7 Stocks Billion Dollar Hedge Fund Voss Capital Is Crazy About

4. SolarWinds (NYSE:SWI)

Value of Voss Capital’s 13F Position (6/30/2024): $44 million

SolarWinds (NYSE:SWI) provides software that facilitates the management of computer networks. According to Voss, SolarWinds (NYSE:SWI) as of May was transitioning from selling software to providing subscriptions to a hybrid cloud offering and a cloud solution.

Voss noted that SolarWinds (NYSE:SWI)’s margins were very high, while its revenue growth was beginning to accelerate.

In the third quarter, however, SolarWinds (NYSE:SWI)’s sales rose just 6% versus the same period a year earlier to $200 million. However, its adjusted EBITDA did jump 13% year-over-year to $96 million, while its gross margin came in at a very high 89.5%, up from 88.7% in Q3 of 2023.

On Dec. 19, Wedbush Securities initiated coverage of SolarWinds (NYSE:SWI) stock with an Outperform rating and a $19 price target. According to Wedbush, SolarWinds (NYSE:SWI) is well-positioned to benefit from companies’ needs to access their data from multiple environments.

Voss wrote that there a high chance of SolarWinds (NYSE:SWI) receiving a takeover offer “within the next year or so.”

Analysts, on average, expect SolarWinds (NYSE:SWI)’s earnings per share to fall slightly to $1.07 in 2025 from $1.09 in 2024.

The shares have climbed 17% since May 24.