Polen Capital, an investment management company, released its “Polen Focus Growth Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund returned -23.94% net of fees compared to a -16.10% return for the S&P 500 and -20.92% return for the Russell 1000 Growth Index. Inflation concerns and interest rate hikes contributed to the portfolio’s decline in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2022.
In the second quarter 2022 investor letter, Polen Capital discussed stocks like Adobe Inc. (NASDAQ:ADBE). Headquartered in San Jose, California, Adobe Inc. (NASDAQ:ADBE) is a worldwide software company. On September 29, 2022, Adobe Inc. (NASDAQ:ADBE) stock closed at $278.25 per share. One-month return of Adobe Inc. (NASDAQ:ADBE) was -24.90% and its shares lost 51.67% of their value over the last 52 weeks. Adobe Inc. (NASDAQ:ADBE) has a market capitalization of $133.493 million.
Here is what Polen Capital specifically said about Adobe Inc. (NASDAQ:ADBE) in its Q2 2022 investor letter:
“As an example of a valuation dislocation we’ve recently taken advantage of, we added to our position in Adobe Inc. (NASDAQ:ADBE) in the second quarter. It is now one of our top three holdings at just under 7% of the Portfolio. According to our research, Adobe has a near monopoly on digital content creation software globally and is a highly advantaged digital marketing and analytics business. The business continues to grow revenues and profits robustly, even in the face of large currency headwinds and macroeconomic weakness in parts of Europe.
We expect the company to continue to grow earnings at a highteens or better rate for the foreseeable future on the back of robust secular growth tailwinds in digital content creation and consumption. Adobe’s tools are the de facto standards for various applications such as graphics and video editing. In addition, Adobe stands to be a leader in providing tools for creators to develop aspects of the immersive internet (metaverse) as that develops as well.
Adobe’s share price has sold off considerably despite its healthy ongoing growth, similar to certain other companies commonly classified as technology businesses. It is now valued at less than 23x consensus 2023 earnings estimates. This is a discount to companies like Coca-Cola, Colgate, Clorox, McDonald’s, and Proctor & Gamble. Each of these consumer staples companies could be considered a good business by any unbiased observer. Yet, our research tells us that each one is also likely to only grow earnings at a single-digit pace because they face more competition and sell into more mature markets than Adobe. The last time we saw dominant, faster-growing businesses like Adobe trading at discounts to more challenged, slower-growing consumer staples businesses like Coca-Cola was in late 2008/early 2009 during the Financial Crisis. We are not making a market call, but we are starting to see valuation discrepancies that we can take advantage of for our Portfolio.”
Adobe Inc. (NASDAQ:ADBE) is in 22nd position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 92 hedge fund portfolios held Adobe Inc. (NASDAQ:ADBE) at the end of the second quarter which was 93 in the previous quarter.
We discussed Adobe Inc. (NASDAQ:ADBE) in another article and shared the best tech stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.
When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.
Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.
At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.
Do the math. According to Musk, this technology could be worth $250 trillion by 2040.
Put another way, that’s roughly equal to:
175 Teslas
107 Amazons
140 Metas
84 Googles
65 Microsofts
And 55 Nvidias
And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.
It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.
Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.
How could anything be worth that much?
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In fact, Verge argues this company’s supercheap AI technology should concern rivals.
Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.
Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.
When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.
Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…
But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.
And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…
This prediction might not be bold at all:
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