Will Alphabet (GOOG) be Able to Retain its Position?
Alphyn Capital Management, an investment management firm, released its fourth-quarter 2022 investor letter. The same can be downloaded here. The fund returned 20.4% in the fourth quarter compared to a 7.6% return for the S&P500 Index. For 2022, the fund returned -20.8% compared to the -18.1% return for the S&P 500 Index. The top 10 positions comprised 78% of the portfolio as of 31 December 2022, and the portfolio held 1% in cash. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Alphyn Capital highlighted stocks like Alphabet Inc. (NASDAQ:GOOG) in the Q4 2022 investor letter. Headquartered in Mountain View, California, Alphabet Inc. (NASDAQ:GOOG) is a multinational technology company. On January 30, 2023, Alphabet Inc. (NASDAQ:GOOG) stock closed at $97.95 per share. One-month return of Alphabet Inc. (NASDAQ:GOOG) was 10.39%, and its shares lost 27.82% of their value over the last 52 weeks. Alphabet Inc. (NASDAQ:GOOG) has a market capitalization of $1.261 trillion.
Alphyn Capital made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2022 investor letter:
"Alphabet Inc. (NASDAQ:GOOG received an open activist letter from TCI Fund on November 15, 2022.3 The letter called out that Alphabet has too many highly paid employees. They suggest that Alphabet establish and publicly disclose an EBIT margin target for the Google Services segment and that management compensation should be linked to this target to ensure accountability. They also asked Alphabet to reduce annual operating losses in its “Other Bets” division, which includes Waymo (self-driving cars), and increase share buybacks, given $116bn cash on the balance sheet and relatively low valuation (16x P/E normalized for “other bets losses”).
The letter from TCI Fund highlights the need for accountability and efficient capital allocation at Alphabet. While I agree with the letter’s suggestions, tech companies must balance economics with investing for the future. For example, in November 2022, a company called OpenAI released a program called ChatGPT, which has received a lot of interest. This computer program can understand and respond to natural language, like how people speak and write. It uses advanced machine learning techniques to generate human-like text based on the input it receives. Interacting with ChatGPT is quite remarkable – one feels like they are texting with a human, and watching the program write entire articles based on a few short prompts is impressive. This kind of technology is not entirely new, many companies, Alphabet included, have been developing versions for some years. What surprised observers was the speed with which ChatGPT caught the public’s imagination, and the many use cases teams of people are working on using the technology..." (Click here to read the full text)
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Alphabet Inc. (NASDAQ:GOOG) is in 6th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 156 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the third quarter, which was 153 in the previous quarter.
We discussed Alphabet Inc. (NASDAQ:GOOG) in another article and shared Giverny Capital's views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.