Joel Greenblatt’s Top 5 Stock Picks

In this article, we will discuss value investor Joel Greenblatt’s top 5 stock picks. To see our detailed analysis of Greenblatt’s investment philosophy and his hedge fund’s performance over the years, and go directly to read Joel Greenblatt’s Return, Portfolio and Magic Formula.

5. Amazon.com, Inc. (NASDAQ:AMZN)

Gotham Asset Management Q1 2023 Stake: $29.85 million

Amazon.com, Inc. (NASDAQ:AMZN) is a retail and tech company that sells consumer products and subscriptions online and in physical stores globally. One of the Big 5 tech giants, Amazon.com, Inc. (NASDAQ:AMZN) made a significant announcement on June 22, revealing its plan to invest $100 million in the AWS Generative AI Innovation Center. This initiative aims to empower users by providing them with resources and assistance to develop and utilize generative artificial intelligence solutions within their respective businesses. Gotham Asset Management reportedly holds 289,049 AMZN shares worth approximately $29.85 million as of the first quarter of 2023.

On April 27, Amazon.com, Inc. (NASDAQ:AMZN) reported a Q1 GAAP EPS of $0.31 and revenue of $127.4 billion, exceeding Wall Street estimates by $0.11 and $2.85 billion, respectively.

Insider Monkey’s first quarter of 2023 survey covering 943 hedge funds revealed that 243 had invested in the firm. Amazon.com, Inc. (NASDAQ:AMZN)’s biggest investor in our database is Ken Fisher’s Fisher Asset Management since it owns 41 million shares that are worth $4.2 billion.

Alphyn Capital Management made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter 2023 investor letter:

“In my 2002 Q4 letter, I outlined quantitative reasoning for why I believe the company’s financials mask its true earnings power. More qualitatively, Amazon.com, Inc. (NASDAQ:AMZN) continues to make strategic strides that enhance its appeal as an investment. Firstly, Amazon’s willingness to streamline costs and shutter underperforming initiatives demonstrates prudent financial management. The company’s overhaul of its fulfillment network, transitioning from a national to a regional model, will improve efficiency and delivery speed, resulting in lower costs and increased customer satisfaction, both critical drivers of revenue growth. Second, Amazon’s unparalleled scale, leading e-commerce platform position, and technology investments attract advertisers eager to engage with its vast customer base and provide consumers with highly targeted ads. This strategy has propelled Amazon’s advertising business to surpass broader market trends. Finally, Amazon remains a long-term growth entity. With retail, 80% of shopping is still offline, and Amazon has been steadily expanding its business sales (currently at $35 billion) and international presence. With AWS, despite near-term conservative enterprise spending, 90% of global IT spending remains on-premise. With other bets, Amazon has ambitious forays into diverse sectors such as grocery, healthcare, and satellite internet connectivity.”

4. Alphabet Inc. (NASDAQ:GOOG)

Gotham Asset Management Q1 2023 Stake: $41.94 million

Alphabet Inc. (NASDAQ:GOOG) reigns as a prominent technology giant among the Big 5. At the core of its operations lies Google, a search engine that handles billions of queries every single day. The firm also encompasses an array of video streaming and productivity platforms, including Youtube. Additionally, the company engages in the sale of electronic devices such as smartphones, ultra-thin notebooks, and speakers. Joel Greenblatt initiated a position in the tech giant back in Q2 2016, at an average quarterly share price of $36.70. Currently, his hedge fund holds a stake worth $41.84 million in the company.

On April 25, Alphabet Inc. (NASDAQ:GOOG) reported a Q1 GAAP EPS of $1.17 and a revenue of $69.79 billion, outperforming market estimates by $0.10 and $950 million, respectively

After digging through 943 hedge funds for their first quarter of 2023 shareholdings, Insider Monkey found out that 155 had bought Alphabet Inc. (NASDAQ:GOOG)’s shares. Out of these, the firm’s largest investor is Ken Fisher’s Fisher Asset Management with a $4.3 billion stake.

3. Apple Inc. (NASDAQ:AAPL)

Gotham Asset Management Q1 2023 Stake: $50.47 million

The largest company in the world by market capitalization, Apple Inc. (NASDAQ:AAPL) is a major tech firm that is branching out in several domains, including the metaverse and AI. With a revenue of $365.82 billion and a net income of $99.8 billion in 2022, Apple Inc. (NASDAQ:AAPL) experienced exceptional financial success. Notably, the iPhone played a significant role in driving this achievement, contributing to over half of the company’s revenue. In 2022, iPhone sales reached an impressive 225.30 million units, further solidifying its position as a cornerstone of the company’s revenue stream. Joel Greenblatt’s Gotham Asset Management cut its position in Apple Inc. (NASDAQ:AAPL) by 15% to end the quarter with a stake worth around $50.47 million.

Apple Inc. (NASDAQ:AAPL) announced its financial results for FQ2 on May 4, surpassing expectations on Wall Street with a GAAP EPS of $1.52 and revenue of $94.84 billion, exceeding estimates by $0.09 and $2 billion, respectively.

