Greenhaven Road Capital, an investment management company, released its fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the Fund returned approximately 15%, bringing the full-year returns to approximately 51%. The reason for all of the Q4 returns was perseverance along with multiple expansions during the quarter as investors were willing to pay a higher P/E or P/S for the same underlying company. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Greenhaven Road Capital featured stocks such as Cellebrite DI Ltd. (NASDAQ:CLBT) in the fourth quarter 2023 investor letter. Headquartered in Petah Tikva, Israel, Cellebrite DI Ltd. (NASDAQ:CLBT) is a software company that develops solutions for legally sanctioned investigations. On February 14, 2024, Cellebrite DI Ltd. (NASDAQ:CLBT) stock closed at $9.68 per share. One-month return of Cellebrite DI Ltd. (NASDAQ:CLBT) was 16.21%, and its shares gained 62.69% of their value over the last 52 weeks. Cellebrite DI Ltd. (NASDAQ:CLBT) has a market capitalization of $1.911 billion.
Greenhaven Road Capital stated the following regarding Cellebrite DI Ltd. (NASDAQ:CLBT) in its fourth quarter 2023 investor letter:
“Cellebrite DI Ltd. (NASDAQ:CLBT) – The company sells software tools to law enforcement agencies to collect and review data from cell phones, benefitting from the increasing types and volumes of data including geo location, photos, texts, emails, and social media. Cellebrite has built a wonderful business and is the scaled provider with a limited competitive landscape. One of their competitors was bought out by Thoma Bravo and has proceeded to increase prices in certain geographies by 30%+. I think Cellebrite will pull the price lever over the next three years but do it in a more subtle way – through new products with greater functionality. This is an ongoing process; they are rolling out their new Insight product, which is designed to sell more seats. They should also continue to gain traction with their case management and Pathfinder analytics products. As an example, Pathfinder, which helps make sense of all the data, now has a 30% attach rate, but only a mid-single-digit penetration rate. I believe that cross-sells of Pathfinder will fuel growth.
Law enforcement agencies are struggling with case closure rates, backlogs, and hiring technologically sophisticated employees, all while facing an ever-growing wave of data, priming the market for new products, cross-sells, and price increases. Selling new products with increased functionality for higher prices should satisfy customers and fuel growth.
In the short term, I think it is quite possible that the market will begin to appreciate the quality of the Cellebrite business: their products are truly mission-critical, the competitive landscape is limited, the value proposition is high, and there is a pricing umbrella. The company’s net dollar retention has consistently been above 120%. CLBT trades at 4X EV/CY 24 ARR (annual recurring revenue), a significant discount to a peer group average of more than 7x. Like PAR, we have the opportunity for revenue growth, earnings growth, and multiple expansion in 2024.”
A female engineer in a datacenter, wearing a headset, monitoring digital data.
Cellebrite DI Ltd. (NASDAQ:CLBT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held Cellebrite DI Ltd. (NASDAQ:CLBT) at the end of third quarter which was 22 in the previous quarter.
We discussed Cellebrite DI Ltd. (NASDAQ:CLBT) in another article and shared Light Street Capital’s top stock picks. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
