This week's mid-year update of our Data Center Investor leaderboard showed Equinix (EQIX) leading the pack with a gain of 73 percent in the first half of 2012. The colocation company has had its share of skeptics over the years, but none more prominent than Jim Cramer, the colorful CNBC stock market pundit.
That got me wondering how Cramer's sell calls on the data center sector have worked out. First, some background:
On Oct. 22, 2009, Cramer warned his legions of viewers that the data center industry was ready for a fall. “Get out of the data center stocks,” Cramer told viewers. “I think the data center industry is in decline. I see an industry that’s about to be brought low by new technology, so I think you should sell, sell, sell.” We found the rationale for his prediction to be imbued with goofiness, and said so (See There’s a Village Somewhere Missing an Idiot for the full story).
He doubled down on that call in January 2011, focusing on colcoation provider Equinix. “I would be a seller of EQIX because I don’t think the data centers, the physical space, is going to grow the way people think,” Cramer opined during the “Lightning Round” segment of his show.
For all those investors that followed Cramer’s “sell, sell, sell” recommendation, here’s what you missed:
Since Cramer's call in 2009, every public data center company but Limelight Networks has outperformed the Dow (up 28 percent), S&P 500 (up 27.7 percent) and NASDAQ index (up 38.7 percent). That strong performance extends beyond the three major industry acquisitions. Shares of Equinix have soared 88 percent in that period.
This apparently has prompted Cramer to finally reconsider his position. Paolo Gorgo noted comments from Cramer following Equinix' first quarter earnings:
"The huge number from Equinix bodes well for a continuation of the big data, big cloud secular growth stories," Cramer said in April. "I regard EQIX, like F5 (FFIV), as an integral manager to all of the data on the Web and where it gets stored."