Some thoughts on storage stock meltdowns Last Friday, storage stocks were under pressure. Perhaps meltdown is too strong a word. But continued pressure was certainly visible. And to some extent, the shares of publicly traded storage vendors have been under pressure for the last few months. There aren't all that many publicly traded storage stocks left these days. But the ones that continue to survive independently - #NetApp (NASDAQ:NTAP), #Pure Storage (NYSE:PSTG) and Nutanix (NASDAQ:NTNX) - have been underperformers compared to most other tech names so far this year. Part of the reason for Friday's pressure supposedly had to do with the ongoing rotation away from tech shares. OK, I get that. And part of the pullback was said to be the result of a misbegotten IPO of a flash storage vendor called Tintri (Pending:TNTR). OK, I get that... sort of. And finally, some writers for financial publications suggested that the pullback in storage companies was based on failed takeover speculation about a company called #MonsterDigital (NASDAQ:MSDI). And now, I think we have reached the land of make-believe and machines triumphing over common sense. It sometimes takes a bit of stomach, so to speak, to buck the trend and commit to a sector that has been out of favor for a lengthy time period. As has been pointed out by many financial journalists and some analysts as well, storage IPOs have done poorly overall. And yet, plumbing the storage industry for investments is exactly what I think investors ought to be doing - now and going forward. The names I favor are NTAP, Pure Storage and Nutanix. They will all benefit from a tide that, if not rising, is not falling either and is rising in places. The enterprise storage business is not falling apart. Companies with disruptive technology are growing rapidly. The other day, I had the occasion to write about VMware (NYSE:VMW) and its hybrid cloud strategy. The fact is that hybrid cloud is the architecture of choice - and really, the public cloud vendors have embraced it as well. The market for enterprise storage and for hyper-converged architecture simply isn't withering and blowing away, and is unlikely to do so in the foreseeable future. The storage business is different from what it was at the start of this decade, but different doesn’t necessarily mean worse. Disruptive vendors are still able to grow significantly and to create value and alpha for investors. This would, I believe, be an excellent opportunity for investors to take a look at the enterprise storage and determine if there are any companies that might meet their own particular screens.
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