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Voss Capital, LLC an investment management company, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. Voss Capital’s funds, Voss Value Fund, LP, and the Voss Value Offshore Fund, Ltd returned +9.6% and +9.5% to investors net of fees and expenses respectively, in the quarter compared to a +0.3% return for the Russell 2000 Index, -1.1% return for the Russell 2000 Value Index, and +2.4% return for the S&P 500 Index. The Voss Value Master Fund’s total gross exposure stood at 184.3% and the net long exposure was 84.9% as of December 31st, 2024. The weight of the fund’s top 10 longs was 72.5% and the top 10 shorts were -14.6%. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, Voss Capital emphasized stocks such as SolarWinds Corporation (NYSE:SWI). SolarWinds Corporation (NYSE:SWI) is a technology company that offers IT management software products. The one-month return of SolarWinds Corporation (NYSE:SWI) was 21.83%, and its shares gained 54.79% of their value over the last 52 weeks. On February 25, 2025, SolarWinds Corporation (NYSE:SWI) stock closed at $18.25 per share with a market capitalization of $3.132 billion.
Voss Capital stated the following regarding SolarWinds Corporation (NYSE:SWI) in its Q4 2024 investor letter:
"SolarWinds Corporation (NYSE:SWI) makes for an interesting case study of low expectations, as we had rarely witnessed such apathy across both the buyside and sell side, along with a strange reluctance to move on from the past cybersecurity breach in 2020 despite clear and ongoing operational execution for several years in a row. We wrote in our Q1 2024 letter that “we think the odds are elevated that the company will receive a buyout offer from a different PE fund within the next year or so.” Given the fact pattern, it was a large position for the fund and Voss was the largest active outside shareholder when the buyout was announced. SWI was undergoing a perpetual license to subscription transition with subscription ARR growth of 36% in the most recent quarter, with total ARR growth having accelerated up to 8.4% from low single digits several quarters ago, and total revenue growth improving from 0% to 5%. Where the market saw a sleepy low/no growth legacy software company, we saw a clear deleveraging story with improving net revenue retention, an ongoing acceleration of total ARR growth (driven by an efficient sales force) occurring since 2022, and a 52%+ on the software “Rule of 40” scale trading for under 9x FCF. The frequent subject of buyout rumors the last few years, SWI finally found a new home in Turn/River Capital at 5.2x EV/Revenue and 13.8x our 2025 FCF estimates, a little below our base case valuation, but a win/win for all stakeholders."