A few months ago, Jon Jacobson gave a damning opinion of the REIT, calling DLR a short opportunity. The varied arguments were that it’s a commodity (no moat) business, the fundamentals are deteriorating, and larger cloud-based competitors like Amazon, Microsoft, or Google can move in as essentially unstoppable larger competitors. The most specific argument was that the REIT substantially understates its real capital expenditures, and when his estimate for the capital expenditures is factored in, then FFO and therefore the fair value is substantially lower than the current trading price.

On the other hand, Gary Brode from Silver Arrow presented a bullish case for the REIT, and countered Jacobson’s short thesis. He provided opposing arguments for some of the arguments that it’s a short, such as stating that Amazon, Microsoft, and Google are not really direct competitors, and pointing out that the estimate for higher capital expenditures is based on faulty assumptions, and that the REIT is in fact properly reporting its real capital expenditures on its income statement.