Stories

We’re looking into the cloud. See what we see.

The power of thematic investing is the ability to cross sectors and industries to pursue less obvious beneficiaries of thematic tailwinds.

Facts

  • In 2010, data created every two days exceeded the total amount of information created from the dawn of civilization through 2002.
  • By 2014, that same amount of data was created every 10 minutes.
  • 90% of all the data in the world has been created in the past two years.
  • 99.4% of physical objects (everything from video cameras to temperature sensors) that may one day be connected the internet are still unconnected.
  • Today, a computer not much larger than a grain of salt can include a solar cell, battery, memory, pressure sensor, wireless radio and antenna.

Insights

  • The enormous amount of data being created has no value until it is contextualized and processed into useful knowledge.
  • The “cloud” is a metaphor for the virtualization of data storage and processing through the Internet. It is technology that is essential and invisible.
  • The “cloud” is characterized by the ability to access and process data independent of location and device, taking advantage of economies of scale and high performance remote computing power.
  • The provision of “cloud” services is consolidating in a select group of companies with almost all other companies and enterprises outsourcing to these few providers.

Action

  • We invested in one of the largest “cloud” services providers, which just happened to also be one of the world’s largest online retailers.
  • Some clients who outsource data storage include: NASA, General Electric, Netflix, the CIA, Johnson & Johnson and the NASDAQ Stock Market.
  • Part of a multifaceted company, the cloud services division is one of the fastest growing and most profitable.

Chevy Chase Trust’s thematic research led it from the theme of Transformative Technologies to a retail company with an under-appreciated technology business.

August 2015