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Cloud Stocks Again Lagged Equity Benchmarks in 1H2014

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
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on Wednesday, 09 July 2014 in MGI Quant

As was the case in 2013, during the 1H2014 equities of cloud companies have lagged broad market benchmarks. In 2013, the 2nd half of the year reversed the trend - cloud equities not only caught up but also outperformed the market finishing the year up over 32.22% vs. S&P 500 up 29.69%.

As of July 7th 2014, MGI Cloud 30(tm) Index - a portfolio of 30 leading cloud related equities, was at $273.97 - down 4% on a YTD basis.

While the broad market benchmarks have also had a stormy 1H2014, on YTD basis S&P 500 squeezed out a 2.27% gain by July 7 2014.

 

 

 

 

 

 

 

 

On a cumulative basis since we have begun tracking MGI Cloud 30 Index, the cloud stocks have vastly outperformed general markets. Since late 2009 when we first created and began tracking MGI Cloud 30, the index has gained almost 174% on a cumulative basis. During the same period, S&P 500 advanced by 69.66%.

During the period from late February to early-mid May of 2014 we have seen MGI Cloud 30 correct by about 28% (peak to trough), followed by a recovery back to the long-term trendline.

A similar and more dramatic sell off took place in 2011 with a 33% correction which was then followed by a reversal to the mean and an outperformance with an over 2% gain in 2011 and a 33% gain in 2012.

Cloud adoption continues to grow - it is a steady process with an increasing number of buyers. The growth in cloud far outpaces GDP growth, inflation and growth in IT budgets.

Marketo (NASDAQ:MKTO) replaced Vocus (NASDAQ:VOCS) as an index component as Vocus was taken private by GTCR for $18 per share.

For additional information, index composition, data or index licensing, please contact MGI Research at 888-801-3644.

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