Merion Road Capital Management, an investment advisor, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, Merion Road Small Cap Fund had a good performance and returned 5.5% bringing 2024 returns to +17.4%. This compared to 0.3% return for the Russell 2000 Index in the quarter and an 11.4% return in 2024. The long-only portfolio of Merion Road rose 9.0% during the quarter, bringing the 2024 returns to 32.4%. This compared to S&P 500’s 2.5% and 24.9% returns for the same periods. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Merion Road Capital Management highlighted stocks like Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter. Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, offers various platforms and services operating through Google Services, Google Cloud, and Other Bets segments. The one-month return of Alphabet Inc. (NASDAQ:GOOG) was 3.86%, and its shares gained 41.86% of their value over the last 52 weeks. On January 31, 2024, Alphabet Inc. (NASDAQ:GOOG) stock closed at $205.60 per share with a market capitalization of $2.506 trillion.
Merion Road Capital Management stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG): We have held GOOG for a long time (since 2018) on the basis of its immense business quality paired with an undemanding valuation, improving treatment of minority shareholders, and multiple options for value creation. Recently we have seen Alphabet bashed for losing the AI race to now heralded for its progress. I remain excited about their prospects with several near-term, mid-term, and long-term tailwinds. Near-term, Google Cloud continues its rapid growth and their latest large language model, Gemini 2.0, appears to have made significant progress to better serve consumer needs and improve GOOG’s other product offerings. Mid-term, Waymo is on the cusp of becoming a real value driver for the company; there are abundant articles discussing Waymo stealing share from the ride-share economy and launching in new geographies. Long-term, GOOG’s recently announced quantum computing chip positions it well for a future (many, many years away) where computing process are fundamentally different than today. All of these options are embedded in a company that already has an established and dominant earnings stream.”
A user’s hands typing a search query into a Google Search box, emphasizing the company’s search capabilities.
Alphabet Inc. (NASDAQ:GOOG) is in 7th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 160 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the third quarter which was 165 in the previous quarter. While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOG) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Alphabet Inc. (NASDAQ:GOOG) and shared Tsai Capital’s views on the company. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.