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Should Investors Buy the Dip in Digital Turbine (APPS) Stock?

Alex Smith
·4 mins read

Greenhaven Road Capital recently released its Q2 2020 Investor Letter, a copy of which you can download here. Greenhaven’s estimated returns for the second quarter exceeded +50%, more than markets have returned over many five-year periods. Both funds are up single digits for the year, comparing favorably to the Russell 2000, which ended June down -13% year to date. You should check out Greenhaven Road Capital's top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Greenhaven Road Capital highlighted a few stocks and Digital Turbine Inc. (NASDAQ:APPS) is one of them. Digital Turbine Inc. (NASDAQ:APPS) is a software company. Year-to-date, Digital Turbine Inc. (NASDAQ:APPS) stock gained 76.2% and on July 27th it had a closing price of $12.56. Here is what Greenhaven Road Capital said:

"Digital Turbine (APPS) – This has been a top five holding for well over a year. In the last quarterly letter, I wrote, “New phone activations will be impacted in the short term, but I am not ready to bet against humanity’s love of having a device in their hand, or advertisers’ desire to reach those consumers. Digital Turbine is positioned for revenue growth, margin expansion, and multiple expansion, despite what the share price said on March 31st.” The price has more than doubled since the end of March, making APPS a very positive contributor to Q2 performance. Digital Turbine’s primary business has been brokering “app slots” on smart phones. Demand continues to rise for the limited number of slots, so revenue per device rises, which is hugely beneficial to the company. To management’s credit, execution has been superb. They have signed up the largest carriers (Verizon, AT&T, Telefonica) and the largest advertisers (Amazon, Netflix, Disney+), they have introduced new products and new pricing models, and they have allocated capital very well with the recent acquisition of Mobile Posse, which was accretive and dramatically increased their recurring revenue base. This management team may lack some of the fancy pedigrees and reputation of some of today’s “high flyers,” but if you step back, their execution has been phenomenal."

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 growth 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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.