Risk management in Opportunities

With market volatility intensifying, driven by escalating tariffs and renewed inflation concerns, we elected to make trades on behalf of clients in our Opportunities strategy. 

The results of the trades saw us exit Xpel (XPEL) and Willscot Holdings (WSC), while trimming Okta (OKTA), Iqvia Holdings (IQV), Graphic Packaging Holdings (GPK), NexGen Energy (NXE), and Denison Mines (DNN). 

We also added to some of our more defensive positions like SPDR Gold Trust (GLD), VanEck Junior Gold Miners (GDXJ), Canadian Pacific (CP), Moody’s (MCO), General Electric (GE), and Raytheon (RTX). 

Importantly, given this backdrop, we’ve lowered Opportunities' net exposure to ~90% (from high 90s).

Let’s dive in.

Reducing exposure to risk

In the face of growing economic uncertainty, our focus has been on reducing exposure to higher-risk names, particularly those vulnerable to tightening financial conditions, deteriorating technicals, and tariff-driven margin pressure.

Even in the face of intense market volatility, Okta (OKTA) has rallied +43% year-to-date. Given the impressive start to the year, the risk / reward has become less favorable at current levels which has led us to take some profits and dial back exposure.

Despite broader healthcare strength, Iqvia (IQV) has remained a laggard in Opportunities. Although their recent earnings report was far better than feared, the business is still experiencing growth challenges as it lacks the tremendous Covid tailwinds it experienced in years prior. While sentiment around the stock has been close to all-time lows, we halved our position in Iqvia to reinvest the proceeds in companies with better risk/reward prospects.

Although fundamentally strong, Willscot Holdings’ (WSC) cyclical business has been weighed down by a decrease in construction activity. Having now missed our earnings expectations multiple times, we believe management has less credibility than we anticipated, and we view the company as a show-me story as they attempt to change the narrative. The opportunity cost of staying invested is simply too high and we believe it will take at least multiple quarters before fundamentals stabilize, leading us to exit the position entirely.

Xpel’s (XPEL) margin profile and business model are incredibly attractive and yet the company has been consistently plagued by poor execution. With recent earnings performance coming in meaningfully below both management’s and Titan’s estimates,we believe that visibility into the trajectory of the business is now quite low. We exited Xpel and plan to allocate the proceeds into more compelling risk/reward opportunities over the near/medium term.

The uranium sector remains fundamentally strong, but sentiment has weighed heavily on the complex, triggering our risk/drawdown limits. Some of the selling pressure appears to be headline-driven, including speculation about Trump’s 25% tariffs on Canadian imports (which we believe will be walked back to some degree) and fears of a US-Russia nuclear arms reduction deal. While we remain bullish on our uranium thesis over the long term, we are temporarily trimming NexGen Energy (NXE), and Denison Mines (DNN) in the near term to mitigate further drawdown risk.

Leaning into defensive growth

While reducing exposure to riskier positions, we are also strategically increasing allocations to what we believe to be quality compounders that have historically performed relatively well in volatile or recessionary environments. These investments provide a blend of stability, strong fundamentals, and defensive growth characteristics.

The goal is quite simple: by reallocating capital from higher-volatility companies towards defensive growth, we maintain exposure to upside potential while reducing risk in an increasingly fragile macro environment.

With recession concerns rising and the timeline for interest rate cuts being pulled forward, gold has historically outperformed in rate-cutting cycles. Given this setup, we elected to add to SPDR Gold Trust (GLD) and the gold miners basket (GDXJ) in an attempt to gain more exposure to rising gold prices.

Both General Electric (GE) and Raytheon (RTX) show strong operational execution and improving fundamentals, positioning them well for a defensive rotation. RTX also benefits from defense spending tailwinds in the event that we see continued global tensions or long-term trends that favor isolationism. 

Much like S&P Global in our Flagship strategy, we believe Moody’s (MCO) should benefit from higher issuance in credit markets in a period of monetary easing (which we expect in 2025-26). With nearly $5.2 trillion in corporate debt coming due in the US and Europe, refinancing will be a top corporate priority and Moody’s is well-positioned as a beneficiary of this upcoming macro tailwind.

We also added to transport company Canadian Pacific (CP) as part of our defensive growth allocation given its resilient business model, long-term infrastructure demand, and favorable industry positioning. With strong fundamentals and an increasingly attractive technical set-up, we believe the company represents a defensive opportunity that also provides meaningful upside in the event that tariff uncertainty is resolved.

Where we go from here

The results of the trade find us leaning into a barbell approach in Titan Opportunities.

If the market stabilizes, we believe we maintain sufficient exposure to benefit from that recovery. On the other hand, if volatility persists, our cash positioning and defensive allocations help mitigate downside from here.

What’s important is that we’re electing to avoid the messy middle ground – moderately risky investments that tend to be historically unproductive in periods of market uncertainty. Importantly, we will continue to actively monitor technical and macroeconomic developments, with a plan to adjust exposure further if conditions deteriorate.

As always, feel free to reach out with any questions.

– Your Titan Team

Disclosures:

Titan Global Capital Management USA LLC ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Please refer to Titan's Program Brochure for important additional information. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. Contact Titan at support@titan.com.

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