RGAIA Investment Advisors, an independent, privately owned asset management firm recently published its second-quarter 2022 investor letter – a copy of which can be downloaded here. RGAIA Investment Advisors believe over the long run, letting winners ride is critical to exceptional results, and letting companies intrinsically compound is critical for optimizing after-tax results. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, RGAIA Investment Advisors mentioned Meta Platforms, Inc. (NASDAQ:META) and explained its insights for the company. Founded in 2002, Meta Platforms, Inc. (NASDAQ:META) is a Menlo Park, California-based multinational technology conglomerate with a $430.8 billion market capitalization. Meta Platforms, Inc. (NASDAQ:META) delivered a -52.34% return since the beginning of the year, while its 12-month returns are down by -57.39%. The stock closed at $160.32 per share on September 05, 2022.
Here is what First Eagle Investments Global Fund has to say about Meta Platforms, Inc. (NASDAQ:META) in its Q2 2022 investor letter:
“Consequently, many former growth darlings now qualify as “value” stocks to the point where the Russell 1000 Value Index even includes our growth holdings. A great example of this is one of our recent purchases: Meta Platforms (NASDAQ:META), the company formerly known as Facebook). As it stands today, META is the fifth largest holding of all in the Russell 1000 Value Index.
We followed Facebook for years and were often asked “why own Twitter when you can buy Facebook?” Sure enough, Twitter’s return was far better over our holding period and we now deployed a decent portion of our Twitter proceeds into META. META today strikes us as one of the cheapest stocks in the entire market and one of the more interesting setups we have seen. META was hit with a triple-whammy of tough COVID comps, changes in Apple’s privacy policies and emerging competition from TikTok.
Despite all this, the company continues to grow, albeit at slower rates. At its lows this year, META was trading for low teens forward P/E (15x 2022 numbers today) and this is despite investments in the Reality Labs division at around a $10b annualized rate. If we exclude the Reality Labs investments, the core META properties of Facebook, Instagram and WhatsApp would earn somewhere around 23% more in bottom line EPS. This would chop about 2.5 turns off the company’s P/E.
Speaking realistically, there is no sign Mark Zuckerberg would entirely stop these investments; however, we do think Zuckerberg is realistic about his stock price and very well might defer a large portion of the investment until core earnings reaccelerate. Further, we think it is appropriate to value the company on a sum of the parts basis and rather than fully expense the Reality Labs investments against the core properties, we should think about what the actual value of that investment might yield. Either way, even fully expensing Reality Labs, this company is far too cheap to ignore.”
Photo by Joshua Hoehne on Unsplash
Our calculations show that Meta Platforms, Inc. (NASDAQ:META) ranks 4th on our list of the 30 Most Popular Stocks Among Hedge Funds. Meta Platforms, Inc. (NASDAQ:META) was in 184 hedge fund portfolios at the end of the second quarter of 2022, compared to 200 funds in the previous quarter. Meta Platforms, Inc. (NASDAQ:META) delivered a -17.47% return in the past 3 months.
In August 2022, we also shared another hedge fund’s views on Meta Platforms, Inc. (NASDAQ:META) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
