
We added Kinsale Capital in September and have been up around 10% at the most since. With the stock pulling back today we’re nearing break-even, which taking into account all factors seems like a fine place to step aside. Nothing won, nothing lost. On the fundamental side, management reported results yesterday that missed expectations due to hurricane-related losses. That’s not surprising as most insurers with exposure took a hit. However, Kinsale didn’t pre-release catastrophe losses, which is a bit odd given that many other market participants did. Still, that doesn’t change the story and Kinsale remains one of the best in the business and with strong pricing will be fine longer-term. However, in the short term there may be a lack of incentive for new money to flow in and as a recent addition with no gain and no loss this is a natural one for us to step aside from now. Kinsale goes on my watch list for potential inclusion in the future. SELL
Earnings Updates
We received a host of earnings updates this week, staring with Pinterest (PINS), which exploded higher (just days after we added the position) because of a big beat that highlighted a growing, global user base. The stock remains a buy on any weakness. BUY
Five9 (FIVN) also reported results that beat on both the top and bottom lines and drove a wave of analyst price target increases. Revenue was up 34% to $112 million, beating by $11 million while adjusted EPS of $0.27 beat by $0.09. It appears everything is coming together here in surprising synchronization. The stock is one of the few up in today’s market. We may move back to buy soon, but for now it remains a hold. We’re up 130%. HOLD
Bandwidth (BAND) also delivered the goods with revenue up 40% to $85 million and adjusted EPS of $0.24 beating by $0.26. Management’s Q4 guidance was a tad above consensus but analysts seem more focused on commentary around Bandwidth powering the Microsoft (MSFT) Azure Communication Service. Also, the company may easily power RingCentral’s new SMS service. Both would be big deals. The stock is off today but with shares trading near the 50-day line and the broader market looking rather rough this isn’t surprising. Keeping at buy. BUY
Dynatrace (DT) beat expectations as well with revenue up 30% to $169 million beating by $7.8 million and adjusted EPS of $0.18 beating by $0.08. The company continued to add customers in the quarter (136 added, up from 85 last quarter) and did a great job keeping customers (net retention above 120%). Management indicated the company will invest in growth (i.e. sales staff) which will drive higher costs. All in all, the future still looks bright. Shares have hit the 200-day line today and are off almost 30% from their recent high. We’ll give DT a little more room but if the stock doesn’t firm up soon we’ll likely take partial profits. HOLD
Livongo (LVGO) reported Q3 results that beat on the top line as revenue was up 126% to $106 million and the bottom line as adjusted EPS of $0.16 beat by $0.10. Overshadowing that announcement is the confirmation that Teladoc (TDOC) shareholders approved the acquisition of Livongo, which stopped trading prior to today’s open. Investors will receive 0.592 shares of TDOC plus 11.33 in cash. We’ll make the appropriate adjustment in our table of results. HOLD