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Cloud Nine Greets Greenhaven Road Capital as Elastic N.V. (ESTC) Tripled their Investment

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Jose Karlo Mari Tottoc
·3 min read
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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 Elastic N.V. (NYSE: ESTC) is part of their top 5 holdings. Elastic N.V. is an information technology and data analysis provider that currently has a $13.2 billion market cap. For the past 3 months, ESTC delivered a 53.12% return and settled at $151.96 per share at the closing of January 29th.

Here is what Greenhaven Road Capital has to say about Elastic N.V. in their investor letter:

"This open-source software company monetizes a very small subset of their users. Therefore, CEO Shay Bannon is fighting a different fight than most software entrepreneurs. Elastic’s open-source model provides the community far more value than it extracts. Earlier this month, the company made a change to their licensing agreement, which will make it more difficult for others to commercialize Elastic’s software. The EV/sales multiple has clearly risen over the past year as the share price has roughly tripled our initial purchases at the end of 2019. The company prices software based on usage and benefits from the continued growth of data as well as their expanding product lines. With net revenue retention (purchases from their existing base of customers) remaining above 130% since before their IPO, Elastic has a long runway of 30%+ growth that should mute the impact of multiple compression when it occurs."

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nullplus/Shutterstock.com

Last December 2020, we published an article telling that Elastic N.V. (NYSE: ESTC) was in 36 hedge fund portfolios. Its all time high statistics is 43. ESTC delivered a massive 136.47% return in the past 12 months.

Our calculations show that Elastic N.V. (NYSE: ESTC) 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

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.

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