4. Alphabet Inc. (NASDAQ:GOOG)
Abrams Capital Management’s Stake Value: $319.1M
Percentage of Abrams Capital Management’s 13F Portfolio: 8.57%
Number of Hedge Fund Holdings: 191
Hedge fund sentiment around Alphabet Inc. (NASDAQ:GOOG) has decreased significantly in Q2 2022, with 191 funds long the stock, down from 205 funds in the preceding quarter.
On August 3, Tigress Financial analyst Ivan Feinseth raised the firm’s price target on Alphabet Inc. (NASDAQ:GOOG) to $186 from $183, keeping a Strong Buy rating on the shares.
Horos Asset Management, an investment management firm, shed light upon their decision of investing again in Alphabet Inc. (NASDAQ:GOOG) in their Q2 2022 investor letter. This is what they had to say:
“As we pointed out in the previous quarterly letter, high inflation and, more specifically, the consequent interest rate hikes by the vast majority of central banks, led to companies with high growth and future cash flow generation expectations being the most severely hit in this year’s market downturn. This category also includes technology companies with high quality businesses, but which traded at demanding valuations. This is the case of Alphabet Inc. (NASDAQ:GOOG), a company in which we are investing again two and a half years after our exit.
As a reminder, the U.S. technology platform owns arguably the ecosystem of products with the greatest network effect that exists in the world. Specifically, Alphabet (NASDAQ:GOOG) has products as well known and used in our daily lives, such as the Google search engine, the operating system for Android mobile devices, the YouTube video platform, the Gmail email, the Google Maps navigation service, the Google Play mobile app store, the Google Drive file storage platform and the Google Photos app. All of them with more than one billion active users (in fact, Android has more than three billion monthly active devices). This rich ecosystem allows the network effects of each product to feed off each other, further strengthening the advertising business, the company’s main source of revenue.
On the other hand, Alphabet (NASDAQ:GOOG) made a strong bet a few years ago on the cloud infrastructure and data services business (Google Cloud), and today ranks third in market share, behind Amazon (Amazon Web Services) and Microsoft (Microsoft Azure). In addition, the company has what may be the most advanced autonomous vehicle project in the West (Baidu is the undisputed leader in China), as well as a host of emerging projects, not to mention its huge capabilities in the field of artificial intelligence. All this, combined with the decline in the stock price that reflects a significant slowdown in Alphabet’s (NASDAQ:GOOG) growth over the next few years, as well as the uncertainty associated with the regulatory pressure that the company has been facing for some time, led us to invest again in this excellent company.”
