Alphyn Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 3.9% was recorded by the fund for the fourth quarter of 2021, and a 13.9% return for the past year, while its S&P 500 TR benchmark delivered a 28.7% return in 2021. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Alphyn Capital Management, in its Q4 2021 investor letter, mentioned Alphabet Inc. (NASDAQ: GOOG) and discussed its stance on the firm. Alphabet Inc. is a Mountain View, California-based multinational technology conglomerate holding company with a $1.7 trillion market capitalization. GOOG delivered a -10.75% return since the beginning of the year, while its 12-month returns are up by 38.61%. The stock closed at $2,582.42 per share on January 27, 2022.
Here is what Alphyn Capital Management has to say about Alphabet Inc. in its Q4 2021 investor letter:
“Alphabet and Amazon are well known and largely understood by investors. One doesn’t always have to turn over an obscure rock to profit in this business, and good investments are sometimes plainly visible. Nevertheless, I still find it helpful to analyze them on a sum-of-parts basis, as this highlights how they have used their scale to expand beyond their core operations, which will help power their continued growth despite their size.
Alphabet has a dominant position in online advertising with one-third market share and is growing at double-digit percentage rates off a large base. Alphabet uses its prodigious cash flow to finance approximately $8bn in operating losses in its cloud and “other bets” divisions. Given the roughly $90bn it generates in the core advertising/serviced business per year, it can well afford to do so. The entire company was worth approximately 22x the core business alone at year-end. This valuation does not include Google Cloud, which generates $18bn in revenues, growing 48% per year. Google Cloud could be worth over $300bn3 in a few years if it catches up to Amazon AWS’s 30% margins. In other bets, Waymo, the self-driving unit, last received funding at a $30bn valuation, and Verily Life Sciences has raised $2.5bn to date to invest in healthcare data science. Should their moonshot investments in quantum computing or nuclear fusion ever work, it would be difficult to estimate their impact on the world. In the mean time we can enjoy that growing cash flow.”
Photo by Firmbee.com on Unsplash
Our calculations show that Alphabet Inc. (NASDAQ: GOOG) ranks 5th on our list of the 30 Most Popular Stocks Among Hedge Funds. GOOG was in 156 hedge fund portfolios at the end of the third quarter of 2021, compared to 155 funds in the previous quarter. Alphabet Inc. (NASDAQ: GOOG delivered a -11.64% return in the past 3 months.
In December 2021, we also shared another hedge fund’s views on GOOG in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
