Summary
VRNS is a software company that has mapping technology that allows categorization of unstructured data. The IPO was successful until a week later when it wasn't. I like the bottoming consolidation, which I feel presents a good risk to reward ratio here. The obvious stop is 20, which is a 25% move. Such a move requires smaller position sizing but I feel that's okay because this trade presents good upside. This stock got everyone excited when it first came out and IPO trades often present a second kick at the cat.
Positives: Revenue growth has been impressive
$5.00 Cash in the Bank
Backed by EMC
Huge corporate client base, Phillip Morris, EMC, Juniper etc..
I never take a trade on buyout rumors or speculation, but if it happens great. VRNS has been reported in acquisition talks with IBM. Buyout target:
"Varonis was in acquisition talks a year ago with IBM Corporation (NYSE: IBM) at a company value of $450 million. Although no deal was reached, no one will be surprised if Varonis, like other companies in its field, ultimately ends up as part of IBM or another computer giant."
Negatives: 25% stop does not permit big size on trade as I would like.
Dynamic:
I'm a big bull on VRNS but one other thing to be aware of is the August lock-up expiration
ReplyDeleteThanks for the comment. I should probably have noted the IPO lock out as part of my check list for this trade. That being said, I does not change my thesis for this trade. I hope it can be a multi-month holding holding
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