1. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Goldman Sachs’ Stake Value: $4,401,136,000
P/E Ratio as of November 10: 16.74
Alphabet Inc. (NASDAQ:GOOG), the parent company of Google and Google subsidiaries, is one of the top Goldman Sachs value picks. Goldman Sachs owns more than 2 million Alphabet Inc. (NASDAQ:GOOG) shares as of the second quarter of 2022, worth $4.40 billion and representing 0.99% of the total portfolio.
On October 26, Oppenheimer analyst Jason Helfstein maintained an Outperform rating on Alphabet Inc. (NASDAQ:GOOG) but trimmed the price target on the shares to $135 from $155 to reflect lower 2023 estimates on weaker first half of the year and slower headcount growth.
Among the hedge funds tracked by Insider Monkey, 153 funds were bullish on Alphabet Inc. (NASDAQ:GOOG) at the end of June 2022, compared to 160 funds in the last quarter. Chris Hohn’s TCI Fund Management held a significant stake in the company, with 2.5 million shares worth $5.4 billion.
Here is what Mayar Capital has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2022 investor letter:
“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?
“Google it!”
This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.
Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to’ something. Second the reason Biden’s advice was met with such opprobrium was because Googling something has become almost second nature to us now.
These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.
Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate’ is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate’ as well as that from its other properties such as Mail, Maps, and so on, totaled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…” (Click here to see the full text)
Follow Alphabet Inc. (NASDAQ:GOOGL)
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