Datadog (DDOG) has been my "sleeper" cybersecurity pick since last October when we bought it in the $80s for my TAZR Trader service.

DDOG is a data analytics company that makes tools for monitoring infrastructure and application performance, but their deep IT expertise and integrations for the Fortune 1,000 mean that they also guard the borders and the interior of enterprise data.

On October 16, I published a special report for Zacks Confidential members titled "State of Threat: Cyber Crime 3.0" where I highlighted the evolving sophistication of global threat actors wreaking havoc for all kinds of companies, including most recently MGM Resorts, 23andMe, and Flagstar Bank of Michigan.

In that report, I explained how "ransom ware" attacks just went full ICBM with state-sponsored infrastructure and weapons. If you want a copy, just email Ultimate@Zacks.com and tell 'em Cooker sent you for Cyber Crime report.

Here’s what I wrote when I bought DDOG for my TAZR Trader group in early October...

TAZR Portfolio is buying a starter position in Datadog between $85 and $90. We would add to this Zacks #1 Rank on any drop after earnings 11/7.

While DDOG is largely a data monitoring and analytics platform, Piper Sandler recently made it one of their top 5 cybersecurity picks as an end-to-end observability and cloud security platform. The Piper team has a price target for DDOG shares at $115, implying over 25% potential upside.

Data is the gold of this new digital age and we need look no further than the recent acquisition of Splunk by Cisco to see what enterprises are willing to invest to stay ahead.

Back in October, I also made an important note about one of the best private buy-and-hold hedge funds on the planet...

Baillie Gifford Stakes a Big DDOG Claim

One of my favorite institutional Technology investors, Baillie Gifford, increased their Datadog position by 70% in Q2 (2023) to make them the 3rd largest holder, behind Vanguard and BlackRock, with over 10 million shares.

If you've seen my pieces on those Scottish Warlords of Edinburgh, you know they are buy and hold fanatics who do deep research, especially in novel technology platforms like Tesla (TSLA).

So while we can see they would have been buying DDOG shares between $60 and $90 in Q2, I don't expect to see that they turned sellers in Q3. In fact, they were probably buying again on the earnings August gap down.

(end of notes from last October)

Where is Baillie Gifford Now?

While my followers enjoyed the rally up above $130 for DDOG shares this year, and we tried another recent buy at $114 for a potential swing back up there, July was not a pretty sight for any technology investors.

I don't know exactly what the Scottish Warlords of Edinburgh did in the past month, but I can tell what they didn't do in Q2 of 2024.

The didn't sell DDOG. Well, only 1.3% of their stash anyway. As of June 30, they still held nearly 9.5 million shares.

Since July 17 when the Nasdaq started its waterfall into a bear market, and CrowdStrike (CRWD) stunk up the joint with a big "user error," here is how "the guard dog of data" held up vs the other two (based on Monday's closes)...

CRWD: -40%

QQQ: -12%
DDOG: -20%

Not too shabby. Based on the fact that DDOG had a lower-beta correction than most tech stocks, I'm guessing "BG" didn't panic in the last month. And on Monday, I'm so confident that they were buyers in the Bank of Japan panic, I'm going to buy shares again myself before DDOG reports on Thursday August 8.

In fact, BG warriors might have had even more conviction after the "crowd de-funding" debacle that shut down Delta before the weekend of July 19-22.

But Wait -- There's More!

Last week BTIG upgraded Datadog to Buy From Neutral with a $143 price target. The average PT among 33 analysts, as of last Friday, is $145, representing 38% upside.

And as I write on Tuesday afternoon, Akamai Technologies (AKAM) announced it formed a partnership with Datadog for a new security offering with the integration of Datadog's security information and event management technology with Akamai's Zero Trust services.

The integration is expected to offer clients enhanced visibility, improved threat detection and response, and compliance and regulatory adherence, among other benefits.

Bottom line: Buy "the guard dog of data" before earnings and let's see if we get another beat-and-raise ripper like we saw last November when all Street expectations were way too low. Near $105, you're getting a 22% topline grower that is trading just over 11X forward sales. And it's profitable growing EPS at 16.5% this year and next.

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