2. Couchbase, Inc. (NASDAQ:BASE)
Discovery Capital Management’s Stake Value: $17,095,000
Percentage of Discovery Capital Management’s 13F Portfolio: 1.27%
Number of Hedge Fund Holders: 13
Couchbase, Inc. (NASDAQ:BASE), a California-based software company, was added to Rob Citrone’s portfolio in the third quarter, with the billionaire buying 549,492 shares worth over $17 million, representing 1.27% of his total 13F securities.
On January 12, Barclays analyst Raimo Lenschow lowered the price target on Couchbase, Inc. (NASDAQ:BASE) to $30 from $41 and kept an Overweight rating on the shares. The analyst says the main question for software investors in 2022 is not around end demand, as there are “no issues there”, but valuation for the sector remains a concern.
Adams Street Partners is the biggest stakeholder of Couchbase, Inc. (NASDAQ:BASE) as of Q3 2021, with 1.78 million shares worth roughly $50 million. Overall, 13 hedge funds were bullish on Couchbase, Inc. (NASDAQ:BASE) in the third quarter of 2021, with stakes totaling approximately $107 million.
Here is what Baron Discovery Fund has to say about Couchbase, Inc. (NASDAQ:BASE) in its Q4 2021 investor letter:
“In the fourth quarter, the Fund was down 3.13% versus the Russell 2000 Growth Index, which was roughly unchanged. For the full-year 2021, the Fund was up 4.89% and beat the 2.83% return of the Russell 2000 Growth Index by 2.06%. The lion’s share of the underperformance in the fourth quarter was due to stock selection in the Information Technology (IT) and Health Care sectors. In IT, there was a fairly even spread of winners and losers for the quarter, though IPO profit taking affected Couchbase, Inc. after big third quarter gains.
Couchbase, Inc. provides modern database software that collects and stores data and powers enterprise applications, for which there is no tolerance for disruption, inaccuracy, or downtime. We wrote about our initial investment in this exciting company in our last quarterly letter. Its solution is fast (it utilizes caching, or retrieval from memory versus hard drives), scales to large amounts of records (which is expensive for old-style relational databases, and not even possible with some of the other NoSQL solutions), and works in all settings (on-premise, in the cloud, or in mixed hybrid environments). Couchbase, with revenues of $150 million, is addressing a large total market of $62 billion, which is slowly migrating to the cloud and using less rigid database structures. We added to our investment in the quarter when shares sold off due to multiple compression in the software sector. We believe that the selling was significantly overdone, and Couchbase now sells at a multiple that is about 25% of its main competitor. We believe that on an absolute and relative basis this 25%-plus grower is meaningfully undervalued.”
