Guardian Fund: “The Migration to the Public Cloud is a Massive Opportunity for Cloudflare (NET)”

Guardian Fund, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. In 2021, the return of the Guardian Fund was 3.27%, measured in euros and net of fees and expenses. This compares to 28.71% for the S&P 500 Index, measured in U.S. dollars, and including dividends. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Guardian Capital Management, in its Q4 2021 investor letter, mentioned Cloudflare, Inc. (NYSE: NET) and discussed its stance on the firm. Cloudflare, Inc. is a web infrastructure and website security company based in San Francisco, California with a $36.6 billion market capitalization. NET delivered a -13.33% return since the beginning of the year, while its 12-month returns are up by 38.18%. The stock closed at $113.97 per share on January 12, 2022.

Here is what Guardian Capital Management has to say about Cloudflare, Inc. in its Q4 2021 investor letter:

“When we read the quarterly earnings updates, we continue to be impressed by the magnitude of the reallocation of resources within society. For instance, cloud spending is expected to nearly triple by 2025. The migration to the public cloud is a massive opportunity for Cloudflare, as well as dozens of companies that are still small private ventures today. The markets for digital commerce, payments, advertising, streaming of content, and information intelligence, are likely to keep compounding at double digit growth rates for the foreseeable future.

No wonder there is much excitement and people feel increasing pressure to participate in wealth creation that is taking place in those fields. While many intelligent capital allocators understand the value that is to be found in investing in internet-enabled businesses, the fear of timing and valuation has been high for years. The shift in thinking and the new mental models required to transition from linearly growing companies to some of the most scalable business models is hard. It becomes even harder when having to do the homework in an echo chamber of worried market observers constantly pointing at rising stock prices combined with the ‘I told you so’ crowd that are flourishing nowadays.

All in all, we are convinced that the podium on which we are focused – the data-driven, cloudnative, founder-led, businesses that enable people to play and work digitally – is where the magic happens for a long time to come. What matters to us is whether the businesses are worth at least double in 2025. We think that when we will be looking back at today’s prices in 2030, they will likely look like bargains for several businesses.”

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Our calculations show that Cloudflare, Inc. (NYSE:NET) failed to obtain a mark in our list of the 30 Most Popular Stocks Among Hedge Funds. NET was in 50 hedge fund portfolios at the end of the third quarter of 2021, compared to43 funds in the previous quarter. Cloudflare, Inc. (NYSE:NET) delivered a -28.51% return in the past 3 months.

In August 2021, we also shared another hedge fund’s views on NET in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.