Is Digital Turbine Inc. (APPS) A Smart Long-Term Buy?

Roben Walker

Greenhaven Road Capital, an investment management firm, published its first quarter 2021 investor letter – a copy of which can be downloaded here. A commendable net return of 14% was recorded by the fund for the Q1 of 2021, outperforming the S&P 500 Index that delivered a 6.17% return for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Greenhaven Road Capital, in their Q1 2021 investor letter, mentioned Digital Turbine, Inc. (NASDAQ: APPS), and shared their insights on the company. Digital Turbine, Inc. is an Austin, Texas-based software company that currently has a $6.3 billion market capitalization. Since the beginning of the year, APPS delivered a 26.47% return, massively extending its 12-month gains to 1,217.31%. As of May 03, 2021, the stock closed at $71.53 per share.

Here is what Greenhaven Road Capital has to say about Digital Turbine, Inc. in their Q1 2021 investor letter:

Digital Turbine (APPS) – The CEO of Digital Turbine likes to quote one of his football coaches who used to say, “Potential is French for ‘ain’t done sh**.’” In my opinion, Digital Turbine is a company with both tremendous potential AND a history of extraordinary execution. In the past quarter, the company reported stunningly good numbers with revenue growth of 146% and EBITDA growth of 300%. Perhaps more importantly, they effectively told investors that both AT&T and Verizon had signed up for their content products and will launch the offerings later this year. This is by far their largest example of cross-selling the Mobile Posse products that they acquired last year into the core Digital Turbine customer base, turning potential synergies into actual customers. The company also announced the acquisition of Fyber, which “has amassed an extensive network with more than 180 programmatic demand partners that reach a total of 650 million unique monthly active users across more than 180 different countries globally. The Company’s proprietary technology platform and expertise in mediation, real-time bidding, advanced analytics tools, and video combine to deliver publishers and advertisers a uniquely holistic app monetization solution.”

The acquisition should be accretive, but the real “potential” lies in plugging the technology into the existing base of app owners and marketers using Digital Turbine’s various offerings. Bill Stone and his team have executed brilliantly and have been rewarded by the markets, but given their momentum and assets, there is a long runway ahead. Digital Turbine is a toll collector on the most valuable per-square-inch real estate in the world – cell phones. They sit between consumers and the companies desperate to reach them and have an increasing arsenal of monetization tools.”

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Our calculations show that Digital Turbine, Inc. (NASDAQ: APPS) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Digital Turbine, Inc. was in 23 hedge fund portfolios. APPS delivered a 19.62% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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

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