Should You Consider Investing in Cellebrite (CLBT)?

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 Cellebrite DI Ltd. (NASDAQ: CLBT) and discussed its stance on the firm. Cellebrite DI Ltd. is an Israel-based digital intelligence company with a $1.1 billion market capitalization. CLBT delivered a -21.82% return since the beginning of the year, while its 12-month returns are down by -41.94%. The stock closed at $6.27 per share on January 31, 2022.

Here is what Greenhaven Road Capital has to say about Cellebrite DI Ltd. in its Q4 2021 investor letter:

“Cellebrite (CLBT) is a recent SPAC/carve-out from a Japanese company, Sun Corporation. The sponsor of the SPAC is Adam Clammer, who spent 18 years in growth investing at KKR. The company is in the Digital Intelligence “DI” space, and their customers are primarily government agencies and law enforcement (state and local) who use their products to extract and manage data from cell phones. From a quantitative perspective, Cellebrite checks a lot of boxes. They have a broad base of customers with an installed base of over 5,000 public safety and 1,700 enterprise customers. The company is growing revenue at 25%, but that is understated as users shift from licenses to SAAS. Net revenue retention is over 140% and recurring revenue is growing over 30% per year. As both the frequency and amount of data collection rises, the company benefits from secular tailwinds and their solutions have a large ROI for end customers as they allow technical personnel, which are the constrained resource, to be more efficient. Cellebrite has 80% gross margins and is seizing on the opportunity to sell more seats and more modules to existing customers, estimating that they are 20% penetrated on their current base. Shares are currently trading for less than 5X 2022 revenues, which is a >50% discount to peers in the DI space. I like our chances for continued growth and even multiple expansion over time.”

Photo by Hack Capital on Unsplash

Our calculations show that Cellebrite DI Ltd. (NASDAQ: CLBT) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. CLBT was in 18 hedge fund portfolios at the end of the third quarter of 2021, compared to 0 funds in the previous quarter. Cellebrite DI Ltd. (NASDAQ: CLBT) delivered a -43.00% return in the past 3 months.

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.