Investor letter, October 2024

The fund has owned Cellebrite for approximately three years. The company remains the go-to software solution for law enforcement to access and analyze cell phone data for criminal cases. Product enhancements have improved and broadened the value proposition, and the company has raised prices and sold more seats as they have delivered more value. During the holding period, ARR has grown from $187M to $345M while remaining profitable, and the company took out the SPAC warrants.

“Cellebrite (CLBT) – We have owned Cellebrite for approximately three years. The company remains the go-to software solution for law enforcement to access and analyze cell phone data for criminal cases. Product enhancements have improved and broadened the value proposition, and the company has raised prices and sold more "seats" as they have delivered more value to their customers. We began buying shares in October 2021 and averaged down from there. In the period we have owned the shares, ARR (annual recurring revenue) has grown from $187M to $345M while remaining profitable. The company took out the SPAC warrants.”

The fund has owned Hagerty for approximately three years. During that time, revenues have roughly doubled and profitability has flipped from negative to positive, all without substantial contribution from the State Farm partnership. The company launched an online marketplace and in-person auction business for classic/collector cars, both likely in the top 5 for the industry. Combined with a recent acquisition that greatly expands the post-1980s car insurance opportunity, Hagerty is well-positioned for higher growth over the next five years.

“Hagerty (HGTY) – We have owned classic/collector car insurance company Hagerty for approximately three years. During that time, revenues have roughly doubled and profitability has flipped from a negative to a positive, all without substantial contribution from their strategic partnership with State Farm. Over that same period, the company launched an online marketplace and in-person auction business for classic/collector cars, both of which are likely in the top 5 for the industry. Combined with a recent acquisition that greatly expands the post-1980s car insurance opportunity, Hagerty is wellpositioned for higher growth over the next five years.”

The fund has owned KKR for approximately five years. Over the last five years, KKR has grown AUM from $206B to $601B and perpetual capital from $19B to $250B, expanded focus on products for insurance companies with the acquisition of Global Atlantic, and dramatically grown its high-net-worth distribution. Shares are up 5X over the last five years, and management laid out a path to quadrupling earnings over the next ten years.

“KKR (KKR) – We have also owned asset manager KKR for approximately five years. Over the last five years, KKR has grown AUM from $206B to $601B and perpetual capital from $19B to $250B while also expanding its focus on products for insurance companies with the acquisition of Global Atlantic. Over the past few years, KKR's investment in distribution to high-net-worth individuals has dramatically grown their investor base. Given the progress, it is not surprising that shares are up 5X over the last five years. At their most recent investor day, KKR management laid out a path (for those who wait) to quadrupling earnings over the next ten years.”

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