Lookback: Greenhaven Road Capital’s 2019 Etsy (ETSY) Thesis

If you are looking for the best ideas for your portfolio you may want to consider some of Greenhaven Road Capital‘s top stock picks. Greenhaven Road Capital, an investment management firm, is bullish on Etsy Inc (NASDAQ:ETSY) stock. In its Q3 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Etsy Inc (NASDAQ:ETSY) stock. Etsy Inc (NASDAQ:ETSY) is an e-commerce website.

On October 13, 2019, Greenhaven Road Capital had released its Q3 2019 investor letter. Etsy Inc (NASDAQ:ETSY) stock has posted a return of 224% in the trailing one year period, outperforming the S&P 500 Index which returned 15.4% in the same period. This suggests that the investment firm was right in its decision.

Greenhaven’s fund posted a return of less than 1% in the third quarter of 2019, underperforming the S&P 500 Index which returned 1.7% in the same quarter. Let’s take a look at comments made by Greenhaven Road Capital about Etsy Inc (NASDAQ:ETSY) in the Q3 2019 investor letter.

“Our “bet” on Etsy (ETSY) is also one on status quo/trend continuation. The thesis is that Etsy will remain a viable niche alternative to Amazon and will continue to improve the monetization of their two-sided marketplace. Our bet on Digital Turbine (APPS) is that they will continue growing their distribution channel for apps on smart phones, particularly for slots controlled by carriers. If successful, we will see the number of devices and revenue per device continue to improve. KKR, Etsy, and Digital Turbine are all asset-light businesses where additional growth will not require raising additional capital, and they should benefit from operating leverage such that their margins should improve as their revenues grow. Thus, even in a “status quo” scenario, the underlying economics should improve and there is not a reliance on the capital markets to get there. They are in control of their own destinies.

It is worth highlighting that while KKR, Etsy, and Digital Turbine are all “bets” on the status quo, they are different in that KKR’s end market is institutional investors, Etsy deals with small merchants and consumers, and Digital Turbine deals with cell phone carriers and large companies with apps. These different end markets also all have different dynamics and are largely independent.”

Most Profitable Etsy Shops in 2018


This isn’t the first time Greenhaven Road Capital talked about Etsy Inc (NASDAQ:ETSY) favorably either. The investment firm has been a long time Etsy Inc (NASDAQ:ETSY) bull. In August 2020, we shared Greenhaven Road Capital’s bullish Etsy Inc (NASDAQ:ETSY) thesis in this article.

In Q2 2020, the number of bullish hedge fund positions on Etsy Inc (NASDAQ:ETSY) stock increased by about 13% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Etsy’s growth potential. Our calculations showed that Etsy Inc (NASDAQ:ETSY) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.