Greenhaven Road Capital, an investment management company, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The firm stated in its Q3 2024 letter that with a concentrated portfolio of idiosyncratic companies returns are expected to come in chunks, with progress being made and multiple multi-baggers holding potential. The expectation was paid off in Q4 with another chunk. The fund returned approximately 13% in the quarter bringing yearly returns to 27%. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, Greenhaven Road Capital emphasized stocks such as Cellebrite DI Ltd. (NASDAQ:CLBT). Headquartered in Petah Tikva, Israel, Cellebrite DI Ltd. (NASDAQ:CLBT) is a software company that develops solutions for legally sanctioned investigations. The one-month return of Cellebrite DI Ltd. (NASDAQ:CLBT) was -27.25%, and its shares gained 57.16% of their value over the last 52 weeks. On March 5, 2025, Cellebrite DI Ltd. (NASDAQ:CLBT) stock closed at $18.34 per share with a market capitalization of $3.94 billion.
Greenhaven Road Capital stated the following regarding Cellebrite DI Ltd. (NASDAQ:CLBT) in its Q4 2024 investor letter:
“Cellebrite DI Ltd. (NASDAQ:CLBT) – Cellebrite has a decade-long history of growing quickly and profitably and is a Rule of 50 company (growth rate + EBITDA margin), growing their recurring revenue by 26% while maintaining EBITDA margins of 24%. I believe this trend should continue as they are in the beginning of an upgrade cycle: management expects 15% of the customer base to have upgraded in 2024, leaving a long runway for 2025 and 2026. The company should accelerate its federal opportunity by obtaining FedRamp certification in 2025, which will make it easier for Federal customers to purchase Cellebrite products. Even without FedRamp, the U.S. Federal government represents more than 30% of revenue.
As discussed in previous letters, I believe Cellebrite will be a large beneficiary of AI as they are integrating it into their products, and I believe they are well-positioned to dramatically increase customer productivity. They have distribution, data, and guardrails to make sure only the proper data is analyzed. Since agencies are constrained on hiring talent, software is the most viable path to reducing case backlogs and increasing closure rates (the KPIs of Cellebrite’s customers). Cellebrite should be able to capture some of the incremental value they will deliver.
While I have little doubt that Cellebrite will “get there,” I do wonder who the CEO will be and if it will remain an independent public company. After 20 years at the helm, Yossi Carmil stepped down from the CEO role at the end of 2024, announcing the plan after reporting Q3 revenues exceeding $100 million. Good for him! Cellebrite’s Executive Chairman of the Board, Tom Hogan, has stepped into the interim CEO role. Tom has a long history in software and was an operating partner at Vista Equity, which has a great playbook for optimizing software companies. I speculate that Tom will become the permanent CEO and may, in the medium term, try to sell the company to Axon Enterprise (AXON), which is a 5% shareholder.”
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, 34 hedge fund portfolios held Cellebrite DI Ltd. (NASDAQ:CLBT) at the end of the fourth quarter compared to 30 in the third quarter. For the full year, Cellebrite DI Ltd.’s (NASDAQ:CLBT) ARR grew 25% year-on-year to $396 million driven by increased spending within its installed customer base. While we acknowledge the potential of Cellebrite DI Ltd. (NASDAQ:CLBT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Cellebrite DI Ltd. (NASDAQ:CLBT) and shared Greenhaven Road Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.