Alphabet (GOOG) Has Risen 19% in Last One Year, Outperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of RiverPark Advisors top stock picks. RiverPark Advisors, an investment management firm, is bullish on Alphabet Inc. (NASDAQ:GOOG) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Alphabet Inc. (NASDAQ:GOOG) stock. Alphabet Inc. (NASDAQ:GOOG) is a technology company.

In July 2019, RiverPark Advisors had released its Q2 2019 investor letter. The investment firm said that Alphabet Inc. (NASDAQ:GOOG) stock was one of the top detractors to the Large Growth fund’s performance in Q2 2019. Alphabet Inc. (NASDAQ:GOOG) stock has posted a return of 19.2% in the trailing one year period, outperforming the S&P 500 Index which returned 10.7% in the same period. This suggests that the investment firm was right in its decision. On a year-to-date basis, Alphabet Inc. (NASDAQ:GOOG) stock has risen by 8.7%.

In Q2 2019 investor letter, RiverPark Advisors said the Large Growth fund posted a return of 7.4% in the second quarter of 2019, outperforming fund’s benchmark the S&P 500 Index which returned 4.3% in the same period. Let’s take a look at comments made by RiverPark Advisors about Alphabet Inc. (NASDAQ:GOOG) stock in the Q2 2019 investor letter.

“Alphabet: GOOG shares were our next largest detractor for the quarter. The shares were weak despite a strong market for technology shares, as decelerating growth in the first quarter was exacerbated by the threat of potential Justice Department anti-trust charges against the company. While we will monitor any investigation closely, we believe that the anti-trust concerns are overblown and actually create a trading opportunity. The company’s products have been used by billions of people and millions of companies worldwide to exchange information and services and have contributed significantly to global innovation and trade. Any regulator-imposed adjustment to the company’s business model is likely to be minor, and the company’s cash balances and free cash flow generation are both large enough to pay any potential fine. We also believe that a break-up of the company would result in a substantially greater sum-of the-parts outcome for shareholders, as the company’s less mature and money-losing divisions, would likely garner substantial valuation support as stand-alone companies in the public or private markets (see Tesla, for example).

Despite a bit of deceleration in its most recent quarter (to 17% revenue growth down from 20%+ for many quarters in a row), we continue to believe that Alphabet’s future growth prospects remain robust, as evidenced by the 39% growth of paid click volumes on Google’s core search properties in the first quarter. To us, paid clicks have been a key and often underappreciated indicator of the importance of the Google franchise to its users, demonstrating the continued opportunity for the company to monetize its traffic with interested advertisers.

With its core business still experiencing healthy engagement growth (now nearly 15 years since its IPO) and many newer businesses (e.g., YouTube, hardware, cloud, other bets) also experiencing impressive growth while still early in their monetization (Other Bets lost $868 million for the quarter), we continue to view Alphabet as among the best-positioned secular growth franchises. We also find the company’s valuation at 16x our 2020 EPS estimate compelling. We maintained our position during the quarter, and Alphabet remains a top five holding in the Fund.”


In Q2 2020, the number of bullish hedge fund positions on Alphabet Inc. (NASDAQ:GOOG) stock decreased by about 6% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Alphabet’s growth potential. Our calculations showed that Alphabet Inc. (NASDAQ:GOOG) is ranked #5 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 leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. 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.