Is it a Great Move to Invest in Alphabet (GOOG)?

Arch Capital Management, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. As with most portfolios with no short exposure, the Arch Capital Fund has dipped into the red in 2022. The fund has a mix of both types of companies in our portfolio, given our agnosticism towards so-called “growth” or “value” stocks. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Arch Capital mentioned Alphabet Inc. (NASDAQ:GOOG) and explained its insights for the company. Founded in 2015, Alphabet Inc. (NASDAQ:GOOG) is a Mountain View, California-based multinational conglomerate company with a $1.4 trillion market capitalization. Alphabet Inc. (NASDAQ:GOOG) delivered a -20.72% return since the beginning of the year, while its 12-month returns are down by -19.76%. The stock closed at $114.70 per share on August 24, 2022.

Here is what Arch Capital has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q2 2022 investor letter:

“In May we decided to buy Alphabet (parent company of Google, YouTube, and Android). Our thesis was simple. Alphabet has billions of locked-in users around the globe with businesses like Search, Maps, and YouTube that should grow in-line or faster than worldwide GDP. With all the cash these businesses generate, management is able to reinvest in Google Cloud, Other Bets projects like Waymo, and return cash to shareholders via share repurchases. At an enterprise value-to-free cash flow (EV/FCF) of around 20 at the time of our purchase, we believe this sets up shareholders for low risk 15%+ returns over the next five years.”

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Our calculations show that Alphabet Inc. (NASDAQ:GOOG) ranks 5th on our list of the 30 Most Popular Stocks Among Hedge Funds. Alphabet Inc. (NASDAQ:GOOG) was in 160 hedge fund portfolios at the end of the second quarter of 2022, compared to 158 funds in the previous quarter. Alphabet Inc. (NASDAQ:GOOG) delivered a 8.37% return in the past 3 months.

In July 2022, we also shared another hedge fund’s views on Alphabet Inc. (NASDAQ:GOOG) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.