Fred Alger Management, an investment management company, released its “Alger Spectra Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In 2024’s second quarter, U.S. stocks were positive, with the S&P 500 rising 4.28%. The Materials and Industrials sectors underperformed compared to the S&P 500 Index, while the Information Technology and Communication Services sectors outperformed. There was a notable return gap in the second quarter, where large-cap growth stocks saw meaningful gains, while smaller-cap and particularly value stocks lagged. Against this backdrop, the fund outperformed the Russell 3000 Growth Index in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Alger Spectra Fund highlighted stocks like DraftKings Inc. (NASDAQ:DKNG) in the second quarter 2024 investor letter. DraftKings Inc. (NASDAQ:DKNG) is a digital sports entertainment and gaming company. The one-month return of DraftKings Inc. (NASDAQ:DKNG) was 11.65%, and its shares gained 10.80% of their value over the last 52 weeks. On September 3, 2024, DraftKings Inc. (NASDAQ:DKNG) stock closed at $33.65 per share with a market capitalization of $16.338 billion.
Alger Spectra Fund stated the following regarding DraftKings Inc. (NASDAQ:DKNG) in its Q2 2024 investor letter:
“DraftKings Inc. (NASDAQ:DKNG) is a digital sports entertainment and gaming firm designed to ignite the passion of sports enthusiasts through a diverse offering that spans daily fantasy, regulated gaming, and digital media. We believe the company’s expertise in product development and customer acquisition, which established it as the market leader in daily fantasy sports (DFS), positions DraftKings to be a key driver in advancing the U.S. sports betting market’s growth. The company reported strong fiscal first quarter results, with revenues beating analyst estimates due to broad-based momentum in customer engagement and acquisition. However, on May 28th, the Illinois Senate passed a new state budget that includes a tiered progressive tax on sportsbook operators, effective July 1, 2024. This new tax ranges from 20% to 40% on gross revenues, a significant increase from the current 15% tax rate. Despite management’s belief that it can mitigate the tax impact by reducing promotions in Illinois, this development negatively affected the company’s share price.”
A woman at a betting table paying out customers who won their sports bets.
DraftKings Inc. (NASDAQ:DKNG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held DraftKings Inc. (NASDAQ:DKNG) at the end of the second quarter which was 64 in the previous quarter. DraftKings Inc. (NASDAQ:DKNG) reported $1.104 billion in revenue, up 26% from Q2 2023, and $128 million in adjusted EBITDA. While we acknowledge the potential of DraftKings Inc. (NASDAQ:DKNG) 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 DraftKings Inc. (NASDAQ:DKNG) and shared Oppenheimer’s favorite stocks for the next 12 months and the top stock picks. In addition, please check out our hedge fund investor letters Q2 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.
