Merion Road Capital, an investment advisor, released its fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, Merion Road Small Cap Fund returned -3.5% compared to a 6.2% return for the Russell 2000 Index and 3.2% for the Barclay Hedge Fund Index. Along with this, MRCM Long Only Large Cap returned -6.4% compared to a -4.9% return for the S&P 500 Index. For the full year 2022, Merion Road Small Cap Fund declined 17%, and MRCM Long Only Large Cap was down by 35%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Merion Road Capital highlighted stocks like Alphabet Inc. (NASDAQ:GOOG) in the Q4 2022 investor letter. Headquartered in Mountain View, California, Alphabet Inc. (NASDAQ:GOOG) is a multinational technology company. On January 16, 2023, Alphabet Inc. (NASDAQ:GOOG) stock closed at $92.80 per share. One-month return of Alphabet Inc. (NASDAQ:GOOG) was 4.09%, and its shares lost 33.61% of their value over the last 52 weeks. Alphabet Inc. (NASDAQ:GOOG) has a market capitalization of $1.196 trillion.
Merion Road Capital made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2022 investor letter:
“Alphabet Inc. (NASDAQ:GOOG). While concern regarding the advertising market and negative sentiment towards the FANG names hung over GOOG’s head for most of the year, a new risk arose in November: ChatGPT. Associated with Microsoft, ChatGPT is an AI based chatbot that can answer user questions with a seemingly human response. While the ChatGPT product is in no ways perfect and GOOG has a similar product, the writing is on the wall – AI will disrupt a myriad of industries. Is this the boogeyman to take down GOOG’s monopoly on search? I don’t think so. When a company becomes a verb, it is hard to replace it from consumer mindshare. If you are looking for the best taco shop in your neighborhood, do you say “I am going to internet search it” or “let’s Bing the best one”? Assuming the products are roughly comparable, routine matters. Additionally, the use case for AI differs widely from most of GOOG’s queries and given the cost difference between running either search, it may not make sense for the majority of operations. Meanwhile the company has been increasing share repurchases and there are some green shoots that GOOG might become more serious on cost controls. GOOG fell 39% to end the year at $88, has $8 a share in cash and should generate around $5 and share in free cash flow implying a 16x multiple.”
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Alphabet Inc. (NASDAQ:GOOG) is in 6th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 156 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the third quarter, which was 153 in the previous quarter.
We discussed Alphabet Inc. (NASDAQ:GOOG) in another article and shared the stocks with the biggest buybacks. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
