After a 65% Slide, One Fund Clears Out This Internet Infrastructure Stock Entirely

Taylor Frigon Capital Management fully exited its position in Cogent Communications Holdings (NASDAQ:CCOI) in the fourth quarter, selling 73,271 shares worth about $2.81 million.

What happened

According to an SEC filing dated January 23, Taylor Frigon Capital Management LLC sold its entire stake in Communications Holdings (NASDAQ:CCOI), reducing its holdings by 73,271 shares. The quarter-end position value in Cogent Communications Holdings declined by $2.81 million.

What else to know

Top holdings after the filing:

• NASDAQ:ALAB: $4.34 million (2.2% of AUM)
• NASDAQ:CRDO: $4.34 million (2.2% of AUM)
• NASDAQ:MDB: $3.81 million (1.9% of AUM)
• NASDAQ:MPWR: $3.71 million (1.9% of AUM)
• NASDAQ:TSEM: $3.49 million (1.8% of AUM)

As of January 23, shares of Cogent Communications Holdings were priced at $24.29, down a staggering 65.4% over the prior year and vastly underperforming the S&P 500’s roughly 14% gain in the same period.

Company overview

Company snapshot

• Cogent Communications provides high-speed internet access, private network services, and data center colocation across multiple continents, with revenue primarily from connectivity and network solutions.
• The company operates a network-centric business model, generating income through recurring service contracts and colocation fees for bandwidth-intensive organizations.
• It serves small and medium-sized businesses, communications service providers, and enterprises requiring reliable, high-capacity data connectivity.

Cogent Communications Holdings is a global provider of internet access and network services, operating 54 data centers and connecting thousands of commercial buildings. The company leverages its extensive network infrastructure to deliver scalable, high-availability solutions for bandwidth-intensive clients. Its focus on recurring service revenue and broad geographic reach underpins its competitive position in the telecommunications sector.

What this transaction means for investors

Portfolio exits are rarely about one bad quarter. They usually reflect a growing mismatch between what a business demands from investors and what a portfolio is designed to tolerate. That tension is front and center here. This portfolio’s top holdings skew toward semiconductors, software, and infrastructure names where capital intensity is rewarded by scale and accelerating margins. A capital-heavy network operator with uneven cash generation increasingly sits outside that framework.

Cogent’s latest results showed progress in pockets. Wavelength revenue jumped sharply year over year, and EBITDA grew meaningfully, with margins expanding to just over 20% in the third quarter. But core service revenue slipped sequentially, operating cash flow remained thin, and the stock kept sliding. A 65% decline over the past year reflects more than sentiment. It reflects investor skepticism that incremental growth will translate cleanly into durable free cash flow.

Against the fund’s remaining holdings, which lean toward businesses with clearer operating leverage and secular demand tailwinds, Cogent stands out for the wrong reasons. Ultimately, strong networks do not automatically make strong stocks, and when capital needs stay high and cash conversion lags, even improving metrics can fail to protect shareholder value--making this exit look less like capitulation and more like discipline.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MongoDB. The Motley Fool recommends Astera Labs and Monolithic Power Systems. The Motley Fool has a disclosure policy.