Apple Inc. (NASDAQ:AAPL) was in 131 hedge fund portfolios at the end of Q1 2023, as per Insider Monkey’s database. These stakes are collectively worth over $165.2 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q1.

Here’s what Fred Alger Management said about Apple Inc. (NASDAQ:AAPL) in its Q1 2023 investor letter:

“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications, computing, and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives particularly tight engagement with consumers and enterprises, which is fostering the growing purchase of high margin services like music, apps, and Apple Pay. While iPhone sales were down year-over-year (YoY). services revenues grew 7% YoY which was slightly above analyst estimates. Company earnings were also better-than-anticipated due to lower input costs, such as memory chips and cost control initiatives. Aside from production disruptions, negative sentiment had also weighed on shares as investors questioned how an economic slowdown would affect consumer demand for Apple products in 2023. However, management projected an acceleration in earnings for the fiscal first quarter, where they noted that iPhone and services growth should remain strong, along with encouraging impacts around product mix, lower input costs, and continued cost controls.”

2. Microsoft Corporation (NASDAQ:MSFT)

Gotham Asset Management Q1 2023 Stake: $55.32 million

Boasting a massive user base surpassing 1 billion, Microsoft Corporation (NASDAQ:MSFT) achieved remarkable financial success in 2022, with a revenue of $198.27 billion and a net income of $72.73 billion. With a market capitalization exceeding $2.56 trillion, the company unmistakably showcases its considerable value. As a prominent market leader in the technology industry, Microsoft Corporation (NASDAQ:MSFT) ongoing triumph can be attributed to its unwavering commitment to innovation, effective marketing strategies, and a devoted customer base. Gotham Asset Management reported holding $55.32 million worth of stakes in the tech giant, making up 1.34% of his hedge fund portfolio.

At the end of Q1 2023, 289 hedge funds in Insider Monkey’s database owned stakes in Microsoft Corporation (NASDAQ:MSFT), worth collectively nearly $58 billion.

Ariel Investments mentioned Microsoft Corporation (NASDAQ:MSFT) in its first-quarter 2023 investor letter:

“Enterprise software provider, Microsoft Corporation (NASDAQ:MSFT) also traded higher in the period alongside the investor enthusiasm for Artificial Intelligence. Microsoft is well positioned as this new technology advances given its large investment in Open AI, the parent company of ChatGPT. Looking ahead, we continue to like Microsoft’s solid fundamentals, competitive positioning and long-term business outlook. We anchor on the company driving value creation by capitalizing on a broad and deep set of opportunities, most notably within Azure, its hybrid cloud infrastructure. The platform continues to demonstrate share gains and strong multi-year purchase intent as enterprises transition to cloud based platforms. At current trading levels, we believe Microsoft’s risk/reward is skewed to the upside.”

1. Snowflake Inc. (NYSE:SNOW)

Gotham Asset Management Q1 2023 Stake: $60.32 million

Snowflake Inc. (NYSE:SNOW) is a cloud computing–based data cloud company based in Bozeman, Montana. It was founded in July 2012 and was publicly launched in October 2014 after two years in stealth mode. The firm offers a cloud-based data storage and analytics service, generally termed “data-as-a-service”. Snowflake Inc. (NYSE:SNOW) is Gotham Asset Management’s largest tech position, and consequently, its largest stock holding with a stake worth approximately $60.32 million

On June 30, Keith Weiss at Morgan Stanley reiterated an Overweight rating on Snowflake Inc. (NYSE:SNOW) shares while also maintaining a $215 price target on the stock.

As of Q1 2023, 63 of the 943 hedge funds surveyed by Insider Monkey had bought Snowflake Inc. (NYSE:SNOW)’s shares. Brad Gerstner’s Altimeter Capital Management is the firm’s largest shareholder with an investment of $2.3 billion.

In its first-quarter 2023 investor letter, The Ithaka Group said the following about Snowflake Inc. (NYSE:SNOW):

“Snowflake Inc. (NYSE:SNOW) is a dominant player in the Data Warehousing market, offering customers the ability to break down data silos and derive value from rapidly growing data sets through Snowflake’s analytical database product, the Data Cloud. The company’s base business is benefitting from a number of secular tailwinds, the three most prevalent being: 1) data-driven decision making, 2) cloud adoption, and 3) the exponential growth of corporate data. The company’s visionary management team, headed by industry veteran Frank Slootman, plans to capture its fair share of this growth through: 1) executing on its land and expand model, 2) acquiring new customers, 3) growing internationally, and 4) expanding its nascent partner network. The stock’s negative contribution in the quarter was due to the timing of Ithaka’s purchase (mid-February) and its small portfolio weighting (100bps).”

Disclosure: None. You can also take a look at 15 Most Profitable Drugs In The World and 10 Best Small-Cap Growth Stocks to Buy Now.