This Fund Just Dumped Its Entire $10 Million Stake in Five9 — Here’s Why

On Friday, Dallas-based Scalar Gauge Management disclosed it sold out its entire stake in Five9 (NASDAQ:FIVN) for an estimated $10.6 million in the third quarter.

What Happened

According to a Securities and Exchange Commission (SEC) filing released Friday, Scalar Gauge Management sold all of its 399,717 shares of Five9 in the third quarter. The estimated value of the shares sold was $10.6 million, calculated using the average price for the period.

What Else to Know

Top holdings after the filing:

• NASDAQ:BL: $32.7 million (16.7% of AUM)
• NASDAQ:AVGO: $13.9 million (7.1% of AUM)
• NYSE:FIX: $13.2 million (6.7% of AUM)
• NYSE:FN: $12.8 million (6.5% of AUM)
• NASDAQ:AXON: $11.1 million (5.7% of AUM)

As of Friday's market close, shares of Five9 were priced at $24.28, down 18% over the past year and well underperforming the S&P 500's nearly 17% gain over the same period. The position previously accounted for 6% of the fund’s AUM.

Company Overview

Company Snapshot

• Five9 provides a cloud-based contact center platform offering voice, video, chat, email, and AI-powered customer engagement solutions.
• The company operates a subscription-based software-as-a-service (SaaS) business model.
• It serves customers across sectors, including financial services, healthcare, technology, and education.

Five9 is a leading provider of cloud software for contact centers, enabling organizations to manage customer interactions across multiple digital and voice channels.

Foolish Take

Scalar Gauge Management’s full exit from Five9 last quarter marks a clear continuation of its broader pullback from cloud software names amid compressed enterprise valuations. The sale happened alongside a liquidation of Clearwater Analytics Holdings, signaling a deliberate rotation away from mid-cap SaaS holdings.

In its most recent investor commentary, Scalar Gauge noted that software multiples have fallen well below 2022 troughs despite stronger profitability, suggesting that valuation pressure rather than fundamentals has driven much of the selloff. The firm continues to describe enterprise software as “one of the most attractive segments of the economy,” yet current positioning suggests a temporary step back in exposure while awaiting stabilization.

For long-term investors, the move reflects the broader crossroads for software valuations in 2025: While AI adoption and margin expansion remain tailwinds, selectivity is key as markets digest slowing revenue growth and shifting capital flows.

Glossary

AUM: Assets Under Management – The total market value of investments managed by a fund or investment firm.

13F: A quarterly report filed by institutional investment managers to disclose their equity holdings to the Securities and Exchange Commission (SEC).

Exited position: When an investor sells all shares of a particular holding, reducing their ownership to zero.

Stake: The amount or percentage of ownership an investor holds in a company.

TTM: The 12-month period ending with the most recent quarterly report.

Cloud-based contact center platform: Software delivered over the internet that enables organizations to manage customer communications across multiple channels.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axon Enterprise, Comfort Systems USA, and Five9. The Motley Fool recommends BlackLine and Broadcom. The Motley Fool has a disclosure policy.