Our theme of Cyber Security Stocks had a rough 2022, declining by close to 34%, roughly in line with the broader Nasdaq-100 which was down by about 33%. There were a series of factors impacting the theme. Notably, rising interest rates and stubbornly high inflation over the year hurt high-growth high multiple tech stocks, including cyber security names. Moreover, during recent earnings calls, cybersecurity players such as Okta
Now, the economic outlook for the U.S. appears relatively tough, with multiple indicators pointing to a recession this year. That said, we think that cybersecurity stocks should hold up better than the broader economy for a couple of reasons. Russia could potentially target Western governments, critical infrastructure, and businesses as its military offensive in Ukraine faces challenges. Moreover, ransomware attacks have also risen over the past year. Cybersecurity players are also seeing increasing interest as acquisition targets. Private equity companies have been targeting players in this sector, given their somewhat depressed valuations and potential to generate steady revenues in the long run. For example, over the last year, private equity major Thoma Bravo acquired multiple cybersecurity players including Ping Identity, Sailpoint, ForgeRock, Bottomline Technologies, and Coupa Software.
Other companies in the sector could also be potential acquisition targets. Within our theme, Okta has been the worst performer declining by almost 64% over the past 12 months. On the other side, Qualys
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