Transition to Connected TV Will Benefit Roku Inc. (ROKU), Proclaimed Greenhaven Road Capital

Greenhaven Road Capital, an investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A spectacular net return of 105% was recorded by the fund for the year end 2020, outperforming its Russell 2000 benchmark that returned 9.4%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Greenhaven Road Capital, in their Q4 2020 Investor Letter said that Roku, Inc. (NASDAQ: ROKU) is a part of their top 5 holdings. Roku, Inc. is a television streaming platform company that currently has a $51.2 billion market cap. For the past 3 months, ROKU delivered a 93.39% return and settled at $389.03 per share at the closing of January 29th.

Here is what Greenhaven Road Capital has to say about Roku, Inc. in their investor letter:

“Roku is well on its way to becoming the go-to operating system for connected televisions as it continues to benefit from being built into roughly one in three televisions in the United States while international expansion (Mexico, Canada, Brazil, Great Britain) increases as well. According to the recent Trade Desk white paper on connected TVs,

“A staggering 27 percent of consumers, for instance, said they intend to ditch their cable subscriptions this year, up from 15 percent in 2020…. Such is the extent of this shift that advertisers can now reach more U.S. households via connected, streaming TV than via traditional linear TV. And many of them are embracing the opportunity to rethink decades-old TV ad processes, such as the ‘upfront’ ad buying model, the 30 second ad-spot, and TV targeting and measurement.”

Roku is ideally positioned to benefit from the continued transition to connected TVs given its role as a must-have platform, as evidenced by HBO Max and Peacock abandoning their go-it-alone strategies to partner with Roku instead. Roku provides the consumer with a superior experience to linear TV. Streaming allows “time shifting,” and shows streamed on Roku typically carry ¼ of the advertisements shown on linear TV. From an advertiser’s perspective, Roku allows for superior targeting as much more is known about the Roku viewer when the ad is purchased and served. Roku can monetize their strategic position through advertising and revenue sharing agreements on subscriptions and streaming services carried on the platform. The Roku business model has similarities to John Malone’s TCI without the required capital expenditures.”

Last December 2020, we published an article telling that Roku, Inc. (NASDAQ: ROKU) was in 59 hedge fund portfolios, its all time high statistics. ROKU delivered a 214.28% return in the past 12 months.

Our calculations show that Roku, Inc. (NASDAQ: ROKU) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 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.