4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Fisher Asset Management’s Stake Value: $4,062,723,000
Alphabet Inc. (NASDAQ:GOOG) is one of the top holdings in the Ken Fisher stock portfolio. Ken Fisher strengthened his position in Alphabet Inc. (NASDAQ:GOOG) by a whopping 1929% in the third quarter of 2022, holding 42.5 million shares worth over $4 billion, representing 3.04% of the total portfolio.
On November 15, Morgan Stanley analyst Brian Nowak reiterated an Overweight rating on Alphabet Inc. (NASDAQ:GOOG) but trimmed the price target on the shares to $120 from $125. Indicators of a soft ad market continued to grow through Q3 earnings season as 14 out of the 19 companies he covers in the space either missed Q3 ad revenue forecasts or guided to slower than anticipated forward growth, the analyst told investors.
According to Insider Monkey’s data, Alphabet Inc. (NASDAQ:GOOG) was part of 153 hedge fund portfolios at the end of June 2022, compared to 160 funds in the prior quarter. Chris Hohn’s TCI Fund Management held a notable stake in the company, with 2.5 million shares worth $5.4 billion.
Here is what Mayar Capital has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2022 investor letter:
“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?
“Google it!”
This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.
Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to’ something. Second, the reason Biden’s advice was met with such opprobrium was because Googling something has become almost second nature to us now.
These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.
Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate’ is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate’ as well as that from its other properties such as Mail, Maps, and so on, totaled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…” (Click here to see the full text)
