Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. The fund returned -0.28% net in the fourth quarter compared to a 2.20% return for the Russell 1000 Growth Index and a 7.41% return for the S&P 500 Index. In 2022, the fund returned -38.02% net compared to -29.14% and -18.22% returns for the Russell and the S&P 500 Indexes, respectively. Inflation, the Fed’s interest rate hikes, and revenue and earnings slowdowns of the fund’s holding companies led the fund to underperform in the quarter and the year. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Polen Capital highlighted stocks like Meta Platforms, Inc. (NASDAQ:META) in the Q4 2022 investor letter. Headquartered in Menlo Park, California, Meta Platforms, Inc. (NASDAQ:META) is a technology company that develops products to connect people. On January 18, 2023, Meta Platforms, Inc. (NASDAQ:META) stock closed at $133.02 per share. One-month return of Meta Platforms, Inc. (NASDAQ:META) was 13.58%, and its shares lost 57.98% of their value over the last 52 weeks. Meta Platforms, Inc. (NASDAQ:META) has a market capitalization of $348.805 billion.
Polen Capital made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q4 2022 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was our most significant detractor for both the quarter and the year. During the year, Meta was dealing with the headwinds in its business from Apple’s privacy initiatives, the weak advertising end market as a result of slowing economic growth, the shifting of user time spent from the more profitable News Feed and Stories products toward the newer Reels shortform video product, and increased competition from TikTok. We expected the first three issues to prove temporary and for TikTok competition to be manageable. As a result, we expected revenue growth to begin to reaccelerate in the back half of 2023 and for margins to stabilize as the company was already investing at very high levels just as the core business slowed considerably for the reasons listed above. Importantly, user engagement in the family of apps (Facebook, Instagram, and WhatsApp) remains robust and advertisers are still deploying tens of billions of dollars to those platforms every year. Reels also continues to perform well in our view, suggesting TikTok competition will prove to be manageable.
For us, the issue was that, during the third quarter earnings call, CEO Mark Zuckerberg expressed very different investment plans for Facebook Reality Labs (metaverse) and artificial intelligence (AI) initiatives than we had expected. We understood the importance of these investments and the need to invest billions annually into both metaverse and AI. While not enthusiastic that they would be a significant headwind to earnings growth in 2022 and to total company earnings for the foreseeable future, we still expected acceptable earnings growth on an annualized basis even with these investments given our expectation that the pace of these investments would moderate as revenue growth in the core slowed…” (Click here to read the full text)
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Meta Platforms, Inc. (NASDAQ:META) is in 4th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 177 hedge fund portfolios held Meta Platforms, Inc. (NASDAQ:META) at the end of the third quarter, which was 185 in the previous quarter.
We discussed Meta Platforms, Inc. (NASDAQ:META) in another article and shared the best debt free stocks to buy. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
