Vulcan Value Partners: “Alphabet (GOOG) Performed very well for Us while We Owned it”

Vulcan Value Partners, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. Vulcan’s Large Cap Composite Fund delivered a 1.2% net return for the fourth quarter of 2021, compared to its benchmarks, the Russell 1000 Value Index and S&P 500 Index which delivered 7.8% and 11% returns respectively for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Vulcan Value Partners, in its Q4 2021 investor letter, mentioned Alphabet Inc. (NASDAQ:GOOG) and discussed its stance on the firm. Founded in 2015, Alphabet Inc. (NASDAQ:GOOG) is a Mountain View, California-based multinational technology conglomerate holding company with a $1.8 trillion market capitalization, and is currently spearheaded by its CEO, Sundar Pichai. Alphabet Inc. (NASDAQ:GOOG) delivered a -3.04% return since the beginning of the year, while its 12-month returns are up by 37.19%. The stock closed at $2,805.55 per share on March 22, 2022.

Here is what Vulcan Value Partners has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2021 investor letter:

“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet, performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet (Google) again with a margin of safety.”

Our calculations show that Alphabet Inc. (NASDAQ:GOOG) ranks 5th on our list of the 30 Most Popular Stocks Among Hedge Funds. Alphabet Inc. (NASDAQ:GOOG) was in 158 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 156 funds in the previous quarter. Alphabet Inc. (NASDAQ:GOOG) delivered a -4.54% return in the past 3 months.

In March 2022, we also shared another hedge fund’s views on Alphabet Inc. (NASDAQ:GOOG) in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.