Greenhaven Road Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. The fund returned approximately -9% net for the fourth quarter, bringing the full-year net return to approximately 3%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Greenhaven Road Capital, in its Q4 2021 investor letter, mentioned Digital Turbine, Inc. (NASDAQ: APPS) and discussed its stance on the firm. Digital Turbine, Inc. is an Austin, Texas-based software company with a $4.2 billion market capitalization. APPS delivered a -27.61% return since the beginning of the year, while its 12-month returns are down by -26.17%. The stock closed at $44.15 per share on January 31, 2022.
Here is what Greenhaven Road Capital has to say about Digital Turbine, Inc. in its Q4 2021 investor letter:
“Digital Turbine (APPS) – In 2021, digital advertising company Digital Turbine completed 3 acquisitions that allow them to control the mobile advertising process from end to end. The company enjoys technology advantages by being preinstalled on devices, as well as first-party data advantages from their carrier partnerships. At their most recent analyst day,
Digital Turbine laid out a path to quadrupling revenues and growing EBITDA by 10X in the next three to five years. Given today’s starting multiple of less than 8X this year’s expected gross profits, anything approximating achieving their “plan” should yield very attractive returns over time. Reasons for optimism include the fact that their software is currently installed on less than 20% of mobile phones, providing a notable growth opportunity for existing technology without additional capital spending. The company also has opportunities to increase the number of carriers and phone manufacturers that they work with, as well as the number of services each carrier purchases.
Digital Turbine also has a massive opportunity with their SingleTap technology, which dramatically improves the likelihood that an app is installed when a user clicks on its SingleTap-enabled ad. SingleTap has grown to a $100M+ business with just 15 customers. At their analyst day, Digital Turbine’s Chief Revenue Officer charted the path to “…really accelerate this into a $1 billion-plus business over the next few years.” In his words, “[t]he way we see this is a very relatively moderate growth from 15 advertisers to 150, which, by the way, represents only a subset of our total advertiser customers today at Digital Turbine.” The current run rate revenues for the entire company are $1.2B per year, so growing SingleTap to $1B in revenue itself would nearly double company revenue overall. This doubling only requires blocking and tackling on an existing product with a very high value proposition to a subset of customers; it does not require a moonshot invention. The SingleTap technology could also be licensed to other platforms such as Snap and Meta (Facebook). At an investor conference in December, management tried to highlight their announcement that Facebook was live-testing SingleTap, which could be a very big deal since Facebook is the second largest distributor of Android apps (Digital Turbine’s priority). The market yawned, and the shares ended down…” (Click here to see the full text)
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Our calculations show that Digital Turbine, Inc. (NASDAQ: APPS) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. APPS was in 19 hedge fund portfolios at the end of the third quarter of 2021, compared to 30 funds in the previous quarter. Digital Turbine, Inc. (NASDAQ: APPS) delivered a -51.70% return in the past 3 months.
In November 2021, we also shared another hedge fund’s views on APPS in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
