Artisan Mid Cap Fund recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -11.55% for the quarter (investor class), outperforming their benchmark, the Russell Midcap Index which returned -27.07% in the same quarter. You should check out Artisan Mid Cap Fund’s top 5 stock picks which helped them beat the market by nearly 16 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Artisan Mid Cap Fund highlighted a few stocks and Datadog Inc. (NASDAQ:DDOG) is one of them. Datadog is a monitoring service for cloud-scale applications. Year-to-date, DDOG stock gained 45.8% and on May 8th it had a closing price of $51.73. Its market cap is of $16.4 billion. Here is what Artisan Mid Cap Fund said:
“Datadog is a leading provider of monitoring and analytics for cloud-based applications. Software has become central to how organizations deliver differentiated products and user experiences and optimize business processes—fueling the disruption taking place across nearly every industry. The success of this digital transformation trend is increasingly tied to quality and performance— in turn, driving strong secular demand for IT infrastructure and application monitoring. Datadog’s platform—which integrates and automates infrastructure monitoring, application performance monitoring and log management—provides real-time observability of its customers’ entire technology stacks and is built to address the scale, complexity and dynamic nature of the modern cloud era. Datadog’s solutions fill a void left by legacy tools built for on-premise IT infrastructures, and the company is well-positioned to exploit a lightly underpenetrated, large addressable market. We believe the company’s low-touch land-and-expand customer acquisition model and attractive profit and cash flow characteristics—which are poised to expand nicely over the coming years—position it well for a solid profit cycle ahead.”
In Q4 2019, the number of bullish hedge fund positions on DDOG stock decreased by about 18% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with DDOG’s growth potential.
Disclosure: None. This article is originally published at Insider Monkey.