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March 26, 2024

Sell Varonis (VRNS)

Sell Varonis (VRNS)

We jumped into security specialist Varonis (VRNS) back in November and were fortunate enough to catch an updraft into the end of 2023. We enjoyed another bump in early February when earnings came out, but since then the stock’s performance has been somewhat lackluster. Over the last few sessions, VRNS has slid below its 50-day moving average line and has also broken below the stock’s closing level the day after the February earnings-related rally. I might be making too much of this “weakness” as VRNS is far from broken. But given a general malaise in security software stocks and that we’re sitting on a 24% gain that I’d rather not watch evaporate, I’m going to sell our position today. We have plenty of exposure to new stocks that are acting well given last week’s new additions, so I don’t feel we need to replace VRNS immediately. SELL

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Tyler Laundon is chief analyst of the limited-subscription advisory, Cabot Small-Cap Confidential and grand slam advisory Cabot Early Opportunities. He has spent his entire career managing, consulting and analyzing start-up and small-cap companies. His hands-on experience has taught Tyler that the development of a superior business model is the biggest factor in determining a company’s long-term success. Accordingly, his research focuses on assessing the viability of management’s growth strategies, trends in addressable markets and achievement of major developmental milestones.