Polen Capital, an investment management firm, published its “Polen Focus Growth Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. During the first quarter of 2022, the Polen Focus Growth Composite Portfolio (the “Portfolio”) returned -13.39% and -13.56%, gross and net of fees respectively. The Russell 1000 Growth Index returned -9.04% (the “Index”) and the S&P 500 (the “S&P”) -4.60%. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Polen Focus Growth Fund mentioned Meta Platforms, Inc. (NASDAQ:FB) and explained its insights for the company. Founded in 2004, Meta Platforms, Inc. (NASDAQ:FB) is a Menlo Park, California-based multinational technology conglomerate with a $532.1 billion market capitalization. Meta Platforms, Inc. (NASDAQ:FB) delivered a -41.54% return since the beginning of the year, while its 12-month returns are down by -40.46%. The stock closed at $196.64 per share on June 08, 2022.
Here is what Polen Focus Growth Fund has to say about Meta Platforms, Inc. (NASDAQ:FB) in its Q1 2022 investor letter:
“What Would You Pay for the World’s Largest Communication and Entertainment Platform? How Does 5x Earnings Sound?
Meta Platforms also had solid, if not slightly lower-than-expected revenue growth last quarter but guided to a significant slowdown in revenue growth for 1Q 2022. Meta called out TikTok, a competitor for people’s time and attention, seeming to imply it as one of the factors causing the growth slowdown. This appeared to stoke fears that the company’s user engagement and value proposition was eroding for its users and marketers and subsequently would lead to lower advertising revenue growth and market share loss.
We do not doubt that TikTok is taking time and attention away from many forms of digital media, core Facebook and Instagram included. That said, we believe TikTok has mostly expanded the pie. Meta’s user engagement has been stable, even on the very mature core Facebook app. Our research shows that most of the growth headwinds are more likely attributable to a combination of factors. These factors include a preference for short-form video while spending time on the platform (Facebook and Instagram Reels), which is not monetized effectively yet, a COVID-19 pull-forward impact like Netflix, and changes to Apple’s (AAPL) iOS operating system.
More specifically, the changes to iOS make it more difficult for Facebook and Instagram to measure certain types of ads accurately, at least for now. Meta has quantified that the Apple impact as roughly a $10 billion revenue headwind for fiscal 2022, or approximately 7% of total revenue. This is a bit larger than we would have expected, and it is taking longer than expected for Facebook to develop with their own measurement tools. But, excluding the Apple impact alone, Facebook would be growing close to what we would have expected in a more normal environment. Although it could take some time to alleviate, we believe the Apple impact will prove temporary, and we continue to monitor engagement trends on Facebook and Instagram from competitors like TikTok…” (Click here to see the full text)
Our calculations show that Meta Platforms, Inc. (NASDAQ:FB) ranks 4th on our list of the 30 Most Popular Stocks Among Hedge Funds. Meta Platforms, Inc. (NASDAQ:FB) was in 200 hedge fund portfolios at the end of the first quarter of 2022, compared to 224 funds in the previous quarter. Meta Platforms, Inc. (NASDAQ:FB) delivered a -0.94% return in the past 3 months.
In May 2022, we also shared another hedge fund’s views on Meta Platforms, Inc. (NASDAQ:FB) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
