💼 Inside the Portfolio: Updates from our Swing Trading Desk

05 Dec 2024 - Insights, adjustments, and forecasts about our latest swing trades 💹

Position Updates:

Kingsoft Cloud Holdings Ltd ADR (KC): The position was strategically reduced following today's gap-up price action. Secured a compelling 50% return on investment within a two-week trading window. Maintaining a runner position with implemented trailing stop-loss for downside protection.

Amentum Holdings Inc (AMTM): Full position exit executed at a loss. The underlying fundamentals remain attractive, and we'll continue monitoring for potential re-entry opportunities when the technical setup improves.

Eli Lilly (LLY): Executed a 25% position reduction as part of our risk management strategy. The core position remains intact with adjusted sizing.

New Positions and Subscriber Insights:

Three new positions were initiated today, demonstrating promising early momentum on two of them. One is more long-term oriented.
Comprehensive trade details, including entry points, position sizing, and risk parameters, have been disseminated to our premium subscribers through our real-time alert platform, ensuring optimal execution timing.

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1. Pure Storage Inc (PSTG)

Pure Storage, Inc. provides data storage technologies, products, and services in the United States and internationally. The company's Purity software is shared across its products. It offers enterprise-class data services, such as data reduction, data protection, encryption, and storage protocols, including block, file, and object. Its product portfolio includes FlashArray for block-oriented storage, addressing databases, applications, virtual machines, and other traditional workloads.

Fundamental Analysis

• Financial Health: Today the company delivered a solid performance in its third-quarter fiscal year 2025 results, showcasing strong revenue growth and a major strategic win, despite some financial challenges. The company reported $831.1 million in revenue, a 9% year-over-year (Y/Y) increase, driven by a 22% Y/Y growth in subscription services revenue, which reached $376.4 million. Subscription annual recurring revenue (ARR) also grew 22% to $1.6 billion, highlighting the success of its subscription-based model.

  Profitability remained strong, with a GAAP gross margin of 70.1% and a non-GAAP gross margin of 71.9%. However, net income declined 9.6% Y/Y to $63.6 million, and free cash flow dropped significantly by 69% to $35.2 million. Operating expenses rose 9.3% Y/Y to $523.2 million, driven by higher investments in R&D and sales.

  A key highlight was a significant design win with a top-four hyperscaler, positioning Pure Storage’s DirectFlash technology as a leader in hyperscale storage. This deal is expected to generate over $500 million in revenue by 2026. Piper Sandler upgraded the stock to Overweight, raising its price target to $76, with a bull-case valuation of $104.

  Despite challenges, Pure Storage’s strategic focus and market leadership position it for long-term growth.

Technical Analysis

• Entry Point: We initiated our position when the stock broke above the 63.00 level on the daily chart, after an initial dip at the open. The stock volume is already bigger than yesterday, this is a very good sign.

• Support and Resistance Levels: Support is currently established at $63.00 on the daily chart. The first resistance level is at $68.50 on the daily, then 70.50 (all-time high)

• Additional Notes: None.

Entry Day: 04 December

Price: $63.74