Investors could do worse than follow the advice of Greenhaven Road Capital. The fund generated returns of 105% in 2020, and one of the largest contributors to its outsize gains last year was its top-five holding in Roku (ROKU 0.15%). Yet even after gains of 148% last year, the streaming platform could just be getting started.
On this clip from Motley Fool Live, recorded on Feb. 1, "The Wrap" host Jason Hall and Fool.com contributor Danny Vena discuss why Greenhaven believes Roku still has plenty of room to run.
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Jason Hall: Let's do our smarter, happier, richer, and share something that helps our Foolish viewers live the Foolish mission there. Danny Vena, tell us who benefits from the connected TV revolution?
Danny Vena: Every once in a while I'll run across something that I find really interesting. This came courtesy of Greenhaven Road Capital, who is an investment management firm. If you want to understand what their bonafides are. Now think about this, for a hedge fund or an investment management fund, their return last year on investment funds was 105% for the year. That's pretty impressive.
Jason Hall: That's amazing.
Danny Vena: I mean, that's saying something. In their annual shareholder letter, what they said was that if you are looking to benefit from the change that's happening in television viewing, essentially going from cable to connected TV, they recommend that you invest in one of their top five holdings, which is Roku.
Roku is a streaming platform that it's got about a $51 billion market cap right now. Basically what they say is Roku is well on its way to becoming the go-to operating system (OS) for connected televisions as it benefits from being built into roughly one and three televisions in the United States while its international expansion increases.
A staggering 27% of consumers say they plan to ditch cable over the next year up from 15% and essentially, connected TV is going to benefit from that and the biggest provider of connected TV is Roku.
According to them anyway, if you want to benefit from that transition, buy Roku stock.
Jason Hall: Love it. I don't know you tie that back to Roku. You always do. [laughs]
