Brasada Capital Management, an investment management firm, released its “Brasada Focused Equity Strategy” first quarter 2023 investor letter. A copy of the same can be downloaded here. Brasada Focused Equity Strategy returned 8.3% net in the first quarter compared to a 7.5% return for the S&P 500 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Brasada Focused Equity Strategy highlighted stocks like Alphabet Inc. (NASDAQ:GOOGL) in the first quarter 2023 investor letter. Headquartered in Mountain View, California, Alphabet Inc. (NASDAQ:GOOGL) is a multinational technology company. On April 17, 2023, Alphabet Inc. (NASDAQ:GOOGL) stock closed at $105.97 per share. One-month return of Alphabet Inc. (NASDAQ:GOOGL) was 1.00%, and its shares lost 18.49% of their value over the last 52 weeks. Alphabet Inc. (NASDAQ:GOOGL) has a market capitalization of $1.361 trillion.
Brasada Focused Equity Strategy made the following comment about Alphabet Inc. (NASDAQ:GOOGL) in its Q1 2023 investor letter:
“Approximately 14% of our portfolios are in Treasury Bills. Given that we are in a volatile and unpredictable environment we would like to preserve that 14% so that we can be offensive if the right opportunities present themselves. In order to buy RTO and add to CP we needed to sell something, and we chose to sell Alphabet Inc. (NASDAQ:GOOGL). We have owned GOOGL since 2014 and it has been a great investment for us. Our original thesis was essentially that GOOGL dominated the internet and was poised to grow in search and through YouTube for years. The landscape is very different for GOOGL today vs. in 2014. The company is more mature which makes it less recession resistant.
In the past GOOGL was a secular grower and could easily growth through a downturn. Today they have such a large share of advertising dollars and an economic slowdown will have a greater impact on their growth. When we purchased GOOGL they had about 54,000 employees. They hired 72,000 people in the last 2 years and today they have about 178,000 employees. What do all these people do?
Meanwhile, GOOGL’s monopoly is at risk. They are reliant on Apple to have Google search as the default on iPhones. Amazon is now a competitor in the ad business, Microsoft has the potential to be more competitive with their integration of ChatGPT, and ChatGPT itself and other AI applications have the potential to take eyeballs away from Google. If that is not enough, the DOJ is coming for Google, and if they are successful, it will further weaken Google’s position. It is not the end of the world for GOOGL. We still expect them to dominate search, they should be able to fix their cost structure, and the multiple on the stock is not demanding. However, we think there are better stocks to own for the long term.”
Photo by Kai Wenzel on Unsplash
Alphabet Inc. (NASDAQ:GOOGL) is in 3rd position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 209 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOGL) at the end of the fourth quarter which was 196 in the previous quarter.
We discussed Alphabet Inc. (NASDAQ:GOOGL) in another article and shared Wedgewood Partners’ views on the company. In addition, please check out our hedge fund investor letters Q1 2023 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.
