Greenhaven Road Capital, an investment management company, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The Fund returned approximately +15% in the third quarter, bringing year-to-date returns to approximately +12% net. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Greenhaven Road Capital highlighted stocks like Cellebrite DI Ltd. (NASDAQ:CLBT) in the third quarter 2024 investor letter. 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 -1.05%, and its shares gained 124.50% of their value over the last 52 weeks. On November 14, 2024, Cellebrite DI Ltd. (NASDAQ:CLBT) stock closed at $17.96 per share with a market capitalization of $3.859 billion.
Greenhaven Road Capital stated the following regarding Cellebrite DI Ltd. (NASDAQ:CLBT) in its Q3 2024 investor letter:
“Cellebrite DI Ltd. (NASDAQ:CLBT) – We have owned Cellebrite for approximately three years. The company remains the go-to software solution for law enforcement to access and analyze cell phone data for criminal cases. Product enhancements have improved and broadened the value proposition, and the company has raised prices and sold more “seats” as they have delivered more value to their customers. We began buying shares in October 2021 and averaged down from there. In the period we have owned the shares, ARR (annual recurring revenue) has grown from $187M to $345M while remaining profitable. The company took out the SPAC warrants.
I do think it is worth articulating a medium-term possibility for Cellebrite. The company’s products are used to extract evidence from digital devices, analyze the data, and ensure that search warrants are complied with. The demand for Cellebrite’s tools to analyze encrypted data from advanced cell phones and other devices is likely to persist at high levels for a long time. Can you really imagine an investigation where the subjects cell phone is not looked at for geolocation data, calls, emails, texts, photos, or web browsing history?
If you believe, as I do, that distribution will be critical for vertically focused AI products, Cellebrite is perfectly positioned. The company has products and relationships in just about every major law enforcement agency. AI is the buzzword of buzzwords, but Cellebrite customers have extensive case backlogs and human capital shortages that are ripe for additional tools. Cellebrite is already touching the data and has required guard rails in place to ensure legal compliance with constraints like search warrants. If you have played with the recent AI tools like Perplexity Pro or NotebookLM, which can parse enormous amounts of data, it is not hard to envision use cases for law enforcement struggling with exploding amounts of data. Cellebrite has a large opportunity in front of them to sell increasingly more powerful tools into law enforcement. If their products can solve more cases and provide labor efficiencies, customers will pay. Cellebrite is well positioned to develop and sell the next generation of AI analytics tools. If well-built the productivity gains will allow them to raise prices, raise prices again, and then raise them again while still delivering great value to their customers.”
A female engineer in a datacenter, wearing a headset, monitoring digital data.
Cellebrite DI Ltd. (NASDAQ:CLBT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Cellebrite DI Ltd. (NASDAQ:CLBT) at the end of the second quarter which was 32 in the previous quarter. At the end of September, Cellebrite DI Ltd.’s (NASDAQ:CLBT) ARR grew 26% year-on-year to $371 million. 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 Q3 2024 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.
