The Great Five9 Fiasco and Scalar’s Greedy Exit

On a particularly sticky Friday in Dallas, Scalar Gauge Management-a fund manager with a penchant for dramatic exits-decided to dump its entire $10.6 million stake in Five9. It was a move so sudden, it might have startled the stock’s shares into hiding behind a bushel of apples.

What Happened

In a letter to the SEC (a document one might imagine written with a quill dipped in lemon juice), Scalar Gauge revealed it had sold every last crumb of its 399,717 shares in Five9 during the third quarter. The total value? A tidy sum calculated with the precision of a clockwork spider: $10.6 million, using the average price as a polite excuse to avoid specifics.

What Else to Know

Post-sale, Scalar’s treasure chest brimmed with new favorites:

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)

By Friday’s market close, Five9’s shares were priced at $24.28-a figure so pitiful it could not even muster the dignity of a proper slump. The stock had tumbled 18% over the past year, lagging far behind the S&P 500’s cheerful 17% climb. Once, this position had been a proud 6% of Scalar’s AUM. Now, it was a ghost story.

Company Overview

Metric	Value
Revenue (TTM)	$1.1 billion
Net Income (TTM)	$8.8 million
Price (as of market close Friday)	$24.28
One-Year Price Change	(18%)

Company Snapshot

Five9, a purveyor of “cloud-based contact center platforms,” offers customers a menagerie of digital interactions: voice, video, chat, email, and AI-powered solutions that hum like a malfunctioning toaster.
Their business model is subscription-based, a SaaS venture that dangles promises of recurring revenue while dancing on the tightrope of customer retention.
They serve clients in sectors that might as well be a witches’ cauldron: financial services, healthcare, technology, and education-each with its own brand of chaos.

Five9 claims to be a leader in cloud software for contact centers, a title it earned by convincing organizations to manage their customer interactions across multiple channels. A noble goal, if one overlooks the occasional explosion of miscommunication.

Foolish Take

Scalar’s full exit from Five9 is not a mere transaction but a grand gesture of disdain. It joins the growing parade of funds fleeing cloud software names, a trend as predictable as a crocodile with a toothache. This exodus comes alongside the liquidation of Clearwater Analytics Holdings, a move that smells faintly of panic and bad coffee.

In its latest missive to investors, Scalar noted that software multiples have fallen below even 2022’s sad little trough. The firm insists enterprise software remains “one of the most attractive segments of the economy”-a claim that dances suspiciously close to sarcasm. For now, they’ve opted to step back, like a cautious cat eyeing a bowl of milk with a suspiciously low water level.

For long-term investors, this tale is a reminder: even the slickest algorithms can’t outsmart a market in a sulk. While AI and margin expansion promise to blow hot air into the sector, the real magic lies in picking the right mushrooms. Some grow; others explode. 🍄

Glossary

AUM: Assets Under Management – The total market value of investments managed by a fund or investment firm. A number that makes everyone feel important, even if they’re just counting beans.

13F: A quarterly report filed by institutional investment managers to disclose their equity holdings to the SEC. A bureaucratic ballet performed to the tune of regulatory compliance.

Exited position: When an investor sells all shares of a particular holding, reducing their ownership to zero. A dramatic finale, often accompanied by a sigh of relief.

Stake: The amount or percentage of ownership an investor holds in a company. A term that sounds far more heroic than it deserves.

TTM: The 12-month period ending with the most recent quarterly report. A time frame that always seems to end at the worst possible moment.

Cloud-based contact center platform: Software delivered over the internet that enables organizations to manage customer communications across multiple channels. A phrase that makes even the most enthusiastic technologist pause and wonder what happened to simplicity.

2025-11-02 18:34