Jefferies’ Top Crowded Software Short Positions: Top 9 Stocks

3. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)

Number of Hedge Fund Holders In Q2 2024: 69

Shares Short % Of Outstanding: 4.12%

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a well-known cybersecurity software provider that rose to fame earlier this year after its faulty software update led to an unbelievable 8.5 million computers going offline worldwide. The outage also flipped the firm’s narrative, as the shares lost more than 42% of their value over the next two weeks. However, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) has managed to control some of the damage from the outage as its shares are up 24.9% year to date and 41.6% since the post-outage bottom. Part of the recovery is based on easing investor worries of customer loss as CrowdStrike Holdings, Inc. (NASDAQ:CRWD) might be able to prevent fallout due to high switching costs. Investors will nevertheless be on the watchout for customers jumping ship, and they will also monitor CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s fiscal 2031 recurring revenue guidance of $10 billion and midpoint free cash flow margin of 36%.

Baron Funds mentioned CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q2 2024 investor letter. Here is what the fund said:

“CrowdStrike Holdings, Inc. is a cloud-architected SaaS cybersecurity vendor offering endpoint security, threat intelligence, and cyberattack response services. Shares continued their strong performance from the first quarter and were again a top contributor, rising 19.5% in the second quarter on better execution than peers in the broader security space. The company reported strong quarterly results with 33% year-over-year revenue growth, driven by customers consolidating their cybersecurity spend on CrowdStrike with free cash flow margins reaching 35%. With accelerating market share gains in its core endpoint detection and response offering, emerging products including Cloud, Identity, and SIEM reaching material scale, and newer products in data protection and AI ramping quickly, net new annual recurring revenue and total revenue look to sustain a long duration of growth. With its leading competitive positioning in cybersecurity, the growing threat landscape (which is also driven by the advancements in AI, making hackers more dangerous), its unique lightweight, single-agent, architecture, and its platform approach, we retain conviction in CrowdStrike, which is emerging as the security platform to beat in terms of scale, profitability, and free cash flow conversion.”