Greenhaven Road Capital, an investment management company, released its first quarter 2024 investor letter. A copy of the same can be downloaded here. In the first quarter, the Fund returned approximately 2%. In the short term, most share price fluctuations are due to changes in investor sentiment. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Greenhaven Road Capital featured stocks like Cellebrite DI Ltd. (NASDAQ:CLBT) in the first 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. On May 3, 2024, Cellebrite DI Ltd. (NASDAQ:CLBT) stock closed at $10.72 per share. One-month return of Cellebrite DI Ltd. (NASDAQ:CLBT) was -3.94%, and its shares gained 96.70% of their value over the last 52 weeks. Cellebrite DI Ltd. (NASDAQ:CLBT) has a market capitalization of $2.201 billion.
Greenhaven Road Capital stated the following regarding Cellebrite DI Ltd. (NASDAQ:CLBT) in its first quarter 2024 investor letter:
“Cellebrite DI Ltd. (NASDAQ:CLBT) – Cellebrite is another technology company, making its results also not inevitable, but I do like their prospects The company says their “end-to-end platform helps investigative teams in both public and private sectors close cases faster, smarter, and more defensively than ever before.” As we have discussed in recent letters, Cellebrite benefits from two trends that seem unlikely to dissipate. The first is that digital evidence is continuing to grow in forms and complexity including text, photo, voicemail, video, geolocation, contacts, emails, Snapchats, Instagram, and crypto. The second trend is that law enforcement agencies are undermanned with technology-proficient employees such that third-party technology tools offer their most realistic path to collect, analyze, and handle the digital evidence. Investigators cannot just throw bodies at the growing mountain of digital evidence; they need tools.
Cellebrite sells tools to extract, analyze, and manage digital evidence, making their users more efficient and effective. Despite this mission-critical offering, Cellebrite typically represents less than 1/10 of 1% of their customers’ budgets. Without pulling the pricing lever and not fully benefitting from the new product cycles, the company has grown ARR like a drum beat for the last four years as it transitioned their business model from perpetual licenses to SAAS. At the recent analyst day, Cellebrite demonstrated products that radically increase investigator efficiency with improved search tools and the application of artificial intelligence. That is the first time I have used the term artificial intelligence in a letter. It sounds so promotional it makes my skin crawl, but I promise you that the tools they demonstrated can dramatically improve efficiency of investigators and should be very high ROI for the customers. A competitor’s price increase created even more room for Cellebrite to raise their own. Rational customers will pay more. Prices are going up which should fuel growth which will be further enhanced by new products.
Cellebrite has an enterprise value of less than $2B. They will likely end the year with just under $400M of annual recurring revenue and last year generated almost $100M in free cash flow. Can the multiple compress? Sure. But if we wait, we own a growing, cash flowing, below market multiple, enduring secular tailwinds company entering a new product cycle which will last years, all while operating in a limited competitive landscape and selling products their customers desperately need. This is not selling water in the desert, but the customers are certainly thirsty.”
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, 28 hedge fund portfolios held Cellebrite DI Ltd. (NASDAQ:CLBT) at the end of the fourth quarter which was 23 in the previous quarter.
We previously discussed Cellebrite DI Ltd. (NASDAQ:CLBT) in another article, where we shared Greenhaven Road Capital’s views on the company. Greenhaven Road Capital maintains a positive outlook on Cellebrite DI Ltd. (NASDAQ:CLBT) due to its limited competition and high demand for its products as discussed in its Q4 2023 and current letter. In addition, please check out our hedge fund investor letters Q1 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.
