We recently compiled a list of the Tiger Global’s 15 Long-Term Stock Picks. In this article, we are going to take a look at where Datadog, Inc. (NASDAQ:DDOG) stands against the other stock picks.
Even as the venture capital efforts of Tiger Global Management come under increased scrutiny on the back of reportedly disappointing post-pandemic performance, the 13F portfolio of the fund seems to be performing exceedingly well to taper over these concerns. From the beginning of 2023 through to the end of the first quarter of 2024, the public long positions of the fund returned more than 80% to investors. These were dominated by prominent stakes in hyperscalers riding the AI boom. The rate of return posted by the fund was more than double the returns of the benchmark S&P 500 over the period. In contrast, a recent report by news publication Bloomberg reveals that the sixteenth private markets fund of Tiger Global, which set out with a target to raise more than $6 billion in funding back in 2022, closed with $2.2 billion in funding earlier this year. Tech news platform TechCrunch reports that the VC efforts of Tiger Global are suffering from a reputation of making bad bets during the pandemic.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
Even though perfectly-timed bets on tech stocks are the claim to fame for Tiger Global in the past few years, a team from the fund recently noted in an investor letter that 30% of its exposure sits in businesses other than the AI-driven tech sector. Per the fund, these positions have roughly doubled over the last fifteen months with an 80% hit rate. Compared to these astute bets, the venture capital efforts of the company paint a grimmer picture. For example, a recent report by the California State Teachers’ Retirement System reveals that the paper losses on the fifteen private markets fund stood at more than 15% at the end of June 2024. This fund had raised more than $12.7 billion back in 2021 to invest in high growth areas. Data from PitchBook Benchmarks shows that the steep losses of this fund place it in the bottom 10% of all venture funds raised in 2021.
However, there is still time for some of these investments to bear fruit in the long term. The investment team at Tiger Global is certainly losing no sleep over these numbers. In a letter to investors, the fund has noted that the private holdings of the fund generated positive returns in the first quarter of 2024. This year, the VC arm of Tiger Global has invested in many prominent startups, including Waymo, OpenAI, Scale AI and Wiz. The Tiger Global team stressed in the letter that a meaningful portion of the private exposure of the public fund is concentrated in global market leaders who are performing well and awaiting attractive opportunities to go public. The team further added that it was also encouraged by the signs of life in the IPO market following relative dormancy over the last two years.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we selected stocks by combing through the 13F portfolio of Tiger Global Management at the end of the third quarter of 2024. Only the companies that have been in the 13F portfolio of the fund consistently for the past three years were selected. These stocks are also popular among other hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a laptop with a software engineer coding on the monitor.
Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 71
Datadog, Inc. (NASDAQ:DDOG) provides monitoring and analytics services. The firm specializes in cloud computing and AI-powered cybersecurity products. Stifel analyst Brad Reback recently raised the price target on the stock to $165 from $141 and kept a Buy rating on the shares. After a bumpy start to 2024, the year is ending on a higher note for the enterprise software group, driven by stabilizing-to-modestly accelerating top-line growth rates along with relatively attractive mid-year multiples, earlier signs of AI monetization, especially among the largest software companies, declining interest rates and solid economic growth and a safe haven status post the election given limited, to no, tariff or China exposure, the advisory told investors in a 2025 preview for the group.
Datadog, Inc. (NASDAQ:DDOG) remains one of the top long-term stock picks of Tiger Global. The stock has featured in the 13F portfolio of the fund since late 2019. Since then, Tiger Global has gradually increased its stake in the firm, climbing to a high of close to 6 million shares in the third quarter of 2022. Latest filings show that the fund owned just over 979,000 shares in the company at the end of the third quarter of 2024 worth over $112 million, representing close to 0.50% of the entire 13F portfolio.
Overall DDOG ranks 10th on our list of Tiger Global Management’s long-term stock picks. While we acknowledge the potential of DDOG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DDOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.