https://www.digitalbridge.com/

Last earnings presentation: https://ir.digitalbridge.com/static-files/00b760b1-0bd0-466a-b4c1-91f29f345369

This is not financial advice. Do your own dd.

Summary:

DigitalBridge is a former traditional reit transforming into a digital reit. They are now 85% digital and will be 100% digital by the end of the year. Their CEO, Marc Ganzi, has been executing the rotation of assets with perfection. They expect to reinstate the dividend early next year.

The stock went up a lot (from under 2$ to 7$ now), but the company is still really under-appreciated. It is still unknown by most people, hasn't gotten media attention and is still valued as a traditional reit instead of a digital one. Average analyst price target is ~10$. The current market cap is 3.5b, but should be 8-10b in my opinion. Institutions own 85%+ of the shares.

Digital infrastructure is the most under-appreciated theme in the market in my opinion. People think about cloud stocks, autonomous vehicles stocks etc., but don't think about the infrastructure needed to support these technologies. The next decade will be marked by automation and the device to device connection. Smart warehouses, ports, logistics, artificial intelligence, smart homes, autonomous cars. These can’t work without digital infrastructure.

DBRG is a mix of an asset manager and a digital reit. They raise capital from institutional investors and invest it for them (they receive a management fee and they co-invest along with them). They also buy and operate companies that are on their balance sheet. So they are a mix of Blackstone/KKR and AMT/CCI/DLR.

They are the only digital reit to own digital infrastructure assets across the whole ecosystem (towers, small cells, fiber and data centers). AMT, CCI and the others, only invest in one or a few of those. DBRG is growing fast and is global.

Marc Ganzi, the CEO, is a big part of their success so far. He has over 27 years of experience in digital infrastructure. Once DBRG is 100% digital, Ganzi will be the first one ever to rotate 100B of assets in 24 months. He wants to grow the company to the biggest digital reit in the world. He will get a compensation package of 100m$ if the stock trades above 10$ for 90 straight trading days.

Catalysts:

• They are expecting to sell their wellness portfolio in the months ahead. It will reduce ~2.6B of debt and will give them 600m+ in cash. They will use this cash to invest in more digital infrastructure.
• They already started to monetize their BRSP shares and will continue in the next months. It will give them around 400-450m of cash.
• Ganzi mentioned that they will reinstate the dividend early next year.
• 100% digital by end of year. Investors will then value the company as a digital reit so they will get a premium. They will be valued in line with their peers (amt, cci, dlr, eqix).
• Less important, but the short interest is at 15% with 58m shares sold short.

To cap it off, I see this as a really undervalued business and an under-appreciated story (the company itself and the digital infrastructure secular theme). I see this like buying AMT in its early days when it was under 10$.