We recently compiled a list of the 99% of Billionaire Abrams’ Portfolio is in These 11 Stocks. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOGL) stands against the other stocks in David Abrams’ portfolio.
Founded in 1999 by David Abrams, Abrams Capital Management is an investment fund that strives to generate value by leveraging opportunistic and value-oriented investment strategies. Likewise, its portfolio is well-skewed to navigate any challenging macro environment, as it mainly focuses on value investments.
In addition, Abrams Capital Management’s portfolio focuses on diversifying its holdings across various asset classes. Stocks, debt, and distressed securities are some of its top asset classes. Diversification and value investments are some of the strategies that have allowed Abrams to perform better than other hedge fund managers, based on an annualized net return of 15% over the past 15 years.
Abrams Capital Management is primarily invested in the Services sector in the equity markets, which accounts for 25% of its holdings, with Technology stocks accounting for about 11,% followed in third by Basic Materials stocks. The strategic distribution affirms the hedge fund’s focus on sectors with higher prospects for value growth that align with long-term investment philosophy.
In the third quarter, Abrams made significant changes, trimming stakes in some holdings while increasing in others. The hedge fund made no new purchases or sales, reduced holdings in 3 stocks, and did not add to any existing positions. The top 10 holdings constitute 97.75% of the portfolio. The investments are concentrated in seven key sectors. The changes reflect the calculated approach in response to changing macroeconomics.
Our Methodology
To compile the list of billionaire Abrams’ portfolio we scanned Abrams Capital Management’s third quarter portfolio, focusing on the biggest holdings based on investment size. Upon analyzing the stocks, focusing on why they stand out, we ranked them in ascending order based on Abrams Capital Management’s equity stake.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Alphabet Inc. (NASDAQ:GOOGL)
Abrams Capital Management’s Q3 2024 Investment: $342.84 Million
Percentage of Abrams Capital Management’s Portfolio: 5.5%
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) is Abrams Capital Management’s largest holding in the communication services sector. The company generates most of its revenue from Google’s search engine advertising network and YouTube. Similarly, the stock is up by about 19.24% year to date as investors react to the company’s robust digital advertising business.
Most of Alphabet Inc.’s (NASDAQ:GOOGL) revenue comes from advertising. This segment benefits from increased ad spending in a strong US and global economy. Besides advertising, Alphabet’s revenue is also growing due to more people using cloud computing solutions.
Alphabet Inc. (NASDAQ:GOOGL) is using artificial intelligence (AI) to improve its search business and boost demand for its cloud services. Alphabet has spent $49.3 billion on expanding its AI infrastructure, including servers and data centers.
These investments helped Alphabet achieve strong Q3 financial results on October 29, 2024. Revenue increased by 15% compared to last year, and earnings per share (EPS) rose by 37% from $1.55 to $2.12. The operating margin also grew from 28% last year to 32% this year, contributing significantly to this gain.
Overall GOOGL ranks 5th on our list of stocks in David Abrams’ portfolio. While we acknowledge the potential of GOOGL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
