Why Digital Turbine (APPS) Stock is a Compelling Investment Case

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 Digital Turbine Inc. (NASDAQ:APPS) stock. In its Q4 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Digital Turbine Inc. (NASDAQ:APPS) stock. Digital Turbine Inc. (NASDAQ:APPS) is a software company. The stock is up 89.1% since the Greenhaven Road Capital’s pitch in February 2020, which suggests that the investment firm was right in its decision. On a year-to-date basis, Digital Turbine Inc. (NASDAQ:APPS) stock has risen by 80.9%.

On February 15, 2020, Greenhaven Road Capital had released its Q4 2019 Investor Letter. Greenhaven Road Capital said that Digital Turbine Inc. (NASDAQ:APPS) is poised to grow in 2020. This isn’t the first time Greenhaven Road Capital talked about Digital Turbine Inc. (NASDAQ:APPS) favorably either. The investment firm has been a long time Digital Turbine Inc. (NASDAQ:APPS) bull. A year ago we shared Greenhaven Road Capital’s bullish Digital Turbine Inc. (NASDAQ:APPS) thesis in this article.

Greenhaven Road Capital fund returned approximately 2% net in the fourth quarter and approximately 15.5% for 2019. The investment firm noted that its 2019 returns were below its benchmark the Russell 2000 Index.

Let’s take a look at comments made by Greenhaven Road Capital about Digital Turbine Inc. (NASDAQ:APPS) in the letter.

“Digital Turbine (APPS) – Digital Turbine serves as a neutral third party that works with wireless carriers to preinstall apps on new cell phones, then sells the slots to app-driven companies like Uber, Amazon, and Netflix. The company saw 30% revenue growth in the core U.S. market where they work with four major carriers including Verizon and AT&T. Their growth is even faster in international markets. This past quarter, APPS announced a Telefonica partnership that will launch in the next six months. Telefonica has more mobile customers than AT&T and Verizon combined. Digital Turbine is also expanding their Samsung agreement, and got almost 20% of their Q3 2019 revenue from new products outside of their core business. Cell phone screen space is incredibly valuable real estate because companies want to put their apps in front of consumers. Digital Turbine brokers this valuable real estate. It would not be surprising to continue to see increasing revenue per device.

One of my largest concerns with the Digital Turbine investment is that large companies will seek to circumvent Digital Turbine and go directly to the carriers. On this past quarter’s conference call, the CEO assuaged some of those fears when he said, “We are proud that Verizon trusts us to manage the distribution and management of their very high-profile applications such as Facebook, Netflix, Apple Music, and now Disney. In addition to Verizon, we are just beginning to work directly with Disney on the distribution of their applications to other partners around the globe.”

Leszek Kobusinski/Shutterstock.com

In Q1 2020, the number of bullish hedge fund positions on Digital Turbine Inc. (NASDAQ:APPS) stock increased by about 10% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Digital Turbine’s upside potential. Our calculations showed that Digital Turbine Inc. (NASDAQ:APPS) 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

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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