Stock Prediction Algorithm: DFT Merger Causes Explosive Growth

Quick Win by the Algorithm

On June 1st, 2017, the I Know First algorithm issued a bullish forecast for DuPont Fabros Technology, Inc. (NYSE:DFT). DFT had a signal of 16.40 and a predictability of 0.12. As a result, in accordance with the forecast, the company’s stock had a return of 16.82% within 1 year, showing a quick win by the algorithm.

stock prediction

Lammet J. du Pont and Hossein Fateh founded DuPont Fabros Technology Inc. in 1997 as a real estate business focused on commercial development opportunities. Headquartered in Washington, D.C., the company decided to pivot and focus on building and managing data centers. The founders launched the company as DuPont Fabros Technology in 2007. It went public as a real estate investment trust (REIT). DFT’s customers include domestic and international companies across multiple industries. DFT operates 11 data centers in three markets in the United States. At its IPO, DFT ranked as the largest American IPO by a REIT year to date.

Quick Win

On June 9th, 2017, DuPont Fabros Technology announced that it would be engaging in an all-stock merger with Digital Realty Trust (NYSE: DLR). The companies announced a merger value of $7.8 billion, including assumed debt. By these numbers, DuPont Fabros’ shareholders received a fixed ratio of 0.545 DLR shares. Analysts value this at between 15%-18% premium.

This has caused DFT stock to rapidly climb to around $64, based on Digital Realty’s offer, which sets each share’s value to $63.60. The equity value of the deal is around $4.95 billion, based on DuPont Fabros’s 77.8 million shares outstanding.

Digital Realty is a company which works with datacenter acquisition, ownership, development and operation. The company held an IPO in 2004 and has since grown to include 228 properties. These add up to 18.3 million square feet.

By merging with DFT, Digital Realty hopes to add to its presence in high-growth data center markets such as Northern Virginia, Chicago, and Silicon Valley. Furthermore, both companies expect the merger to save $18 million annually in overhead expenses. Hence, combined, the two companies will have a larger operation which will have more financial flexibility and other benefits.

In addition, since the two companies will no longer be competing, DuPont Fabros’ large development pipline of properties in existing DLR markets will now lead to revenue growth. This is since the properties under construction are just 48% pre-leased.

This merger has since led DFT to continuously growing stock value. Given these factors, one can see why DFT has had such an impressive increase.

This bullish forecast on DFT was sent to current I Know First subscribers on June 1, 2017. 

Before making any trading decisions, consult the latest forecast as the algorithm constantly updates predictions daily. You can use the algorithm for intra-day trading. The predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.