Shares of Alphabet Inc (NASDAQ:GOOGL) are in the green today after the company defeated Oracle Corporation (NYSE:ORCL) in a legal battle. After a two-week-long trial, a US Federal Jury announced on Thursday that Alphabet Inc (NASDAQ:GOOGL)’s Android operating system does not infringe Oracle’s copyrights because it is just a “re-implementation” of 37 Java APIs, which come under “fair use.” In a statement, Google’s spokesperson said that the company’s victory in the case is a win for the Android ecosystem, Java programming community, and developers who rely on open source resources to create innovative products. Shares of GOOGL have gained 1.23% today, while ORCL’s shares are up marginally.
How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors (see the details here). With this in mind, let’s take a look at the recent hedge fund activity surrounding Alphabet Inc (NASDAQ:GOOGL).
Is Alphabet Inc (NASDAQ:GOOGL) the right investment to pursue these days? The smart money is getting more bullish. At Q1’s end, a total of 155 of the hedge funds tracked by Insider Monkey were long this stock, a 1% rise from the end of the prior quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Alphabet Inc (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Berkshire Hathaway Inc. (NYSE:BRK-B) to gather more data points.
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According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Andreas Halvorsen’s Viking Global has the most valuable position in Alphabet Inc (NASDAQ:GOOGL), worth over to $1.56 billion, comprising 6.9% of its total 13F portfolio. On Viking Global’s heels is Lansdowne Partners, led by Alex Snow, holding a $1.32 billion position; 10.4% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions comprise Ken Fisher’s Fisher Asset Management, Dan Loeb’s Third Point, and Stephen Mandel’s Lone Pine Capital.
On the next page we’ll look at some funds that took up positions in GOOGL during Q1, as well as compare the stock to a handful of others with similar market caps.
Key money managers jumped into Alphabet Inc (NASDAQ:GOOGL) headfirst during Q1. Third Point assembled the most outsized position in Alphabet Inc (NASDAQ:GOOGL), having $534 million invested in the company at the end of the quarter. Jim Simons’ Renaissance Technologies also made a $125.1 million investment in the stock during the quarter. The other funds with brand new GOOGL positions are Alexander Mitchell’s Scopus Asset Management, Nick Niell’s Arrowgrass Capital Partners, and Matthew Tewksbury’s Stevens Capital Management.
Let’s go over hedge fund activity in other stocks similar to Alphabet Inc (NASDAQ:GOOGL). We will take a look at Alphabet Inc (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), Berkshire Hathaway Inc. (NYSE:BRK-B), and Exxon Mobil Corporation (NYSE:XOM). This group of stocks’ market valuations are similar to GOOGL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOOG | 142 | 14902723 | 0 |
| MSFT | 144 | 20830664 | 4 |
| BRK-B | 71 | 19576045 | -4 |
| XOM | 60 | 2500727 | -8 |
As you can see these stocks had an average of 104 hedge funds with bullish positions and the average amount invested in these stocks was $14.45 billion. That figure was $14.98 billion in GOOGL’s case. Microsoft Corporation (NASDAQ:MSFT) is the most popular stock in this table. On the other hand Exxon Mobil Corporation (NYSE:XOM) is the least popular one with only 60 bullish hedge fund positions. Compared to these stocks Alphabet Inc (NASDAQ:GOOGL) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
